It’s less than a week now that farmers have to make crop insurance decisions. Decision day is Monday March 15, and it has been a while since the spring crop insurance price has been this high. The average price for December corn futures last month was $4.58 a bushel and it was $11.87 for November soybeans.
Ed Usset at the University of Minnesota says those starting prices for crop insurance are very high.
“That’s a great thing to start with and you’ve got to have crop insurance. You’ve got to have that. Then I’m telling producers that the market can go lower if we can assume a normal year. If we can assume some sort of non-drought year, just a normal year in the corn belt, we are going to go lower by harvest.”
Over in Illinois Gary Schnitkey from U of I agrees, and he suggests taking the highest RP policies you’re comfortable with. He also says use ECO if you are willing to pay the premium. So, for highly productive soils he recommends 80 or 85 percent RP plus ECO to 90 percent.
“First off, I would say it is probably worth it because you are going to be protecting a higher revenue level. So, if at all possible think about that. But many farmers have a budget in mind. If you want to keep in that twelve to eighteen dollar area they’ll have to drop down from 85 percent to 80 percent or roughly five percent and that’s likely the case if you did 80 percent last year you are going to have to drop down to 75 percent to keep your premium about the same. Again, the good thing about dropping from 85 to 80 is you are probably still going to have a higher guarantee this year than last year because of the higher prices.”
Farmers on less productive soils will have tougher decisions to make on ECO. University of Illinois has a downloadable crop insurance decision tool to help you see how different coverage levels and options might work on you farms.
Source: NAFB News