As the 2018 Agriculture Improvement Act, commonly called the Farm Bill, makes its way to the  US Senate floor this week, one major part of the bill is crop insurance.

Home State Bank Ag Lender Ashley Johnston says the federal crop insurance program offers the same premiums for everyone, no matter who a crop producer uses as their ag lender. The premiums are then set by Risk Assessed Marketing (RAM). She points out that for the most common type of crop insurance, revenue protection, a crop producer will get the higher amount of market price for corn and soybeans of either the spring projected price or the harvest price.

“What you do is you take your APH, which is your average yield on usually a ten-year database or how many years you have in your database, and you take that times what coverage level you choose from 55 to 85-percent, and then you get to take that off the higher spring price or the fall price, or harvest. And that is your guarantee. So if by chance you produce less bushels or if the price comes in lower, you have that guarantee and you could possibly have an indemnity payment.”

Johnston says a downside of crop insurance is having to pay the premiums for it, but she believes it can help crop producers in the long run.

“Crop insurance is good to maybe use in your marketing plan. You know that in the spring what your guarantee is and then you can market off of that. In your marketing plan you can use crop insurance to maximize your profits.”

The current US Farm Bill is set to expire this September. The US House failed to pass the new legislation this past March and the Senate is set to debate it this week.