RMA to Pilot Limited Irrigation Insurance in SD-6 HPA

Just got the news that Risk Management Agency (RMA) is gearing up to launch their long-awaited limited irrigation insurance program in our SD-6 Local Enhanced Management Area (LEMA) - in 2013.  I've blogged about this developing program earlier (here) when it was being considered for a 3-state (Kansas, Colorado and Nebraska) roll-out.

This program is being designed to provide irrigated producers a proportional level of crop insurance for restricted irrigated cropping patterns - only for irrigated corn and soybeans initially (as these are the only two crops they have the yield to water use data for at this time).  Currently crop insurance is available only for fully irrigated crops, or, dryland crops, but nothing in between.  The thinking has been that if producers could get fair (proportional) insurance coverage (more risk management options) they would be more likely to limit irrigation and conserve water.  Of course, this protection gets even more important when these same producers are required to restrict pumpage.  The reduced coverages would be easier on the insurance companies, as well. 

A related issue is the effect of restricted irrigation (mandates or otherwise) on actual production history's (APH's).  The plan is that the pilot insurance program will be tried out under a special written agreement in the SD-6 HPA - where a LEMA order is expected soon to restrict their irrigation pumpage to 55 acre-inches over the next 5 years.  Under said agreements a special accounting will be done in regard to the production yields.  Bottom line is that participating producers' yield histories will not be affected during the special program period.

This is a win-win situation in my opinion and I wish to thank RMA and all those involved in offering this program to the SD-6 producers.  It will be interesting to find out how the producers opt to use this program - if at all.  Keep in mind, with the flexibility to use the 55 inches as desired, it is possible that some producers will not need it at all.  For example, those who choose to fully irrigate in 4 of the 5 LEMA years and go to dryland production in the other year will not need it.  On the other hand, anyone planning to use just their 11 acre-inch average allocation per year should be more interested.

There are many other details that are being worked at this time.  I'll try to do another article later on this program as an update. It's great to see the various levels of government supporting the locally developing LEMA plan.