Minding Ag's Business

Split Nitrogen Applications? There's Insurance for That

Katie Micik Dehlinger
By  Katie Micik Dehlinger , Farm Business Editor
Farmers in blue-shaded counties are eligible to sign up for PACE, a new crop insurance endorsement that pays an indemnity if a farmer splits up nitrogen applications but isn't able to get it all on because of adverse weather conditions. (Map courtesy of Farmdoc)

MT. JULIET, Tenn. (DTN) -- A new crop insurance tool aims to help farmers who split-apply nitrogen to non-irrigated corn offset weather risk related to their second or third applications.

The Post Application Coverage Endorsement (PACE), still in the pilot phase, is available in parts of 11 states for the first time in 2022. Corn farmers in eligible areas can purchase the endorsement in addition to their revenue protection, revenue protection with harvest price exclusion or yield protection insurance plans, but they must decide by the March 15 crop insurance sales closing date.

"We are very excited about this new option," Risk Management Agency Administrator Marcia Bunger said in a webinar hosted by Agri-Pulse. "PACE is a great example of how the private industry can help cultivate new ideas in the crop insurance program, especially in underserved areas such as climate-smart ag. It's scientific, based on data, and it empowers producers to use nutrients more carefully."

PACE was developed by a coalition including the National Corn Growers Association, Ag-Analytics Technology Company, Meridian Institute and others.

Farmers must have applied 20% of their nitrogen or more before planting and share their plans for subsequent applications at the time of the sign-up. If a weather event prevents them from applying nitrogen in V3 to V10 growth stages and the crop suffers nitrogen deficiency, it will trigger an insurance payment.

P[L1] D[0x0] M[300x250] OOP[F] ADUNIT[] T[]

Megan Dwyer, nutrient loss reduction manager at the Illinois Corn Growers Association, said the program insures against a weather event, not a yield loss.

"Our growers are telling us that the No. 1 reason that they are concerned about split-applying nitrogen, or are maybe hesitant to do so, is that risk of not getting that application made," she said on the webinar. "Anytime that we can ensure that application is made at the time when the crop needs it, we limit the amount that is going to be lost, which is obviously an economic driver for a grower." It also makes it less likely that nitrogen will wash into waterways and contribute to hypoxia in the Gulf of Mexico.

Premiums are based on how much nitrogen is applied during the growing season and the level of coverage a farmer chooses. For example, a farmer plans to apply 180 pounds of nitrogen, with 108 pounds going on in the fall and 72 pounds post-planting. That's 60% pre-plant and 40% post-planting. Premiums are determined using the amount applied after planting, according to a Farmdoc analysis that you can find here: https://farmdocdaily.illinois.edu/….

Farmers also get to choose coverage that ranges from 75% to 90% in 5% increments. Higher-percentage elections result in higher payments when nitrogen can't be applied, and therefore result in higher premiums. Farmdoc also has a tool to help farmers estimate their premiums. You can find it here: https://farmdoc.illinois.edu/….

Unlike other crop insurance initiatives designed to achieve climate- or environment-related goals, like rebates or increased subsidies for specific practices, PACE is a true insurance product.

"We wanted to make sure that we're looking at an insurance product for what it's really intended to do, which is mitigate a true risk," Dwyer said. "A lot of what we've heard today comes down to being science and data-driven and being actuarially sound."

David Zanoni, RMA's lead underwriter for PACE, said every new product goes through growing pains. PACE has a complexity and design that farmers and insurance agents haven't worked with before.

"We want to have a good-quality product that people understand and can buy, so there was a strong desire by our board to limit the scope of the initial year to a pilot area," Zanoni said on the webinar. Determining which areas to include in the pilot area was a balancing act. They had a sense of where the product would really be in demand based on where splitting applications is a common practice, but they also wanted to have geographic diversity.

"We're hoping to get a good first year, and then there will be opportunities to add as we gain experience based on the feedback we get," Zanoni said.

If you'd like to learn more about PACE, contact your crop insurance agent. You can find an RMA fact sheet here: https://www.rma.usda.gov/….

Katie Dehlinger can be reached at katie.dehlinger@dtn.com

Follow her on Twitter at @KatieD_DTN

P[] D[728x170] M[320x75] OOP[F] ADUNIT[] T[]
P[L2] D[728x90] M[320x50] OOP[F] ADUNIT[] T[]

Comments

To comment, please Log In or Join our Community .