New Producer Status

New Producer Status

Many if not most crop insurance policies are written to take the farmer’s past actual production history (APH) into account when calculating the insurable yield guarantee.  However, farmers who do not have continuous production records for their ground will not have sufficient APH data for agents and adjusters to use as a basis for indemnity calculation.  In those cases, the crop insurance company will use a transitional or “T” yield calculated as a fraction of the county average production as a substitute for actual production records.

Established producers are only allowed to use a lesser percentage of the county average to fill in their missing years of production.  However, farmers and ranchers who are entitled to elect “new producer status” on their policy application are permitted  to assume their average yield will be 100% of the county average for the previous years.

In recent years, the federal Office of the Inspector General (OIG) has been pushing the Risk Management Agency charged with overseeing the federal crop insurance program to investigate producers who have claimed new producer status.  As a result, farmers are getting challenges to their coverage, and in some cases, demands that they pay back indemnity that had already been paid out.

If you believe your new producer status is being unfairly challenged, do not wait, and do not assume the government gets the last word on this.  Instead, give us a call to discuss your options.

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