Yield Exclusion and Crop Insurance

When farmers go to their federal crop insurance agents in March they may have a new decision to make. The new Yield Exclusion option may allow some producers to increase their covered yields.

Yield Exclusion, or Y-E, will not be available in every county or on every covered crop. We’ll explain how the availability is triggered in a moment. It was created in conference on Capitol Hill as part of the 2014 farm bill. Consequently, says University of Illinois ag economist Bruce Sherrick, it is a little quirky, but really valuable.
Quote Summary - The Yield Exclusion is really important because it provides the ability to drop a yield out of the APH calculation based on conditions triggered by the county’s experience, or the experience of a contiguous county.
Here is how Y-E allows a producer to exclude a yield from their APH calculation. If the farm is in a county or contiguous to a county that had a prior year yield less than fifty percent of its prior ten year average then the farm is eligible for a yield to be dropped from the APH calculation.

see USDA RMA APH Commodity Maps website

The yield dropped is from the year the county experienced the fifty percent or greater decrease. Because the database used to calculate rates still contains the original ten years of data the rate yield does not change, but the coverage amount does change.
Quote Summary - This is primarily explained by RMA as a change in the effective coverage. Instead of picking 65, 70, 75, 80, or 85 percent coverage of a number, you are picking bushels and calculating what the implied coverage would have been. It is not a very complicated program if you think about it in those terms.

see USDA RMA APH YE Overview of Premium Rating pdf file

However, while most might see this as a way to increase APH and consequently the revenue guarantee, it can sometimes have a detrimental impact.
Quote Summary - You can lose part of trend by electing to exclude a yield. This could be really important. Especially as a farmer picks up new ground. Maybe this ground was in a unit structure that makes the APH history unavailable. Farmers want to be careful about the impact of dropping a yield to increase APH because it could lose trend on all yields in the database.
The decision can be changed, and or updated in future years. However, like other crop insurance decisions, previous year’s decisions remain in play until a change is requested.