Source: AgAnswers, an Ohio State University and Purdue Extension Partnership

Should Asian soybean rust become a problem this year, many farmers will protect their crop with fungicide. A second level of protection against yield loss also is available, but only for a limited time.

Crop insurance can cover losses caused by soybean rust, said George Patrick, a Purdue University agricultural economist. The deadline for purchasing insurance for spring-planted crops like soybeans is March 15, he said.

"Soybean rust, if it occurs naturally, would be an insured peril," Patrick said. "If a farmer has a crop loss which exceeds the insurance deductible and is caused by rust, they're covered by the insurance."

Like other disease, insect and weed threats, crop insurance will cover yield losses related to soybean rust only if a farmer has made an attempt to stop the crop-damaging fungus, Patrick said.

"A farmer has to use what they call 'good farming practices,'" he said. "A farmer should be following the recommendations of agronomists and other people, as far as what would be adequate control measures for rust. If there were a rust outbreak, the farmer would be expected to try to control it. They'd have to spray fungicide, put it on in a timely manner and in adequate quantity."

Traditionally, Indiana farmers insure more corn than soybean acres. Because of rust concerns, Patrick expects additional soybean acres to be covered by insurance this year.

"Last year, about 62 percent of the soybean acres in Indiana were insured by some type of policy. For corn it was a little over 66 percent," Patrick said. "Both of those are probably going to go up some this year -- especially the soybean acreage -- because there are some producers that may insure corn and haven't insured soybeans in the past.

"The premium rates are a little lower this year for most producers. The bad news is that the lower rates come from the lower prices associated with the commodities this year. In terms of dollars, the coverage levels also are down some."

Insuring soybeans against rust could be a bargain, at least for the coming season, Patrick said. Since soybean rust is new to the United States, "the premium rate does not reflect the added risk of the rust that we may be facing," he said.

Crop insurance policies come in two main types: individual producer-based insurances and group plans.

The individual-based insurances, which include Actual Production History (APH), Crop Revenue Coverage (CRC) and Revenue Assurance (RA) plans, are tied to an individual farmer's historical yields and revenue. In 2004, about 64 percent of the corn acres and 57 percent of the soybean acres insured in Indiana were covered by the CRC or RA revenue plans.

The group plans, made up of the Group Risk Plan (GRP) and Group Risk Income Protection (GRIP), are based on the yield history of the county wherein the insured acres lie. Indemnities are paid if county yields or revenues are below the insured levels.

Commodity prices affect both the level of crop insurance coverage and a farmer's premiums, Patrick said. The CRC, RA and GRIP plans offer additional harvest price coverage at an extra cost.

Farmers should consider crop insurance an important part of any risk management strategy, Patrick said. He urged producers to contact their insurance agents to learn more.

Two free online tools developed through cooperation between the University of Illinois and Purdue also can assist farmers with their crop insurance decisions.

The iFARM Crop Insurance Premium Calculator, located at http://www.farmdoc.uiuc.edu/cropins/insurance/2005/premium_index_2005.asp , provides estimated premiums for a variety of crops after a farmer enters his or her state, county, crop and APH yield into the appropriate data fields.

The iFARM Crop Insurance Evaluator, at http://www.farmdoc.uiuc.edu/cropins/evaluator/2005/index_2005_IN.asp , provides insurance information by county and crop in Indiana, including:

• Estimated premium costs of various types of coverage.
• Frequency and average amount of indemnity payments.
• One percent and 5 percent Value at Risk -- measures of revenue for the worst year out of 100 years and 20 years, respectively.
• Net cost of insurance over time.

More information about crop insurance is available in the Purdue Agricultural Economics Report, located online at http://www.agecon.purdue.edu/extension/pubs/paer/archive.asp . The September 2001 issue includes an overview, titled, "Crop and Revenue Insurance Alternatives." The December 2001 issue contains the article "Protecting Farm Revenues with Pre-harvest Pricing and Insurance."