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Member

crop insurance and yield averages

We live in a county NW of the Twin Cities.  A number of crop farmers from southern MN have "invaded" and driven up the land rent to ridiculous numbers.  The story is that they are collecting on the crop insurance based on their "southern" yields (probably 200-250/a for corn) and not on our county average which is more like 80-100bu/a.  How is that legal? 

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9 Replies
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Senior Advisor

Re: crop insurance and yield averages

Doesn't sound logical to me.  I bet it is not happening.

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Advisor

Re: crop insurance and yield averages

Yep!  They have base units with proven yields (usually hauled in from farms they rent) to drive up the yields on the farms they own.  It is a game played all over Iowa.  If you farm land in Boone County, Iowa those yields will transfer to scrub ground in Southern Iowa where you can milk this pony until the tenant shucks the farm and goes to a new one.   

 

The landlords are the ones getting screwed in the scam, because their farms are usually the ones from which grain is hauled to build up yields on land owned by the BTO's and where the indemnity is paid.  I did not believe this was fair, but it is happening all over Iowa and most big tenants play this game.

 

A land owner who owns all the land they farm, cannot participate in this scam, because it takes rented ground to build the yields, which are readily accepted by Federal Crop and transferred to farms rented in another area.  

 

I thought everyone knew this was how the BTO's who rent most of their land finance their operations, and that is why they can afford to bid up marginal ground in an area they take on to farm in a state because the federal crop insurance payment probably equals the yield an area farmer would experience in a normal year.  

 

The procedure prices local farmers who reside in an area where lower yields are common out of the land rental market when these jokers move in.  If you are a farmer just beginning your are stuck with historical yields (lower) T yields or county averages.  

 

Welcome to the real world.  Grain is fungible, you cannot tell what farm it comes from, so it is easy to shift loads to farms owned and file crop insurance claims on farms rented.  I mean . . . these guys has to have some way to buy that new pickup each year.  In fact, to establish a high yield a farmer only has to farm a small portion of the land say corn on 10% of the acres, pour fertilizer to it, and that high yield on that small parcel will apply to the whole farm if you wanted to plant the whole thing to corn in  a few years.  So if you want to build yields plant the minimum amount you can insure for a few years, drive up proven yields, and in doing so you have raised the yield on the whole farm, even the marginal acres, when you do put it all to corn.

 

 This practice could be stopped if land was crop shared and actual bushels had to be split with a landlord,who was on site counting the number of truckloads leaving the fields.  How do you think these jokers can move into Southern Iowa and pay $300 an acre for ground?  Adios Amigo.  Education is expensive sometimes. Pass the popcorn and get me another Corona.    John 

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Veteran Contributor

Re: crop insurance and yield averages

I farm in 3 counties. You can use your historical yield in each county but it does not transfer out. When I started in a new county I started with that county avg. Until my new history was made. This ( yield scam) is an excuse for why others lost land or couldn't outbid. The truth is some bto assume they are good and can budget in a new area as they have in others. Some just want the land no matter the  profit margin. Some just want a foot in the door.some really are better at farming and you can't explain it. Most bto got big and will stay big, facts of life. Jealousy is a dead end street, control what you can and be ready to invest when #s moderate.      Faust you rabble rouzer. You have been to the coffee shop after swearing it off

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Senior Advisor

Re: crop insurance and yield averages

Faust the way you described it was like they were illegally bootlegging grain. If this in deed is the case, why doesn't someone turn them in?
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Advisor

Re: crop insurance and yield averages

Shaggy, how do you prove where the grain comes from when they set down to calculate yields and report the yields to crop insurance?  How does one know if the grain reported for proven yields came from a farm in Boone County,or from a county in Southern Iowa where a Federal Crop Claim is filed.

 

 I bet if a check was made, on all the big tenants who are using proven yields and past yield history for federal crop claims, you would find a disproportionate loss ratio by these outfits when they move into a marginal crop area and drive up rents.  

 

If you are a land owner and do not rent ground, you produce what you produce, every year I have to turn in a listing of all scale tickets, dates of delivery to the elevator, and those delivery dates usually relate to the fields or farms being harvested on that date.  I also have to include any grain put in bins which they measure.  

 

You can almost identify each field harvested by the moisture content of the grain reflected on the delivery summary since moisture content usually varies from field to field.

 

I mean . . . these guys do have one limitation, the way I understand it, if they have more than $500,000 in claims Federal Crop Insurance audits them . . . what ever that means.

 

But again . . . I do not see anyway to control it . . . many of these guys are running 10,000 plus acres . . . and there is no way to contol grain movement.

 

I think one thing that could be an equalizer would be to limit crop insurance to say 2,000 acres of ground per operator, or assign a yield according to county.  Last week I think someone published the rents and yields for every county in Iowa.  Federal Crop could take an average of those yields over 5 years, and assign a Federal Crop Yield for each county, and that would eliminate the variable given big tenants to influence proven yields by grain moving from one farming unit to another.

