WHIP +

WHIP+ Update:

We are still awaiting official information regarding the sign dates and requirements for the WHIP+ program that will include payments for 2020 and 2021 crop shortfalls experienced due to severe weather conditions.

 At this point, we are assuming FSA will use a similar calculation formula to the one used under the 2019 WHIP+ payments.  One expection that we are aware at this time is that the new program will account for the premiums producers paid for their MPCI/NAP coverage.

 

As you may recall, the 2019 Whip payment formula was:

 (The Expected Value of the Crop X the WHIP factor)

 – Minus the Actual Value of the Crop Harvested (bushels X Spring MPCI price)

 X Times the payment factor (1 if harvested)

 – Minus the Crop Insurance Indemnity received by the Producer

 = Equals the WHIP+ Payment

 

The “Expected Value of the crop” for the 2019 WHIP payment was based solely on the spring/base price for crop insurance.  If the implementation remains the same for 2020/21 WHIP+ program, a number of producer’s with Revenue Protection (RP) insurance will receive a WHIP+ payment that is greatly reduced since the crop insurance indemnity they received is based on a higher fall price and is subtracted from the value of the crop which is calculated using the lower spring/base price.

 

What this means is that, if FSA does not use the higher harvest price (for essentially all covered commodities), your calculated WHIP+ payment may be quite a bit less than producers are anticipating.  Below is a wheat example where the 2021 MPCI Harvest Price was 41% higher than the initial MPCI spring price:

2021 WHEAT EXAMPLE with MPCI Revenue Protection policy using the 2019 WHIP+ formula:

 Crop: Spring Wheat

APH: 60 bpa

MPCI Plan and level of Coverage: Revenue Protection @ 75%

MPCI Spring/Base Price: $6.53

MPCI Harvest Price: $9.21

 

WHIP Expected Value:   60 bushels APH X $6.53 = $391.80

 Whip Factor: 92.5% (2019 factor)

 WHIP Actual Value:  Producer harvests 20 bpa crop X $6.53 = $130.60

 

Crop Insurance Indemnity:

60 bu APH x 75% = 45 bu guarantee

45 bu – 20 bu harvested production = 25 bpa shortfall.

25 bushel shortfall x $9.21 MPCI Harvest Price = $230.25 indemnity.

 

WHIP+ Calculation (using 2019 formula)

(Exp value $391.80) X (Whip Factor 92.5%) = $362.42 – $130.60 (Value Crop Harvested) X payment factor of 1 – (Crop Insurance indemnity of $230.25) = $1.57/acre WHIP Indemnity Payment

 

 Compare that to what the WHIP+ Calculation would be if the MPCI Harvest Price is used to calculated the Expected Value (just as it was used to set the 2021 MPCI guarantees).

 WHIP Expected Value:   60 bushels APH X $9.21 = $552.60

 Whip Factor: 92.5% (2019 factor)

 WHIP Actual Value:  $552.60 X .925 = $362.42

 Harvested Value: 20 bu X $9.21 = $184.20

 

Crop Insurance Indemnity:

60 bu APH x 75% = 45 bu guarantee

45 bu – 20 bu harvested production = 25 bpa shortfall.

25 bushel shortfall x $9.21 MPCI Harvest Price = $230.25 indemnity.

 

WHIP+ Calculation (using higher MPCI harvest price)

(Exp value $552.60) X (Whip Factor 92.5%) = $552.60 – $184.20 (Value Crop Harvested) X payment factor of 1 – (Crop Insurance indemnity of $230.25) = $96.70/acre WHIP Indemnity Payment

We encourage producers to reach out to your state elected officials and request that the harvest price be used in the WHIP+ formula for the 2020/21 crop years (for producers that purchased Revenue Protection MPCI coverage).

MN Senators & House of Representatives:

Senator Amy Klobuchar:  202-224-3244 or email at the following link:   https://www.klobuchar.senate.gov/public/index.cfm/email-amy

Senator Tina Smith:  202-224-5641 or email at the following link: https://www.smith.senate.gov/share-your-opinion

Representative Michelle Fischbach:  202-225-2165 or email at the following link: https://fischbach.house.gov/contact

 

ND Senators & House of Representatives:

 Senator John Hoeven:  202-224-2551 or  email at the following link:  https://www.hoeven.senate.gov/contact/email-the-senator

Senator Kevin Cramer:  701-232-5094 or email at the following link:  https://www.cramer.senate.gov/contact/contact-kevin

Representative Kelly Armstrong:  701-353-6665  or email at the following link: https://armstrong.house.gov/contact/email-me

Protecting your farm from the unexpected….It’s what we do.

For questions and further details about crop insurance plans and product availability, please contact a Northern Ag agent to schedule your free consultation.