CHAMPAIGN-URBANA, Ill. - In a “normal” year Doug Yoder, crop agency manager for COUNTRY Financial, would spend much of February and March driving from town to town offering his annual farm bill and crop insurance update at county farm bureau auditoriums, grain service facilities and other small venues where a few dozen farmers can gather. This year, due to the ongoing pandemic, Yoder presented a live webinar to help farmers better understand important ag industry updates that may affect their farm operations. 

Some of the new options for crop insurance available to farmers in 2021 include a Quality Loss Option, Enhanced Coverage Option and COUNTRY’s exclusive “Added-Value Enhancement” coverage. During the Feb. 25 webinar, Yoder took a few moments to explain each of these options, after cautioning farmers that due to recent higher market prices for corn and soybeans crop insurance premiums will come in “significantly” higher in 2021 —  albeit carrying enhanced benefits.  

“The Quality Loss Option, or QL, is a fantastic new option that is yet another tool which lets you improve your important APH — actual production history — number,” Yoder said. “As you know when you buy a personal line of insurance like Revenue Protection (RP), your guarantee is built on the yield history of your particular farm operation, up to ten years of your actual production. That is a critical number, and anytime you can improve that APH number you will get higher guarantees and higher coverage amounts per acre. QL is another potential way that some of our insureds in Illinois can look at improving their APH.”

QL can be impactful because it is centered around production years during which producers suffered losses due to quality factors. The option allows insurers to “replace” the affected years’ yield data with new yield averages based on pre-quality loss yield totals when determining guarantees and per-acre coverage ratios. The QL option is available to growers of corn, soybeans and wheat and can be attached to most major crop insurance policies, including RP.

Quality loss factors that can be adjusted to improve yield and APH considerations include grade, test weight, defects, damage and more. Moisture and moisture shrink are not among loss factors that can be considered for QL adjustment, however.

The Enhanced Coverage Option is a new supplemental coverage option USDA is rolling out in 2021. ECO is a county-based coverage that, unlike 

the previous farm bill’s Supplemental Coverage Option, is available to farms enrolled in either ARC or PLC insurance programs (SCO is available only to PLC-enrolled farms). 

“This is county by county coverage that you would apply on top of your base policy. Where SCO kicks in at 86 percent of your county number, ECO gives you a coverage level choice. You can choose either 90 or 95 percent coverage level for your county policy to kick in, and shut off at 86 percent,” said Yoder. “This provides you with a four to nine percent band of coverage.”

For 2021 ECO is available for corn and soybean production in all 102 Illinois counties, and other commodities in certain counties. “Anyone considering purchasing ECO for their commodities should check with their agent to make sure the commodity (other than corn and soybeans) is available in their county,” Yoder advised.  

ECO comes with a secondary choice called Price Selection, which allows producers to choose a range of 50 to 100 percent of the full coverage of the ECO option. While selecting 50 percent would cut in half the size of a producer’s premium, it would do the same with a potential claim, Yoder cautioned.

ECO and QL can be stacked together with RP and other popular insurance programs. As with all crop insurance decisions, farmers who are interested in the new QL or ECO options for 2021 must meet with their agents before March 15 to attach the coverage. 

In addition to the two new government crop insurance options for 2021, COUNTRY is introducing a new private supplemental option for its farming clients. “We are in the process of introducing our Added-Value Enhancement (AVE) option, a tool that I think a lot of our customers are going to be interested in,” said Yoder. “It’s a flexible new tool that allows you to add new coverage in a slightly different way.”

COUNTRY’s new policy option was borne out of policy concern for the take-it-or-leave-it approach of determining annual crop insurance guarantees based on February commodity price averages. Recent years of low February price averages have left some lenders and policy holders unsatisfied with the resulting low coverage amounts for RP and other policies. This has resulted in demand for additional coverage options, such as SCO, ECO and others, according to Yoder. 

“AVE allows you to substitute a higher grain price instead of the take-it-or-leave-it February average. You decide how much extra price you want, and how wide a coverage band of bushels you want that extra price guarantee on. There is no speculative nature in this; you simply tell us how much extra price you need to satisfy you or your lender,” Yoder explained.  

For more information on 2021 government crop insurance programs or COUNTRY’s new AVE insurance option, direct inquiries to wintercropmeetings@countryfinancial.com.