What are written crop insurance agreements?

By definition, a written agreement is a document that alters the terms of a policy as authorized under the Common Crop Insurance Policy, Basic Provisions, Crop Provisions or Special Provisions of the multiperil crop insurance policy reinsured by the Federal Crop Insurance Provisions. A written agreement is seldom required in the production of wheat for the Pacific Northwest, as wheat is the predominate crop grown, insured and insurable in nearly all counties. That said, we have applied for and issued numerous written agreements for wheat rotational crops, as well as irrigated crops, that were not insurable in the county at that time.

To best understand what an approved written agreement can do, we must first set up how the policy is structured. The Common Crop Insurance Basic Provisions state the rights and responsibilities of the parties are specifically subject to the Federal Crop Insurance Act and is an agreement to insure in return for payment of premium, subject to all the provisions of the policy.

The Crop Provisions are specific to each crop. The Small Grains Crop Provisions outline definitions, unit division, contract changes, cancellation and termination dates, the insured crop, insurance period, causes of loss, replanting, duties in the event of damage or loss, settlement of a claim, late planting, and prevented planting for small grains. The crop provisions for other crops — apples, canola or dry peas, for example — will follow a similar format but be specific to the insured crop in question.

The Special Provisions of Insurance are contained within the county actuarial for the specific crop, county and state. The actuarial documents provide specifics on the availability and plans of insurance for a particular county and state, including for crop types (winter or spring) and practices (irrigated, nonirrigated, continuous crop or summerfallow). The actuarials also include information on unit structure, prices, transitional yields, all dates corresponding to the crop, all rates, and all subsidy factors. The Special Provisions of Insurance provide a summary of the actuarial documents as well as general statements of insurability, clarification of definitions or dates, crop rotation requirements for insurability, quality determinations and measurements, and discount factor charts.

A written agreement can provide an exception to the standard crop insurance policy and would allow a producer to insure a crop that otherwise would not be insurable. Written agreements are typically applicable for the crop year in which they are signed, and the terms must be agreed to by both the Risk Management Agency (RMA), which provides the insurance offer, and the producer.

At last count, there are 16 different standard written agreements available nationwide, each with specific requirements and submission deadlines. Written agreements include: 

• Requesting a premium rate change for high-risk rated areas of crop production, such as a lower rainfall area within a county or tillable river bottoms. Deadline for the crop to be insured is the sales closing date for that crop.

• Requests to establish coverage for acreage not planted or harvested in one of the three previous crop years. For example, former Conservation Reserve Program (CRP) acreage left in grass for a couple of years after the CRP contract expired. Deadline for the crop to be insured is the sales closing date for that crop.

• Requests to establish coverage for a crop practice/type that is not currently insurable. For example, Benton County is a summerfallow-only county, meaning that for the wheat crop to be insurable, it must be grown on qualified summerfallow acreage. Recropped wheat acres are not insurable. This is for both spring and winter wheat. If a producer in Benton County wanted to insure recrop fall wheat or spring wheat, they would need to submit a written agreement to RMA’s Spokane Regional Office for consideration. Deadline for submission is the acreage reporting date or the date specified in the Crop Provisions or Special Provisions.

• Written unit agreements provide unit structure by irrigation systems or topographical features, canyons or rivers, rather than by a rectangular survey system. The rectangular survey system works great in North Dakota or Iowa; however, in our region, a field could encompass several sections and, in some instances, could be a single unit for the entire farm. The deadline for submission is the earliest acreage reporting date for the crop(s) to be included in the request. Producers don’t need to submit a new request every year provided there are no changes to the farming operation.

• County without actuarial documents requests establish coverage for a crop in a county with no actuarial documents for that crop. Initially, canola was not widely grown in our region, so some counties didn’t have insurance available. Sunflowers are another crop that is gaining interest in parts of the Pacific Northwest that might be considered for this request. Deadline for submission is the cancellation date in the Crop Provisions or Special Provisions for the initial request, and the sales closing date in subsequent years.

There are also requests for nursery plant list, rotation exception requests, special purpose corn, seed potato acreage, dry bean types, and unrated land. This gives a flavor for the variety of applications for written agreements. The takeaway I’d like to leave with you is this: If you’re contemplating planting and insuring a crop out of the ordinary, have discussions with your crop insurance agent early in the planning stages so the necessary documentation and paperwork can be completed in a timely manner.

Curtis Evanenko serves as a risk management advisor with McGregor Risk Management Services. He can be reached at (509) 540-2632 or by email at cevanenko@mcgregorrisk.com.