Why Does Yield Exclusion Matter?

Let’s run through the question: Why Does Yield Exclusion Matter?, especially this year.  

One of the highlights of the 2014 Farm Bill is the response to producer’s requests to find a way to lessen the impact of successive years of low crop yields due to circumstances beyond our control. Yield Exclusion (YE) is the provision that allows that request to be addressed in most cases. However, for you as a wheat producer to be ready to take a look at the pro’s and con’s to YE, there are some very critical things you need to be aware of:

6 Critical Issues

1. The opportunity to exclude and particular year is dependent on your county’s disaster status and yields for that year, not your own production.
2. The USDA determines ahead of time the years that specific crops are eligible for YE in your county. That information is available thru your crop insurance agent.
3. You can opt out in all eligible years, or just the ones that benefit you. Election is available on a crop by crop, farm by farm and year by year basis.
4. In most cases, participating in YE will result in higher per acres guarantees, but also higher insurance premiums per acre. The degree of increases is determined by producer and farm.
5. ALL of your production history must be in the Crop Insurance Companies database in order to get a summary by farm as to how much your guarantee and premium will increase if you choose to elect some or all of the years eligible. THIS INCLUDES PRODUCTION FOR 2015 WHEAT CROP!!
6. Getting your production recorded early is vital, because you have only until Sales Closing Date of Sept 30^th, 2015 to add YE to your policy if you want to utilize that option. Typically, unless we have a claim, production is not reported until October or the production reporting deadline of Nov 15^th.  

Early Recording Is The Key

The key, once again, is to get all of your production history recorded early this year in order to have time to evaluate the advantages and disadvantages of YE on a farm-by-farm basis. –

 Here is an example of how Yield Exclusion would work:

Current APH History				YE Adjusted APH History
Year	APH Yield	YE Eligible?	Exercise YE?	Year	Yields
2012	8	n	y	2012	n/a
2011	11	y	y	2011	n/a
2010	21	n		2010	21
2009	9	y	y	2009	n/a
2008	49	n		2008	49
2007	28	n		2007	28
2006	31	n		2006	31
2005	25	y	n	2005	25
2004	38	n		2004	38
2003	32	n		2003	32
APH Years = 10 years to count Recorded yield totals = 252 APH = Recorded yield/Years = 25.2 bu Guarantee @ 70% = 17.64 bu x $6 = $105.84/ac Premium w/o YE = $8.94/acre (Enterprise Unit)			APH Years after YE = 7 years to count Recorded yield total = 224 APH = Recorded yield/Years = 32 bu Guarantee @ 70% = 22.4 bu x $6 = $134.4/ac Premium with YE = $11.95/acre (Enterprise Unit)

An increased guarantee on crop yields is a key improvement for many producers. With the increased cost of inputs and the lagging commodity prices, it can often be the difference in securing enough operating money to provide the best opportunity for a successful crop. For many, the YE option will be a beneficial option to use, but for others the increase in cost will not justify the additional guarantee.

Again, Early Recording Is The Key

The key, once again, is to get all of your production history recorded early this year in order to have time to evaluate the advantages and disadvantages of YE on a farm-by-farm basis.

     As always, if you have any questions regarding the new opportunity to use Yield Exclusion, or if you have questions or concerns about anything else that we can help you with please feel free to contact us by phone, email, or just drop by and visit.