Watch Now: Wheat Insurance 101 Webinar
Protecting your wheat in this historic market is now more important than ever. To help you navigate this erratic time, we’ve put together a webinar so farmers know what to expect from wheat insurance for 2022.
What you’ll learn
The different small grains and their plan options
Causes of loss
Tools for small grains and so much more
Enrollment ends September 30, 2022.
Let FBN® help find a smart, simple, and personalized plan for you. We use data to ensure you have the right wheat insurance to fit your farm’s needs. So even if it's a second opinion, let's line up what you need from this critical risk-management tool.
Kelsey Lennon (00:01):
Hi, everyone. Welcome to our MPCI Small Grains Insurance webinar put on by FBN® Insurance. I first want to start by reading this disclaimer, the purpose of the following material is to promote awareness of risk management concepts and to highlight risk management products, features, benefits, and availability. This presentation does not provide full details of policy provisions or approved procedures.
Producers should consult with a local agent for specific details and program requirements. We do not make any representations or warranties express or implied as to the accuracy or complete completeness of the statements or any information contained in the material and any liability, therefore is expressly disclaimed.
So first I would like to introduce our two speakers. We have Mark Miller. He is an FBN insurance agent out of Northeast Arkansas, and also from Northeast Arkansas we have Dustin Faulkner. So thank you both for joining us today and walking us through wheat insurance with our crowd. So everyone knows what we are going over today.
The agenda- first, we'll talk about the different small grains and plan options. We'll talk about important dates, insurability requirements, cause of loss and indemnity, examples, new updates, some tools that we have at FBN for small grain producers and processing reminders. And with that, I will turn it over to Dustin and Mark. So thank you guys for joining us.
Mark Miller (01:35):
Thanks Kelsey. Like she said, today we just wanted to cover some of the opportunities out there on some of the small grain type insurances and winter varieties the slides, as you can see we've got wheat, barley oats and rye. With these commodities, we have a list of products available on the MPCI side of insurance.
We've got revenue protection, revenue protection with the harvest price, exclusion yield protection area, revenue protection area, revenue protection with the harvest price, exclusion area, yield protection, margin protection with a harvest price option.
And then we have some additive endorsements available on these products called SCO and ECO. We'll start with the barley insurance plans. This offers revenue protection, the revenue protection with the HPE, yield protection and the endorsements of SCO and ECO. I state that you need to check the availability by state and county. We'll cover the owed insurance plans. It offers an APH, which is an actual production history 90 in some areas it does offer the SCO and the ECO endorsements, the same follows with the rye insurance plans.
Mark Miller (03:31):
Some important dates to point out. We start with a contract change date when we open up the season around the 30th of June, it's followed by a sales closing date of nine 30 acreage reporting dates, which is a date that identifies what you're ensuring would be 12/15. And then the premium date premium billing date would be issued around the 1st of July.
It's followed up with around the end of harvest of a 10/31 end of the insurance period date. And then you would follow it up on November the 14th with a production reporting or yield data date. This slide represents the sales closing footprint on wheat and you can see the different color codes that represent your area. This slide would show the same footprint for the barley insurance.
Some of the requirements that need to be met to participate in these insurance products is the insured must have a share of the crop. The actuarial documents provide the premium rates on the crop. So that's some web browser information that could give you the premium rates by the commodity. Crop is grown. The crop has to be grown on insurable acreage, and the crop is planted and harvested as grain
Mark Miller (05:40):
Of the causes of loss on the MPCI side of insurance would this is just a list of examples all which are naturally causing perils. We can read through the list of weather conditions, earthquake failure of irrigation, water supply, if it is caused by an insured peril during the insurance period, fire insects and plant disease, go ahead and click to the next wildlife volcano, volcanic eruption and for the revenue protection only a change in the harvest price from the projected price can sometimes influence an indemnity or a claim.
Mark Miller (06:36):
At this point. I'm gonna turn it over to my colleague Dustin Faulkner to explain some of the examples of the revenue protection product.
Dustin Faulker (06:48)
Thank you, Mark. The first in looking at this example here, we have an example of a revenue protection indemnity example for wheat on the left column there in the lighter shaded, we, we have two examples here, one where there is not a loss one where there is a loss on the left side of the, the light shaded side of the PO the slide here.
We have an approved yield on, on each of these of 60. The coverage level is 85%. We have a projected price of $7 and 16 cents, and that creates a revenue guarantee of $365.
Dustin Faulker (07:28):
And looking at the two examples on the left of the lighter shaded on the left side, insured had a 60 bushel approved yield with, like I said, like I said, once again, with 85% policy, he harvested 60 bushels. Therefore there was no indemnity claim, excuse me, because the insured did meet his revenue guarantee on the right hand side, same approved, 60 bushel yield, 85% policy insured had a harvest yield of 42.
The harvest price came in at $8 and 22 cents per bushel on this that raised the insured's revenue guaranteed of $419. The insured's actual revenue was $345, which did create an indemnity of $74. Next slide, please, Kelsey, kinda comparing this to the APH 90 example.
