Monday, March 17 is the deadline to purchase crop insurance for the 2008 crop year. Producers need to analyze how crop insurance fits into their risk management and grain marketing strategies for the coming year. Producers have noticed that crop insurance premiums for 2008 are higher than 2007 for the same level of coverage, which is due to the added total dollar guarantee for 2008 crop insurance policies. For example in 2008, a soybean farm with an actual production history (APH) of 48 bu./acre, has a yield guarantee of 36 bu./acre, a dollar guarantee of $414/acre with a standard APH (yield-only) insurance policy and a $480.96/acre guarantee with a crop revenue coverage (CRC) or revenue assurance (RA) insurance policy (yield and price). Of course with a CRC or revenue assurance-harvest price (RA-HP) insurance policy, the insurance guarantee could increase by next fall if the average the average CBOT price in October is higher than the CRC and RA base price. The March 15 guarantees in 2007 for soybeans with a 48 bu./acre APH and 36 bu./acre guarantee were $252/acre for APH insurance policies and $291.24 for CRC and RA insurance policies. So, as you can see, there is a considerably greater guarantee in 2008 than in 2007 at the same yield and coverage levels. The same scenario is also true for corn and spring wheat.
2008 APH Crop Insurance Market Prices:
Corn – $ 4.75/bu.
Soybeans – $11.50/bu.
Wheat – $ 4.90/bu.
2008 RA and CRC Base Prices for Crop Insurance:
Corn – $ 5.40/bu.
Soybeans – $13.36/bu.
Wheat – $11.11/bu.
Crop Insurance Final Considerations:
- There are a wide variety of crop insurance policies and coverage levels available. Be sure to compare apples to apples when comparing various crop insurance plans and premium costs.
- Take time to compare coverage differences and premium costs between the RA-HP and the CRC policies. The maximum change in final harvest prices, as compared to the base price, for CRC policies is $1.50/bu. for corn and $3/bu. for soybeans. The no-limit to final harvest prices with RA-HP policies may be a factor, especially if you have a significant amount of 2008 grain forward priced.
- The biotech yield endorsement (BYE) is new for 2008 on eligible corn acres in Minnesota, Iowa, Illinois and Indiana. There could be a premium savings of about 12-15% with the BYE; however, producers must follow all compliance regulations for corn raised under the BYE.
More Information on 2008 Crop Insurance Alternatives:
A reputable crop insurance agent is the best source of information to make 2008 crop insurance decisions.The University of Illinois Farm Management Web site has some good crop insurance information, and an online crop insurance premium calculator and comparison spreadsheet at: www.farmdoc.uiuc.edu/
Editor’s note: Kent Thiesse is a former University of Minnesota Extension educator and now is Vice President of MinnStar Bank, Lake Crystal, MN. You can contact him at 507-726-2137 or via e-mail at firstname.lastname@example.org.