UNIVERSITY PARK, Pa. -- Farmers preparing for spring planting in drought-stressed areas of Pennsylvania should pay attention to the rapidly approaching deadline of a crop insurance program sponsored by the U.S. Department of Agriculture.

Pennsylvania agricultural producers have a special need for crop insurance this growing season, says Jayson Harper, professor of agricultural economics and farm management specialist in Penn State's College of Agricultural Sciences.

"We're certainly 'looking down the barrel' of a drought this year, with the drought emergency that's going on in southeastern Pennsylvania in particular," Harper says. "The cost of crop insurance has come down a lot from just two years ago, so it's much more affordable. The Commonwealth of Pennsylvania has gotten behind the crop insurance program, providing additional subsidies. So some levels of crop insurances cost about half of what they did two years ago, and farmers can get the lowest level of coverage for free."

The USDA's Risk Management Agency sets March 15 as the last day for Pennsylvania farmers to purchase crop insurance for spring plantings of corn, barley, forage, grain sorghum, green peas, tobacco, oats, potatoes, processing beans, soybeans, sweet corn, tomatoes and winter squash.

The crop insurance programs are an important part of the federal farm policy, Harper explains, because they replace disaster assistance programs as the "safety net" for an industry that must cope with weather catastrophes and other natural forces. Instead of relying on ad hoc federal programs, farmers control their risk by choosing from a wide range of crop insurance plans. Like automobile drivers and home owners, Harper says, farmers get as much protection as they're willing to pay for.

"Farmers have traditionally handled their own risk on farms -- they've planted a few extra acres of crops to cover shortfalls," he says. "With crop insurance, they can cover between 50 and 75 percent (and in some cases, 85 percent) of their normal yields, and that will give them quite a bit of cash flow protection in a year like we're facing."

After the statewide drought of 1999 wreaked havoc in the state's agricultural economy, the Pennsylvania Department of Agriculture stepped in to make crop insurance more affordable.

"After '99, there was a lot of concern about how farmers could better deal with their risk," Harper says. "State Agriculture Secretary Sam Hayes led the effort to make crop insurance a viable program, providing additional subsidies to reduce the cost to farmers. The state also is paying many fees for crop insurance this year, so farmers can get the lowest level of crop insurance coverage for free."

As with other forms of insurance, there are several types of coverage for farmers to choose from. They also need to select a crop insurance agent who understands their situation. Harper says the best place to start in shopping for a crop insurance agent is by asking other farmers.

"Other growers are one of the best sources of information on who the knowledgeable crop insurance agents are," Harper says. "You also can check with the insurance company carrying your other types of insurance -- it may have an agent who specializes in crop insurance.

"You also can talk to the people or organizations that supply your other farm business management services -- your banker, for instance. And the Pennsylvania Farm Bureau and Farm Credit sell crop insurance."

Farmers with access to the World Wide Web can get valuable information from the USDA Risk Management Agency's site at http://www.rma.usda.gov, which includes an "agent locator" function. And Harper's own Penn State Crop Insurance Education Web site (http://www.cropins.aers.psu.edu) features fact sheets, newsletter articles and more for producers looking for the best insurance for their situation.

Other crop insurance innovations for Pennsylvania farmers include:

• Crop revenue coverage is a new form of insurance (corn and soybeans only) that protects against both yield and price risk: farmers are paid if revenues fall below the guaranteed price due to either reduced yield or depressed market prices.
• Adjusted gross revenue, another new program now available only in Berks, Carbon, Lackawanna, Lehigh, Monroe and Northampton counties, insures the revenue of the entire farm rather than a specific crop.
• Higher coverage levels allow farmers of certain crops to guarantee revenues that approach 85 percent of their farm's actual production history yield.
• Reduced premiums and application fees resulted from 2000 federal legislation that cut crop insurance premiums for farmers by 27 to 41 percent (depending on the level of coverage desired). In addition, the state will pay the $50-per-crop application fee and will reduce producer premiums by an additional 11 to 22 percent during this calendar year. This support cuts crop insurance premiums by 40 to 58 percent compared to 1999.
• Improved catastrophic insurance (or CAT coverage) pays 55 percent of the established price of the commodity on crop losses in excess of 50 percent. Intended as replacement for federal disaster assistance, premiums on CAT coverage are paid totally by the USDA. Producers only are responsible for a $100 per crop administrative fee, which the state will pay for 2002 to encourage all farmers to get at least this level of protection.

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EDITORS: Contact Jayson Harper at 814-863-8638.

Contact:

Gary Abdullah gxa2@psu.edu 814-863-2708 814-865-1068 fax