March 15 is less than two weeks away and that’s when ARC/PLC and crop insurance decisions need to be made. The Purdue Center for Commercial Agriculture held a webinar Monday to help with making some of those decisions.
Purdue ag economist Dr. Jim Mintert says the big challenge for producers this year will be the jump in premiums.
“And that jump in premiums is triggered by two things. One is the fact that the crop prices used to compute the revenue coverage have gone up substantially, and then secondly, there’s more volatility. So, there’s going to be a bit of sticker shock when you look at those premiums, but remember you are buying substantially more coverage than you were buying a year ago.”
Mintert says most will select PLC for corn this year.
“For soybeans, we’ve sort of encouraged people to think about the ARC County program, but, to be honest with you, we don’t expect either one of those programs to generate a farm program payment in 2021.”
A new option is available to producers this year for crop insurance. The Enhanced Coverage Option offers a 90% or 95% coverage level down to 86%. That provides additional insurance over what’s being provided with your Revenue Protection product.
“That’s probably most attractive for farms that are in a situation where they can’t really afford any significant downside revenue risk from current levels or projected levels. So, in that context it might make some sense. The limitation of it is the fact that, although the coverage levels are very high in 90% and 95% ranging down to that 86%, so you’re picking up between 4% and 9% of additional coverage, the challenge is that it’s tied to county level yields, and so it’s a county level revenue product.”
Mintert and his colleague Dr. Michael Langemeier go into much more detail in the webinar. You can view the video here.
Mintert also encourages farmers to use the crop insurance tools found at the University of Illinois’ farmdoc site.