sure farm program

Department of Economics

SURE Farm Program

North Central Iowa Crop & Land Stewardship ClinicIowa Falls, Iowa

December 30, 2009

Chad HartAssistant Professor/Grain Markets Specialist

[email protected]


Supplemental Revenue Assistance Payments Program (SURE)

Part of the 2008 Farm Bill

Permanent disaster assistance

Provides payments to producers in disaster counties for crop losses

Run by the Farm Service Agency, USDA

Covers the 2008-2011 crops


Supplemental Revenue Assistance Payments Program (SURE)

Based on crop insurance program, non-insured crop assistance program, and disaster declarations

Whole-farm revenue protection, not commodity-specific


SURE Triggers

Declared “disaster county” by Secretary of Agriculture or contiguous to one

Farm with losses exceeding 50% of normal production (value) in a calendar year

At least one crop must have a 10% (or greater) production loss


All Crops Must Be Covered

But there are some exceptionsPastureCrops with an expected value of less than 5%

of the total expected value of production on the farm

Value = Crop insurance price X yield

Crops on which the producer has received a waiver


SURE SettingsParticipation and revenue guarantee tied to crop

insuranceFarm revenue, including some government

payments, used to determine paymentPayments set as 60% of the difference between

guarantee and actual revenueLimited to $100,000 per producerPayments not known or paid until the end of the

marketing year


SURE Guarantee for 2008

Farm guarantee is the sum of120%*Crop insurance price election*Crop insurance

coverage level*Planted acres* Max(APH or CCP yield), for insurable commodities

125%*NCAP price election*Planted acres* Max(NCAP or CCP yield), for non-insurable commodities

For an individual crop, the guarantee can not be greater than 90% of the crop’s expected revenue

Crop insurance coverage level minimum = 70%


SURE Guarantee for 2009 and Beyond

Farm guarantee is the sum of115%*Crop insurance price election*Crop insurance

coverage level*Planted acres* Max(APH or CCP yield), for insurable commodities

120%*NCAP price election*Planted acres* Max(NCAP or CCP yield), for non-insurable commodities

For an individual crop, the guarantee can not be greater than 90% of the crop’s expected revenue


SURE Expected Farm Revenues

Expected farm revenue is the sum ofMax(APH or CCP yield)*Planted acres*100% of

the crop insurance price for insurable commodities

100% of NCAP yield*100% of NCAP price*Planted acres for non-insurable commodities


SURE Increases Guarantees

Adds 20% to value of crop insurance guarantee if signed up by March 2008; else 15%.

Minimum for 2008 is 80.5% (equivalent of 70% guarantee x 115%)

Maximum is 90%

Crop insurance guarantee

2008 SURE

guarantee

2009-11 SURE

guarantee

65% 80.5% 74.75%

70% 84% 80.5%

75% 90% 86.25%

80% 90% 90%

85% 90% 90%


SURE Actual Farm Revenues

Actual farm revenue is the sum ofHarvested acres*Farm yield*National season-

average price for all commodities15% of direct paymentsAll CCP or ACRE paymentsAll marketing loan benefitsAll crop insurance or NCAP payments

Net of premiums (to a minimum of $0)

Any other disaster assistance payments


2008 SURE Map


2009 SURE Map


SURE Payment

Guarantee minus actual revenue

aggregated for all crops x 60%

Limit of $100,000 per year per payment

limitation


ExampleCrop insurance (RA)

75% guarantee 160 bu/acre APH yield $5.40 indemnity price $648 per acre guarantee for RA$16 per acre premium

SURE guarantee120% of $648 = $778 / acre guaranteeNo additional premium


ExampleCrop insurance

Actual yield was 140 bu. per acre (12% loss)Harvest crop insurance price was $3.74Actual revenue was $524 per acreCrop insurance payment was

$648 - $524 = $124 per acre


ExampleSURE

Actual yield = 140 bu/acre2008 marketing year price = $4.06/buMarket revenue = 140*4.06 = $568.40/acreCrop insurance benefit = $124 - $16 = $10815% of direct payment = $3Total revenues = $679.40Shortfall = $778 - $679.40 = $98.60/acrePayment = 60% * $98.60 = $59.16/acre


Will I get a SURE payment? Are you in an eligible county or have a 50% or

greater production loss Do you have a 10% production loss on at

least one crop Price declines matter

Corn $5.40 to $4.06 = 24.8%Soybeans $13.36 to $9.97 = 25.4%

So, even higher yields, up to 120% of the APH yield, on other crops could still result in a SURE payment.


Crop Insurance plus SURE Payment

$-

$50

$100

$150

$200

$250

$300

$350

100 105 110 115 120 125 130 135 140 145 150 155 160 165 170 175 180 185 190 195 200

Corn Yield-bu/acre

$ per acre

SURE pmt.

Crop Ins. Pmt

Source: Dr. William Edwards, ISU


SURE Payment per Acre for 2008(50% corn, 50% soybeans)

Insurance Guarantee

10% Yield Loss

RA CRC

20% Yield Loss

RA CRC

85% $ 7 $25 $33 $46

80% $17 $35 $43 $56

75% $27 $45 $53 $66

70% $26 $44 $51 $65

65% $36 $44 $61 $75

Source: Dr. William Edwards, ISU


What to do?

Find out if you are in an eligible county for 2008 and 2009

Estimate potential paymentsAg Decision Maker calculator at

www.extension.iastate.edu/agdm/

Watch for FSA announcements


Information NeededYields submitted for crop insurance, for

all land farmedCrop insurance payments receivedUSDA commodity payments receivedRMA will turn over yield and acre data

to FSAFSA will aggregate data across farms


Summary of SURE

SURE provides 15 to 20% added coverage above the crop insurance guarantee (up to 90%).

All crops must be insured (except crops that are less than 5% of total crop value).

All crops and all farms per producer are added together to calculate coverage and losses.

Payment is 60% of loss.


Decision Points for SURE

If all crops will be insured anyway, there is no added cost for SURE.

If additional crops have to be insured, there is an added cost.$300 per crop for catastrophic coverage$250 per crop for NAP coverageStandard APH or revenue insurance at a

low level could be cheaper for small areas


How will SURE affect my crop insurance decision?

May have to insure minor crops

Higher or lower levels of crop insurance give a higher or lower SURE trigger

Producers who insure at the 80% or 85% level get less additional coverage due to 90% cap


How will SURE affect my crop insurance decision?

SURE is for all crops and all acres together

SURE pays only 60% of the revenue loss


2008 SURE Map


2009 SURE Map


SURE Sign-upSign-up for the 2008 crop year starts Jan. 4,

2010

See your local FSA office to sign-up

Sign-up will likely conclude by Mar. 1


Thank you for your time!

Any questions?

My web site:http://www.econ.iastate.edu/faculty/hart/

Iowa Farm Outlook:http://www.econ.iastate.edu/outreach/agriculture/periodicals/ifo/

Ag Decision Maker:http://www.extension.iastate.edu/agdm/

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