Through the Risk Management Agency’s (RMA) price-protection programs, growers like Ken Gerber set a floor for corn, soybeans and wheat and are opening the door for greater marketing opportunities.

USDA’s RMA revenue-assurance and crop-revenue coverage insurance packages have been combined. But growers can still cover up to 85% of their estimated yield and work off a guaranteed price, providing more comfort in forward contracts, futures or options to take advantage of volatile swings in price. It’s a USDA hedge.

Like homeowners insurance, or truck or crop hail policies, there are high premiums, easily $30-50/acre or more. However, to protect up to 85% of your yield and price, it’s risk management that can sometimes save the farm, says Gerber, a Sabina, OH, grower and RMA licensed insurance agent.

Gerber still grows corn and beans, but reduced his acres when he entered his 60s. However, he’s close to the turn row of many southwestern Ohio growers who trust his insurance program expertise and marketing savvy.

“Our area had a lot of hail damage on late-planted beans,” he says. “Some lost as much as half of their crop. They’re glad they were insured.”

RMA coverage can be a strong price cushion for growers, says Darrell Good, University of Illinois Extension grain marketing economist. But don’t jump into an insurance program without analyzing your situation. “If you know you have a floor price under your revenue, it gives you more confidence in forward pricing,” he says “But don’t do it blindly; only do that if the market offers a better return than the insurance.”

Through RMA, growers can select coverage based on 65%, 70%, 75%, 80% and 85% of their production. They can insure based on individual farm units, or combine them into enterprise units. That usually equates to a lower policy price because policy risk is spread over more acres.

“There are two components of a price premium,” says Gerber, describing Corn Belt RMA programs. “The first is the February price-discovery period for corn and soybeans. It’s the average CBOT price for November soybeans and December corn for February. The second is a computer-generated measure of market volatility.

“The premium can change until the sales closing date of March 15 in the Midwest. So the actual premium price won’t be known until final CBOT prices and volatility measures are completed.”

Gerber says some contend that the enterprise unit discount won’t be as great for 2011. “But in situations like we’ve seen, where we have a big spread in yields, growers might still look at the cost of enterprise units, instead of individual units,” he says.