Lack of Data Dooms GRIP & GRP in 1000+ Counties
Marcia Taylor with DTN/The Progressive Farmer had a great post recently on the elimination of crop insurance under the Group Risk Income Protection (GRIP) and Group Risk Program (GRP) in over 1,000 counties across the US. The primary reason for eliminating these counties were due to not reporting at least 30 yield reports or 25% of the acres for the county. The USDA requires at least this amount of data in order to provide the insurance coverage.
Also, of the 1,062 counties that lost these insurance programs, only 310 counties were actually buying these types of insurance policies. It appears that most of the counties affected were located in the South, Great Plains and Eastern part of the US. Most the Mid West corn belt was not affected. The decision eliminates this coverage for corn, soybean, grain sorghum, cotton and peanut producers.
Farmers in Lawrence County, Alabama say their maximum insurance yield reduced from 135 bushels per acre to only 60. This insurance can be expensive. GRIP with a harvest-price option cost $90 per acre as mentioned in the article, however, the return has been as high as $415 in 2007 and $222 in 2008 per acre for this particular county. Payouts were as high as $614 per acre in Baca County, Colorado in 2008 largely due to the steep decline in corn prices.
However, these farmers need to realize they need to report their yields and if they do a good job of this, then the coverage will be available again. The trends over time have shown that this coverage returns about $1.78 for every $1.00 of premium.
GRIP has offered some of these growers superior coverage levels. This coverage is no longer available and it may cost the farmers substantial losses to their bottom line.
Paul Neiffer is a certified public accountant and business advisor specializing in income taxation, accounting services, and succession planning for farmers and agribusiness processors. Paul is a principal with CliftonLarsonAllen in Walla Walla, Washington, as well as a regular speaker at national conferences and contributor at agweb.com. Raised on a farm in central Washington, he has been immersed in the ag industry his entire life, including the last 30 years professionally. Paul and his wife purchase an 180 acre ranch in 2016 and enjoy keeping it full of animals.
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