Will 10,000 Corn Producers Buy Production Insurance in 2006?

Lindsay Barfoot, Account Lead for Corn - Agricorp

Agricorp reports good plan performance and record provincial average com yields, leading to significant premium rate reductions for 2006.

In 2005, more than 8,100 Ontario corn producers purchased Production Insurance (PI) coverage. This was the seventh year in a row where more than one million acres were insured under the plan, which has paid more than $200 million in claims to producers since 1996 (see Insured Corn Acres graph). Strong yields across the province in 2005 limited claim payments to approximately $4 million, the lowest since 1996!

Production insurance protects Ontario farmers from yield reductions and crop losses resulting from various insured perils including adverse weather, disease and insect damage. "Crop insurance provides producers with peace of mind by protecting their farm and financial interests," says Jean Marc Beneteau, Director, Ontario Corn Producers' Association. Insured customers are guaranteed a production level, which is established by averaging up to ten years of actual yield history from their own individual farm. Approximately half of Agricorp's customers have built up a history of more than ten years of yield data.

The long-term sustainability of the insurance plan is critically dependent on accurate estimates of each customer's realistic yield potential. Since average corn yields have been trending upward over the past 20 years (see Actual Yields graph), Agricorp applies an adjustment factor to increase each actual yield. For 2006 an adjustment factor of 1.0154 was used to increase the actual yield in each customer's ten year yield history.

Effective plan performance and lower corn prices have resulted in substantial decreases in premium rates - by as much as 18 to 23 percent. For 2006, premium base rates range from $4.32 to $11.20 per acre, depending on the price and coverage options chosen.

Customized Coverage
The 2006 Production Insurance plan for corn offers several attractive options and features allowing producers to design a plan that meets their own unique risk management needs.

Options:
· Choose between a fixed claim price ($2.21 per bushel) and a floating claim price, which is determined by survey at harvest time.
· Choose from multiple coverage levels: 75,80,85 and 90 percent.

Features:
· Reseeding benefit of up to $65 per acre.
· Unseeded acreage benefit if adverse weather prevents planting.
· Salvage benefit of up to 49 cents per bushel, if the crop quality is reduced to sample grade.
· Multiple harvest methods (i.e.: grain corn, silage, cob meal, hi-moisture).
· Linkage to the Canadian Agricultural Income Stabilization (CAIS) program. If a PI claim payment results in a lower CAIS benefit, producers may be eligible for a rebate of up to 100 percent of their PI premium.

Important Planting Dates for Corn Producers
Agricorp has established dates for planting corn crops in order to qualify for full insurance coverage (see table below). The earliest planting date is the date when the soil temperature is normally expected to exceed 10 degrees Celsius and soil conditions will be acceptable. Customers wanting to plant outside these dates are encouraged to contact Agricorp for information and questions.

Working with Agricorp Agricorp customers will be receiving their renewal documents by mail in March. To make changes to existing insurance coverage or to enroll as a new customer, contact Agricorp by May 1, 2006.

Producers can contact Agricorp's Call Centre toll-free at 1-888-247-4999, Monday to Friday, 7 a.m. to 5 p.m.
for reporting or to discuss any questions. Visit Agricorp online at www.Agricorp.com for more information.