Corn farmers who split-apply nitrogen now have another option for insurance coverage. USDA's Risk Management Agency announced the details of its Post Application Coverage Endorsement (PACE) in certain states for non-irrigated corn, providing coverage for producers who use this practice. Split-applying nitrogen saves producers money and is considered better for natural resources.
PACE provides payments for the projected yield lost when producers are unable to apply the post nitrogen application during the V3-V10 corn growth stages due to field conditions created by weather. PACE is offered in select counties in 11 states, including Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Nebraska, North Dakota, Ohio, South Dakota and Wisconsin. It is available as supplemental coverage for Yield Protection, Revenue Protection, and Revenue Protection with Harvest Price Exclusion policies. The first sales closing date to purchase insurance is March 15, 2022.
“We are proud to offer this new insurance option that encourages the use of conservation practices that benefit not just the environment, but also producers’ balance sheets,” says RMA Administrator Marcia Bunger. “America’s agricultural communities are on the frontlines crafting solutions to address climate change and improve the environment. Across USDA, we’re adapting our programs to meet the needs of producers as well as the challenges they face.”
In crop year 2022, RMA introduced PACE to help corn farmers improve water quality while gaining efficiencies and reducing costs by specifically supporting the practice of “split application.” In this case, nitrogen is used in more targeted amounts over multiple applications, rather than one large application. To “split-apply” nitrogen, growers make multiple fertilizer applications during the growing season rather than providing all the crop’s nitrogen requirements with a single treatment before or during planting. This practice can lead to lower input costs and helps prevent runoff and leaching of nutrients into waterways and groundwater.
PACE was developed by the Illinois Corn Growers Association, National Corn Growers Association, Ag-Analytics Technology Company, Meridian Institute and others and submitted to the Federal Crop Insurance Corporation under provisions in the law allowing for private development of new crop insurance products.
“PACE is an important addition to the risk management toolbox for corn growers,” says National Corn Growers Association President Chris Edgington. “We are appreciative of our industry partners and the Risk Management Agency for working to develop and deliver this new crop insurance product. ”
Todd Barker, CEO of the Meridian Institute, commended USDA for unveiling the new tool. “Corn farmers across the Midwest have adapted to changing conditions, including adopting climate-smart practices like split-nitrogen application, and the Federal Crop Insurance Program must continue to evolve to meet the needs of farmers across the country,” Barker says. “With the availability of PACE in the crop insurance market, USDA, RMA, the Federal Crop Insurance Corporation Board, and the Biden administration have taken an important step forward to ensuring that the nation’s agriculture sector is resilient and strong for the long-term.”
PACE indemnifies based on your approved yield, share, PACE coverage level percent and final PACE Loss Factor when you are physically prevented from post-applying nitrogen due to a covered cause of loss. Your final PACE Loss Factor depends on the amount of pre- and post-apply nitrogen. The lower the pre-apply nitrogen percent, the higher the preliminary PACE Loss Factor (and premium). In the event of a claim, your indemnity is equal to your approved yield X your share X PACE coverage level percent X the maximum of the projected price and harvest price X your final PACE Loss Factor X your affected acres.
For example, suppose approved yield is 200 bu./acre, projected and harvest price is $4.00, PACE coverage level percent is 90%, final PACE Loss Factor is 15%, share is 100%, and affected PACE loss acres is 100. Your PACE indemnity would be 200 x $4.00 x 90% x 100% x 15% = $108/acre, or $10,800.
This new crop insurance option builds upon RMA’s efforts to encourage use of conservation practices, including cover crops. For example, RMA recently provided $59.5 million in premium support for producers who planted cover crops on 12.2 million acres through the new Pandemic Cover Crop Program. Additionally, RMA recently updated policy to allow producers with crop insurance to hay, graze or chop cover crops at any time and still receive 100% of the prevented planting payment. This policy change supports use of cover crops, which can help producers build resilience to drought.