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2019 Fumonisin Update #1

2019 Particulars

I have heard of some corn testing above 20 ppm already and the rain today (Sep 21) may blow up the fumonisin levels as it did last year. Hopefully, the sun comes out quickly after the rain and we don’t see large spikes in fumonisin levels. The treatment of fumonisin has changed since last year with the 2019 Special Provisions of Insurance (SPOI) containing new quality adjustment procedures for fumonisin.

With the 2019 corn crop, fumonisin now has a chart with discount factors increasing with fumonisin levels. The default .500 DF (discount factor) is not in effect now for fumonisin. The new chart for discount factors is as follows:

Fumonisin Range DF
0.1 - 2.0 ppm 0
2.1 - 20.0 ppm .100
40.1 - 60.0 ppm .300
60.1 - 100.0 ppm .400
100.1 ppm and higher Same as last year (RIV only)

If you are marketing your grain within 60 days of harvest (which is the end of the insurance period for that unit), then the DFs are not in effect and your quality adjustment is based on the reduction in value (RIV). The RIV is simply a percentage of value lost due to the fumonisin. For example, a $3.00/bu cash price and a discount of $0.60/bu would equal a RIV of 20% (0.6 / 3.0).

If you are going to store the grain longer than the 60 days or the grain is going into farm storage (bins or a bag), then the DF chart will be used for closing the claim.

If you have a sample above 100.1 ppm, then that will have to sold, fed or destroyed before the claim can be closed as that falls out of the DF chart. This is the same language as last year for handling those very high samples.

If you think you will have a claim, then please contact your agent to get a claim opened up and get with the adjuster to get sampling lined up before harvest.

Interaction with the Harvest Price for RP policies

In Texas and Oklahoma, the harvest price for corn is being set now with the average of December corn closing prices during September. As of Sep 21, the average is at $3.57/bu. The base price for 2018 is $3.96/bu. This equates to roughly a .100 DF. If you combine that with a DF from fumonisin, then you might be in a loss situation. For example, if you have a 220 APH unit with 75% RP coverage, then your revenue guarantee is $ $653.40/ac (220 x 75% x 3.96). With a harvested yield of 225 bushels and a fumonisin sample of 30 ppm (.200 DF) and a harvest price of $3.57/bu (projected), then your harvest revenue is $642.60/ac [225 x (1 - .200) x 3.57]. This would give you a loss of $10.80/ac (653.40 - 642.60). As you can see, you harvested 5 bu/ac more than your APH and still collected an indemnity.

The decision in this case is the hit on your APH worth the loss In this example, if you took the loss, your yield would be 180 bu/ac on the APH [225 x (1 - .200)] instead of 225 bu/ac.

The harvest price will be set for Kansas corn during the month of October.