 

That is about the only way to resolve the problem.  In the county yield and rent summary posted last week you could see the disparity in rents from RSW country north of I-80 to the much lower yields and average rents South of I-80.  This would eliminate the predatory pursuit of acres by farmers with high proven yields from driving up rents in marginal farming areas where local farmers have much lower yields due to conditions in those areas, and who are not able to or are prevented from getting the arbitrary high yield numbers being assigned tenants from other areas.

 

You almost have to be a New York lawyer anymore to figure out how to game the system like it is being gamed right now.   They could use county T yeilds, Average county yields, limit acres insured for each producer.  Of course, I am sure those who are driving up rents see it much differently, and probably looks at cheaper land in a marginal area as an "earned benefit" from pumping up yields on land they own or have been farming for years. 

 

Adios Amigo.  Pass the popcorn and get me another Corona.  John

 

 

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Advisor

Re: crop insurance and yield averages

fringeacres- lol.  I never participated in moving grain yields around from farm to farm because I never rented ground where I could raise yields,  which I guess is the way to go to reap maximum rewards in farming Federal Crop.  I always just purchased the land I farmed and yields went down hill on their own from there. lol.  

 

I am just relating to what   others have told me how it works.  It could be that the information I have been receiving over the years is not correct.  But I know there is someone on this site,like yourself or others that know the "inside skinny" on this issue.  I never had to worry about building yields by moving grain from farms I rented. lol. 

 

You are right in that you can be a continuous soybean farmer like me, but plant 10 acres of corn each year and claim 250 bu. yields each year (import it if you have to) and you have established a high proven yield for all your acres. lol. But from what I understand they are using proven yields on other farms when setting indemnity payments for federal crop.  I have friends who have over 225 bu. proven yields, and I guarantee you those proven yields did not come from the land they own. lol.    John

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Senior Contributor

Re: crop insurance and yield averages/ VICSEC

Say VICSEC, I live in the Twin Cities in Dakota County, about 9 miles due south of the Mall of America in Bloomington, MN. Can I ask what county that these Southern MN farmers are invading? Is it near the St.Cloud area? When you say that they have driven up the Cash-Rent prices to ridiculous numbers, about what rent per acre are you meaning is ridiculous? You aren't talking about over $500 to $550/acre like in Northern Iowa are you? I am just curious since I live in the Twin Cities, but I really have no knowledge of the cash-rent market in MN. The land I own is all in North-Central and Eastern Iowa. Don't worry, I am not going to invade your county, that's probably the last thing you guys want, a bunch of Northern Iowa guys coming up there and running up the cash rent even higher than the Southern MN farmers!!!!!!!! Thanks.

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Senior Advisor

Re: crop insurance and yield averages

Faust, there is no way to prove it unless they are turned in and/or spot checked before each field. If they are conducting illegal acts, it's only a matter of time before they get caught. No one likes to be the rat, but if the well being of the community is at stake, someone might have to step up and call them out. Possibly even tell the landlords and let them deal with it. Just sounds like a sorry situation.

I agree with the 2000 acre limit on subsidized crop insurance. I'm not so much in favor of putting an acre maximum in place, but possibly a dollar amount or an acre amount that gets subsidized. If someone wants to farm 3000 acres they can get subsidized crop insurance on 2000 and the last 1000 they are liable for 100% of the insurance out of pocket. Even this will have loop holes, hired men, spouses and additional farm enterprises just to name a few. It's the same ole same ole, the crooked people always find a way to dip there fingers into the cookie jar while the honest folks are busy baking cookies.
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Senior Contributor

Re: crop insurance and yield averages/ FAUST-this gives me an idea!!!!!!

You know Faust, if southern MN farmers can do this to the Northern MN farmers. This seems like something us Northern Iowa farmers can do to the Southern Iowa farmers. We come down to southern Iowa and use our 220 to 240+bu yield numbers like the southern MN Guys are doing, but we just do this to you southern Iowa boys. You know us Northern Iowa Boys are very, very, good about running up the cash-rent prices!!!!!!!! Give us 1 year, and I bet you that we can run up the cash-rent in your area of southern Iowa to at least $600/acre!!!!!!!!! LMAO!!!!!!!!!!

Also, you know us Northern Iowa Guys also have to have at least one large Hog Operation per section of land so we save $80+/acre or so on fertilizer costs. We only spread 5,000 gallons per acre, so not much at all!!!!!! Let's see here, one section is 640 acres or 1 square mile. 5,000 gallons per acre times 640 acres= 3,200,000 gallons of manure per square mile!!!!!!

You know, I think this summer I will start looking for land to rent in Southern Iowa and I should also find one landowner down there that will sell me just a little 10 acre parcel for $250,000 to put a hog operation on so I will have plenty of pig manure to use for fertilizer!!!!!!!!!!!!! LMAO!!!!!!!!!!!!!!!!

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