Enterprise Units

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Enterprise units are the big story in crop insurance elections. Because of changes in government subsidies, they offer substantial savings on the premiums you pay compared with optional or basic units, says Steve Johnson, farm and agribusiness management specialist at Iowa State University, who spoke at this year's Top Producer Seminar.

Enterprise units are advantageous if all farms are close together (raising the chance of a claim). It is also easier to qualify for replanting and prevented planting, he says.

"You may not want to use enterprise units if you have variable farms and inconsistent crop production histories, if disease and quality issues appear only on some farms, if the farms are disbursed throughout the county or if you have irrigated and nonirrigated acreage in the same unit,” Johnson adds.

Your unit choices include basic, optional, enterprise and whole farm. (See below for explanation.) Put simply, the larger the unit you are insuring, the cheaper your premium, since it is harder to have a disaster on a large unit than a small one.

The biotech endorsement also lowers your premium. It has been expanded to more seed companies and varieties in Colorado, Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, Nebraska, Ohio, South Dakota and Wisconsin. At least 75% of the corn acreage in the insured unit has to be planted to a qualifying hybrid.

New in 2010 is coverage for specialty soybeans. You use past yield records for the actual production history (APH) for each type. "Separate coverage means that lower yields will not affect APH for conventional beans,” Johnson says.

Sorting Out Units
These rules may vary depending on the type of insurance you purchase (actual production history, revenue assurance, crop revenue coverage).

Basic units:
Separate units for (a) land owned or cash rented and (b) share rented with different landlords within a county. Each crop-share landowner can also insure his or her own interest in the crop as a separate unit.

Optional units: You can choose to declare farms in different townships in one county as separate optional units, with separate policies. Separate actual production history (APH) records must be reported for each optional unit, and the operator does not receive the 10% premium discount. Optional units may also be designated when a crop is being grown under distinctly different farming practices, such as irrigated and dryland. Other special farming practices may qualify acres to be insured as separate units.

Enterprise units: All acres of one crop grown in the same county by one producer on a single policy. There are rules regarding minimums for number of sections, farm serial numbers and units in terms of acreage and percent of the insured acreage in the enterprise unit.

Whole farm units: All crops in a single policy.

Top Producer, March 2010