SURE fits with crop insurance
Supplemental Revenue Assistance, or SURE, is a disaster payment program created in the 2008 Farm Bill. It takes the place of previous disaster programs. SURE is meant to supplement privately purchased crop insurance, not replace it.
Farmers can participate in SURE year by year through 2012 if they have crop insurance on all insurable crops. On non-insurable crops, if those crops exceed 5% of the total farm revenue, the farmer will need to buy the Non-Insured Assistance Program, or NAP, coverage in order to qualify for SURE.
To be eligible for SURE benefits, farmers must buy crop insurance on all insurable crops and NAP on all non-insurable crops that exceed 5% of the total farm revenue. If a farmer doesn’t purchase crop insurance on a crop that is considered a crop of economic significance (5%), then the farmer isn’t eligible for a SURE benefit for that year.
Once a farming operation becomes eligible for SURE, the application for disaster payment will be accepted the following year; the year after the year of the disaster. The reason is the National Average Market Price must be established for each crop after the marketing year for that crop. So, 2009 SURE applications will not be taken until fall 2010.
Most of the past disaster programs made payments based on individual crop losses. SURE is a “farm operation” type of disaster assistance program that’s tied to crop insurance coverage and farm-planted acreage. SURE includes all crops within the operation.
This information is provided by Kevin McClure, program specialist with USDA’s Farm Service Agency office in Des Moines.
Question: We were hit by hail in 2009 in north-central Iowa. I had private crop insurance, and the company has paid me for damage. I also signed up for USDA’s new Supplemental Revenue Assistance, or SURE, program for 2009 crops but haven’t been paid yet. Can you explain how SURE works?
Answer: Generally, SURE payments can be triggered by two events. First, if a county is covered by a USDA Secretarial disaster declaration or the county is contiguous to a county with such a declaration, then SURE benefits will be available. Second, if a farm suffers a 50% revenue loss, regardless of the disaster status of the county, then the farm qualifies for SURE payments. So SURE can be triggered by county-level and/or farm-level disasters. Individual farms also need to have suffered at least a 10% yield loss on one or more crops to qualify for SURE benefits.
The SURE guarantee can be up to 90% of the expected revenue on all of a farmer’s crops as computed for crop insurance purposes. The actual revenue is the production harvested multiplied by USDA’s marketing year-average price, plus any crop insurance and other USDA payments received. Payments are equal to 60% of any shortfall between the SURE guarantee and the actual revenue.
It is important to note that starting in 2009 if crop losses in a state are widespread enough to trigger ACRE payments from USDA’s Average Crop Revenue Election program, then it may be ACRE that compensates farmers for crop losses, not SURE. This is because payments received under ACRE are counted as actual revenue for the purpose of calculating SURE payments.
The way SURE works is you have to go through the entire marketing year for the crop to find out how much money your SURE payment will amount to if you have a crop disaster. At the end of the marketing year, you can collect the SURE disaster payment if you qualify.
For the 2009-produced crop, we have to go through the 12-month marketing year (Sept. 1, 2009, to Aug. 31, 2010) for corn and soybeans for the average crop price to be established for the year.
Question: Say I have a crop loss and I apply for a SURE payment. When will I know if I’m approved to receive the disaster money, so I can tell my banker I have this money coming?
Answer: With SURE, since it is revenue-based, we have to wait for the national average market price to be announced, which is 12 months after the start of the marketing year for that particular crop. For example, for corn and soybeans in 2008, which was a big flood year in Iowa, those prices for corn and soybeans were announced by USDA in October 2009.
One criticism we hear is if you have a major disaster, you need to be able to get the money sooner to be able to plant the next year. SURE doesn’t do that. We have to wait for the 12-month marketing year to pass to be able to calculate the total farm revenue for the producer.
Question: In 2008 the disasters were caused by wet weather and flooding during the growing season, which, in some cases, prevented planting. But isn’t that covered under crop insurance?
Answer: Correct. SURE is a supplement to what you get from crop insurance; that’s why it’s called Supplemental Revenue Assistance. To figure the SURE payment, we take into account all of the indemnities paid by your crop insurance policy and 15% of the direct and countercyclical payments. Those are subtracted off to figure a potential SURE payment.
SURE isn’t a double payment. It’s a supplement to what you collect from insurance to help cover the crop loss.
For information on ACRE and SURE, see www.extension.
This article published in the January, 2010 edition of WALLACES FARMER.