Your February farm checklist should include a visit with your crop insurance agent. He or she will be happy to see you, and may have the coffee pot on. Don’t wait until March 3rd rolls around and USDA announces the spring guarantees for Revenue Protection policies on corn and soybeans.
You already have an idea that soybeans will be just over $11 and corn will be around $4.50. Nothing can be done about the lower guarantee levels compared to past years, but keep in mind guarantees have been lower than they will be this year.
Just go visit with your agent, have a cup of coffee and ensure that the policy on file for you does not need to be adjusted in the wake of the new economic era that we have entered.
The major change from prior years will be the lower guarantee levels, which are based on the performance of the November soybean contract and the December corn contract during the month of February. All of the closing prices will be average and USDA will apply a volatility factor. However, since volatility is much lower this year than in past years, the lower volatility factor will reduce your eventual premium.
WHAT IS NEW?
University of Illinois agricultural economist Gary Schnitkey assures you that nothing in the newly-signed Farm Bill will impact your crop insurance policy or decisions. The details for this growing season had to be worked out well before Congress eventually settled on farm policy.
There are a couple new issues that may interest you:
- The GRP and GRIP policies have been renamed Area Revenue Protection (ARP). That is a policy that might be of benefit if you are more concerned about price risk than yield risk. It offers a 90% coverage level, and while it is more expensive than a Revenue Protection (RP) policy it will benefit farms that cannot benefit from Enterprise units of all one crop in a county. ARP will also benefit farms if their APH yield is low compared to what might be expected in their county.
- The new concept of Supplemental Coverage Option will provide coverage for a shallow loss of 86% and down to the crop insurance coverage level that is selected. SCO will not be available until the 2015 cropping season and will only be available for operators who selected the Price Loss Coverage option in the farm program.
CUTTING THE COST
One issue many farmers are wrestling with is making ends meet financially, given higher production costs and cash rents, while crop insurance guarantees and marketing prices are much lower.