Producers wondering how to share soybean rust-inhibiting fungicide costs in share-rent arrangements as well as crop insurance coverage for rust-induced losses led University of Illinois Extension to provide answers.

"In general, clarifying up front how fungicide costs will be shared is wise," said Gary Schnitkey, U of I Extension farm financial management specialist and author of the report "Soybean Rust Considerations in Share-rent Arrangements and in Crop Insurance." The full report is available on farmdoc, under the Farm Economics: Facts and Opinions section at: http://www.farmdoc.uiuc.edu/manage/newsletters/fefo05_06/fefo05_06.html.

Many share-rent arrangements share chemical costs, that is, herbicide, insecticides, and fungicides, said Schnitkey, between landlords and farm operators in proportion to the shares of crop revenue.

"Under many 50-50 share-rent arrangements, for example, landlords receive 50 percent of the crop revenue and pay 50 percent of chemical costs," he said. "In these cases, fungicide costs for rust control likely will be shared equally.

"Questions of how to share fungicide costs arise under arrangements that do not share chemical costs in proportion to crop revenue. In these situations, there may be ambiguity whether fungicide costs should be shared
equally or be paid totally by the operators."

Written leases, he added, may not totally clarify how fungicides should be split because some may not specifically mention fungicides. If an oral lease is used, the issue obviously needs clarification.

"Because fungicides provide protection against crop losses for both the farm operator and landlord, sharing fungicide costs in proportion to their shares of crop revenue seems fair if not specified in the written lease," he said.

In regards to crop insurance, Schnitkey said the federal Risk Management Agency (RMA) continues to clarify how Asian soybean rust will be covered under multi-peril crop insurance policies.

"As a general rule, multi-peril crop insurance policies will cover all naturally occurring losses, including those from soybean rust, as long as 'good farming practices' are used," he said. "By definition, good farming practices are recommended by agricultural experts so the crop will reach the production guarantee set forth in the insurance policy. Economic considerations do not necessarily determine good farming practices. Failure to use a practice because it is uneconomical could invalidate the crop insurance coverage."

For soybean rust, Schnitkey said, concerns with good farming practices can be divided into two areas. The first is detection. Failure to detect soybean rust because of negligence could result in loss of insurance coverage.

"The second area is controlling rust," he said. "Once rust is detected, farmers will have to engage in yield-loss control measures, which will usually involve spraying fungicides. If questions arise about whether a farmer followed good farming practices in selecting and using fungicides, recommendations of agricultural experts will be relied on. Hence, documenting agricultural expert recommendations could prove beneficial if questions arise."

Farmers should be prepared to document their rust-monitoring activities, contact their insurance agent if rust occurs, document spraying activities, and document why, if for some reason, rust-infected fields are not sprayed.

"Farmers should document no matter what type of crop insurance policy they have," he emphasized. "The steps outlined in the report are an 'ounce of prevention.' Given that the crop is being protected, most farmers will not
run into coverage issues. The above activities provide evidence that good farming practices were being followed."