Crop insurance maximizes environmental conservation and minimizes loss
Agri Pulse welcomed speakers to discuss the value of crop insurance and how it can assist with conservation of resources. Post-Application Coverage Endorsement (PACE) is a new crop insurance offered this 2022 season for non-irrigated corn growers located in certain counties within Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Nebraska, North Dakota, Ohio, South Dakota and Wisconsin.
PACE was designed to encourage corn producers to strategically apply nitrogen – using split application to increase efficiency and decrease nitrogen runoff. Growers who have an outlined nitrogen application plan and purchase PACE will be covered if an application of nitrogen is missed because of weather conditions or crop loss.
Crop insurance and conservation
U.S. Department of Agriculture (USDA) Risk Management Agency (RMA) Administrator Marcia Bunger mentions the importance of crop insurance is for growers to conserve the land properly.
“At USDA we believe farmers, ranchers and private forest landowners are the best stewards of our land with their climate-smart management practices,” she says. “Crop insurance and conservation go hand-in-hand.”
Bunger says USDA RMA is working to address climate change and looking into new programs to assist farmers with conserving resources.
“USDA is tackling current and emerging challenges and is looking for opportunities to build a better America,” she says.
Bunger explains PACE is an exciting new development projected to ensure farmers control nitrogen runoff.
“PACE gives us a way to look at climate-smart insurance options based on scientific data, empowering producers to use nutrients more carefully,” she adds.
Bunger explains split application of nitrogen is when growers apply nitrogen two or more separate times over the field instead of a large, one-time application.
“Split application of nitrogen lessens the amount leaking into waterways and ground water because it uses a more targeted approach of more applications rather than one large application,” she says. “This can also lead to lower input costs and prevents nutrient runoff.”
Illinois Corn Growers Nutrient Loss Reduction Manager Meghan Dwyer explains PACE will help producers mitigate risk of missing a nitrogen application due to weather events.
“Our research shows growers say the number one reason they are hesitant to slow-apply nitrogen is the risk of not getting the application made,” she adds.
Dwyer says PACE will help producers feel more confident and comfortable with slowly applying nitrogen. She also mentions this will ensure the nitrogen application is made at the correct time.
“PACE will limit the amount of nitrogen being lost, which is the economic driver for the grower,” Dwyer says.
She also mentions it will assist with environmental conservation as well.
“We won’t see nitrogen making its way into rivers and down to the Gulf of Mexico when it’s being applied at the correct times,” Dwyer says.
PACE region selection
USDA RMA Senior Underwriter David Zanoni explains PACE is something producers haven’t seen before and is a bit complex at first glance. RMA selected specific counties to be able to purchase PACE this first year.
“If we go too big too quickly, there could be adverse impacts on producers,” he says. “We want to have a good quality product people can understand and buy.”
Zanoni mentions the RMA board desired a small focus area to be used as a pilot this first year. This way, data can be collected from the pilot group and changes can be made to improve the program before broadening the area.
“We are hoping to get a good first year and get opportunities to add counties based on feedback,” he says.
There is a possibility perimeters will be expanded after this first pilot year.
“This all depends on how the pilot goes,” Zanoni says. “It will depend on what type of issues pop up and what people like about PACE.”
Dwyer acknowledges PACE is open to adjusting boundaries and products in the future.
“We need a really core data set before we move on,” she says. “We need to make sure the data set is concise and solid, ensuring confidence in growers before adding any other products.”
Zanoni mentions RMA is not in charge of selecting the perimeters for PACE, this is the submitter’s decision.
“Submitters can work with growers who are ready to buy PACE,” he says. “I encourage collaborations between growers and submitters.”
Loss adjustment process
In order for growers to receive a payout from their PACE policy, they need to be able to verify they were unable to apply nitrogen during the V3 to V10 stages due to weather. There also needs to be a noticeable nitrogen-deficiency crop loss.
Growers are required to send a notice of loss to PACE, and an adjuster will review the number of days which were available to apply nitrogen to determine if it was possible to apply during the V3 to V10 stage.
“There needs to be some sort of weather event stopping the producer from getting into the field during the critical window,” Zanoni says.
Producers need to have a plan for V3 to V10 application in place and nitrogen available which they could have put down if it weren’t for the weather, he adds. There also needs to be evidence of nitrogen stress on the crop – such as yellowing tips of leaves.
“Loss is covered by scientific models on how much yield producers would have had if they hadn’t missed the application,” Zanoni says.
Offsetting insurance plans come into play when producers suffer a severe loss triggering their underlying policy.
“Your underlying policy takes over at a certain point when the loss is too severe,” says Zanoni.
Dwyer mentions PACE offers valuable incentives for corn growers.
“If your current system is set up to split-apply your nitrogen, this is looking at the offset of risk,” she adds. “Growers risk a potential crop failure when they don’t apply nitrogen in-season, and they will need a rescue treatment or insurance plan to cover financial harm.”
Dwyer says PACE is all about protecting risk and adding different tools to the toolbox for growers.
“For this policy you need to put at least 20 percent of your nitrogen on up front,” she says. “PACE is looking to protect the 25 to 80 percent application coverage happening between the V3 and V10 window.”
Kaitlyn Root is an editor for the Wyoming Livestock Roundup. Send comments on this article to firstname.lastname@example.org.