What is Extra Payment for SDRP 1 Versus SDRP 2
We calculate the extra payment for missing crop insurance by $1
We and many others in the farm media have posted on how the payment structure under SDRP Stage 1 and Stage 2 is dramatically different since Stage 1 uses harvest price and stage 2 uses the spring projected price.
But what does this really mean on a per acre basis for farmers. We elected to work up a table of the estimated extra payments under Stage 1 versus Stage 2 for those farmers who collected crop insurance by $1 per acre and those that missed collecting crop insurance by that one dollar.
For example, assume a farmer in Illinois had an APH of 220 for the 2023 crop year and elected 85% coverage. The spring price was $5.91. Therefore, their guarantee was $1,105.17 (220 X $5.91 X 85%). Based on the final harvest price of $4.88, their final yield to collect $1 of crop insurance was 226.26 (226.26 X $4.88 = $1,104.15). Under SDRP Stage 1 the farmer would have collected about $53.21 (after factoring in crop insurance premium reimbursement and multiplying by the 35% payment factor).
However, under Stage 2, since it uses the spring price of $5.91, the recalculated harvest revenue would be $1,337.22 (226.26 X $5.91) and the SDRP guarantee would be $1,235.19 (220 X 95% X $5.91). Since harvest revenue is greater than the updated SDRP guarantee, there is no payment under Stage 2.
Therefore, for this farmer Stage 1 pays $53.21 and Stage 2 pays zero, even though under Stage 1, the farmer only collected $1 of crop insurance proceeds.
We have worked up the following table showing the effect for a farmer in Illinois with the following APHs:
Corn - 220 bpa
Soybeans - 65 bpa
Soft Red Wheat - 100 bpa
Here is the table:
