Written by M. Sean High
On October 20, 2015, the U.S. Department of Agriculture’s (USDA) Risk Management Agency (RMA) announced an expansion of the federal government’s crop insurance program. According to RMA, “[p] roducers of buckwheat, cabbage, extra-long staple cotton, processing beans, dry beans, flax, green peas, millet, mustard, pumpkins, silage sorghum, sugar beets, sweet corn in select counties will have the option to elect APH [Actual Production History] Yield Exclusion for the 2016 crop year.”
APH Yield Exclusion is a federal crop insurance option that gives farmers the ability “in exceptionally bad years (such as a year in which a natural disaster or other extreme weather occurs)” to exclude low crop yields from their production history for the purpose of calculating insurance coverage. Under APH Yield Exclusion, crop years are eligible for exclusion “when the average per planted acreage yield for the county was at least 50 percent below the simple average for the previous 10 consecutive crop years.”
Because crop insurance coverage calculations are based on production history, lower actual yields could result in reduced insurance guarantees and smaller indemnity payments. Through APH Yield Exclusion, USDA seeks to avoid this problem by allowing eligible farmers the ability to exclude bad years from coverage calculations and thus receive greater levels of crop insurance protection.
To receive APH Yield Exclusion, farmers must choose the option by the sales closing date of their insurance policy. Once selected, APH Yield Exclusion will automatically continue until a farmer submits a request to end the coverage. Furthermore, when the option is selected, “it will automatically exclude all eligible crops years from your actual production history database, unless [the farmer] specifically opt [s] out of the exclusion for a specific crop year.”