Late Soybeans plantings could cause low 2013 yields and therefore lead to reductions in insurance guarantees, says University of Illinois farm management specialist Gary Schnitkey.
Since lower actual yields may shrink future Actual Production History yields - used to set crop insurance guarantees - this year's low APH yields could cause lower insurance guarantees in future years.
"If a farmer takes a prevented planting payment and does not plant a crop following the late planting period, there is no impact on the APH yield, as prevented planting acres do not enter into the calculation of the APH yields," he says.
On the other hand, yields from late-planted soybeans will enter into the calculation of APH yield, potentially leading to reductions in APH yields. While this year's expected returns from prevented planting and late planting should have the largest impact on decisions, the potential for lower APH yields could be a consideration and favors taking the prevented planting payment.
When calculating APH yield reductions, there is a lowest yield that is used in calculating an APH yield. If an actual yield is below 60% of the T-yield, the producer can request to have the actual yield replaced with 60% of the T-yield. Each county has its own T-yield.
According to Schnitkey, your APH yield cannot decline by more than 10% from one year to the next. For a farm with a 50 bushel APH yield, this means that the yield cannot decrease by more than 5 bushels.
For many insurable units, a ten year yield history is used to determine APH yields. In these cases, the 2013 yield will replace the earliest yield in the yield history. For a ten-year yield history, it is straight forward to calculate the potential yield reduction: the APH yield will change by the difference in the 2013 and earliest yield divided by 10.
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