For several years the Risk Management Agency (RMA) of the United States Department of Agriculture (USDA) and the various private insurance companies that deliver crop insurance protection to millions of producers across the country have been negotiating a major overhaul of the basic policy that is used for most insurable crops.
According to William Edwards, Extension economistat Iowa State University, the new Common Crop Insurance Policy, sometimes known as COMBO, will go into effect for crops insured in 2011. Covered crops include corn, soybeans, grain sorghum, wheat, barley, cotton, rice, canola and sunflowers.
The new policy simplifies and streamlines the choices. Instead of a different policy for each type of insurance, there will now be one master policy with several options:
• Yield Protection
• Revenue Protection
• Revenue Protection with Harvest Price Exclusion
Edwards says the Yield Protection (YP) is equivalent to the old Actual Production History (APH) policy. Yield protection establishes a guarantee based on the APH yield, which is determined by four to ten years of actual yield records. A major change from the old APH policy is that the indemnity price used to calculate the payment made to the producer in the event of a loss is now the same as the price used for revenue insurance policies.