The 2012 drought raises question about crop insurance coverage in 2013. Specific questions that have been asked are: 1) how much will the Actual Production History (APH) yields decline in 2013 as a result of poor yields in 2012, and 2) will 2013 crop insurance premiums increase as a result of the 2012 drought?

2012 APH yield declines
Low yields in 2012 will reduce 2013 APH yields on many farms. However, there are two factors that could potentially reduce the size of the APH yield declines.
The first is that a producer can request to have any yield in the yield history replaced by 60% of the T yield. The T yield is specific to a crop in a county. Table 1 shows 2012 corn and soybean T yields for Illinois counties. In 2012, some farms will have yields below 60% of the T yield. These farmers should request to have their actual yield replaced by 60% of the T yield.

To illustrate, take a farm in Macon County where the T yield is 174 bu. per acre (see Table 1). If the farm has a yield below 104.4 bu. (174 bu. T yield x 60%), that farm could ask to have its actual yield replaced by 104.4 bu. per acre. This substitution will limit yield declines.

Take a McLean County farm with a 10-year yield history where the historic yields exactly equal the county averages in each year. This farm would have a 2012 APH yield of 175 bu. per acre. If this farm has a yield below 104.4 bu. yield in 2012, a 104.4 bu. yield could be used in the APH yield calculation, resulting in an a 2013 APH yield of 169 bu. per acre. This farm’s APH will decline by 6 bu. between 2012 and 2013. Using a lower actual yield than 60% of the T yield would result in more an APH yield decrease.

The second factor limiting APH yield declines is that there is 10% limit on a decline in the APH yield from one year to the next. Take the McLean County farm with a 2012 APH yield of 175 bushels per acre. The 2013 cannot be below 157.5 bu. per acre (175 APH yield x 90%).

While APH yields will decline, the Trend-Adjustment Endorsement will be available in 2013. This endorsement will act to increase yields used in guarantee calculations in the recognition that average corn and soybean yields have increased over time.