September 3, 2019
After a difficult start this planting season, most farmers in the province were finally able to get their crops in the ground. Customers who were unable to plant by the insurance planting deadline may be wondering how their program coverage will be affected in the year to come.
Unseeded acres have no effect on a customer's historical yields
When customers are unable to plant their crop by the insurance planting deadline, they may be concerned that their historical average yield could decrease and affect their Production Insurance coverage. Farmers can rest assured that having unseeded acres will not impact next year's average farm yield (AFY). Each crop a farmer grows has its own AFY. In years that a crop is not grown or insured, the crop is not included when calculating AFY.
Unseeded acres - Discounts and surcharges in a high claim year
Base premium rates for Production Insurance are set annually to reflect factors like past performance of the plan, changes to the commodity price, and the level of the Production Insurance Fund. Once a customer has been enrolled in Production Insurance for more than one year, their premium rate may be discounted or surcharged based on their claim history. Premium discounts and surcharges take into account a customer's individual claim rate compared to the claim rate for the whole crop plan.
In years where many other plan participants are also in a claim situation, even a large claim may have little effect on a customer's discount or surcharge because the claim rate for the plan is also likely to increase.
When next year's discounts and surcharges are calculated, all claims that have been made, including payment for the unseeded acreage benefit (USAB), will be considered in the calculation.
To learn more about discounts and surcharges, see the Production Insurance
Discounts and Surcharges feature sheet on agricorp.com.
Unseeded acres are covered under RMP
The Risk Management Program for grains and oilseeds covers fluctuating costs and market prices. Payments are made if the average market price for the commodity falls below its support level.
In Ontario, 5,500 grains and oilseeds farmers have RMP coverage in addition to Production Insurance. The two programs work together: any unseeded acres covered through Production Insurance may also qualify for RMP payments.
For RMP, payments for unseeded acres are based on the same USAB crop (also called dominant crop) that the customer selected for Production Insurance.
The following scenario outlines how Production Insurance coverage and RMP coverage work together to provide more comprehensive coverage for customers when they have unseeded acres.
Unseeded acres can affect the overall income used for AgriStability
AgriStability covers large declines in net income caused by production loss, increased costs or market conditions. When customers have unseeded acres or have to switch crops, it can reduce their overall income for the year, which may make them eligible for an AgriStability payment.
If a customer receives a USAB payment for Production Insurance, that payment is considered income for AgriStability and needs to be reported.
Including USAB payments as income for AgriStability can be beneficial because it helps maintain a healthy reference margin.
Production Insurance and RMP for unseeded acres
Smith Farms intended to plant 100 acres of corn and 100 acres of soybeans. Wet planting conditions changed Smith Farms' plans.
Smith Farms was only able to plant 50 acres of soybeans.
Smith Farms selected corn as their USAB crop (dominant crop) for Production Insurance.
For the 150 unseeded acres, Smith Farms has Production Insurance USAB coverage based on 150 acres of corn (the USAB crop)
They also have RMP coverage based on 150 acres of corn (the USAB crop), even though the crop wasn't planted
For the 50 acres of soybeans, Smith Farms has Production Insurance yield coverage. They also have RMP coverage based on 50 acres of soybeans