And then to the example for rye, the approved yield for the insured is 42 insured also had a 85% policy, had a guaranteed yield of 36. If you look on the left hand side, it's showing the example where the harvest yield came in at 40, which was above the guaranteed yield for the insurer of 36 bushels. So there was no indemnity payment on the right hand side with the darker shaded. The insured had a harvest yield of 28. So that created a yield loss of eight bushels and created an indemnity payment of $26.
Dustin Faulker (09:10):
Let's move on to the next slide there, please kinda move over from, from those examples. And let's talk a little bit about prevent plant. There are two taps or two choices when it comes to a prevent plant acre. The first one is a straight prevent plant on eligible wheat acres, leaving the ground fallow for the remainder of the crop year.
The second choice an insured may have is taking prevent plant on eligible wheat acres and planting a subsequent crop behind the prevent plant acre. Next slide, in looking at the first example we discussed, which is a straight prevent plant using this example of you know, number one, like I say, EU discount on premium is based on how many acres are actually planted. Let's kinda walk through this example, if it's okay. Insured had an approved deal of 60 bushels. He had a 85% coverage level.
Dustin Faulker (10:05):
So therefore there is a 51 bushel guarantee for the insured moving from that 51 bushel guarantee. The projected price was $8 and 90 cents, which created a revenue guarantee of $454. Your prevent plant guarantee in this situation is 60%. So $454 times 60% prevent plant based guarantee equals a prevent plant indemnity of $272.
The premium in this scenario was $65 per acre for the crop insurance premium. So when you subtract that from the prevent plant indemnity, that creates a net indemnity situation of $207, okay, let's move on to the next, the second choice you have in a prevent plant situation is to plant, to prevent plant the acre and then plant a subsequent crop.
Following that prevent plant acre, the premium will still be based on the amount of acres actually planted to the first crop. The indemnity and premium are discounted to 35%. The negative in this situation is that farmers will have to use a yield in their history that is 60% of their approved yield, which will lower their approved yield in future years.
So I wanna show you on the right hand side here, kind of walking through an example where you plant a subsequent crop moving from that prior side, we looked at with a prevent plant indemnity of $272. You take 35% of that amount, which gives you a $95 amount for the new prevent plan indemnity.
Dustin Faulker (11:53):
And then you, then you take the 35% of it, which creates, you got this $65 crop insurance premium, and that creates a $23 premium for the crop insurance for the prevent plant. Now, because you're paying 35% of the premium, the $95, which is the new prevent plant, which is 35% of the $272 prevent and plant indemnity creates a 73 net prevent plant indemnity at mount, and looking at how that penalty would work for the 60% of their approved yield, which is in the lower section of this slide.
You take 60 bushels was their first crop approved yield. You get a 60% APH deduction, and that creates now you have a 36 plugged in for that crop year, which you yield to count for that first crop in the APH history. Next slide, please kind of after looking at, through some of those scenarios, it kind of brings up some opportunities of how FBN can help.
FBN has some tools out there that, you know, insureds can look at or potential clients can look at. You have number one, the first tool is the prevent plant comparison calculator. And the second one is the MPCI loss calculator. These tools are built to identify the right coverage for you.
You know, we encourage you, if you would like to take a look at these tools, to reach out to an FBN agent in your area and let them go over these tools and examples for you to, to further help your insurance choice decisions.
Like I said, if you would like to learn more, these are examples of how you might be able to reach out to us. You visit fbn.com/mpci or call 877-204-4645. Like I said, we look forward to being able to visit with you on your wheat needs for the 2023 crop year. If there are any questions, this is a great place to reach out to look. Thank you.
Kelsey Lennon (14:12):
Thank you, Dustin and Mark. And again, if you're interested in talking to an FBN agent to learn more about FBN Insurance or just some of your options, when it comes to wheat and other small grains, please visit fbn.com/mpci or call 877-204-4645. Thank you both for joining us today and walking us through that webinar. We really appreciate it.
The purpose of the following material is to promote awareness of risk management concepts and to highlight risk management products, features, benefits and availability. This presentation does not provide full details of policy provisions or approved procedures. Producers should consult with a local agent for specific details and program requirements.
We are an Equal Opportunity Provider. FBN Crop Insurance services are offered by FBN Insurance LLC (dba FBN Insurance Solutions Services LLC in Texas, and FBN Insurance Solutions LLC in California and Michigan) and are only available where FBN Insurance LLC is licensed. FBN membership is not required to purchase through FBN Insurance LLC, but certain features are only available to FBN members. FBN Crop Insurance is currently offered in the following states: AK, AL, AR, AZ, CA, CO, CT, DE, FL, GA, HI, IA, ID, IL, IN, KS, KY, LA, MD, ME, MI, MN, MO, MS, MT, NC, ND, NE, NH, NJ, NM, NV, NY, OH, OK, OR, PA, RI, SC, SD, TN, TX, UT, VA, VT, WA, WI, WV, WY.