The prices used to calculate revenue insurance guarantees for 2001 crops have been announced. The Federal Crop Insurance Corporation indemnity prices for multiple peril yield insurance this year are $2.05 and $5.26 for corn and soybeans, respectively, slightly higher than for 2000.
The average futures price in February was $2.46 per bushel for corn and $4.66 per bushel for soybeans. These are based on the closing Chicago Board of Trade prices for December corn and November soybean contracts. This compares to $2.51 for corn and $5.32 for soybeans last year, according to William Edwards, Iowa State University Extension economist.
"Farmers who purchase either Crop Revenue Coverage or Revenue Assurance can choose to guarantee up to 85 % of their expected gross revenue, based on their proven yield for each insurance unit and the corresponding futures price," says Edwards. "If their actual revenue, as determined by their actual yield and the fall futures price, is below the guarantee, they will receive a payment for the difference."
Crop producers and landowners have until March 15 to contact their insurance agent if they want to change the terms of their policies from last year. Premiums for most producers will be lower than last year. The U.S. Department of Agriculture is funding a larger portion of the cost of federally approved crop insurance guarantees this year, according to Edwards.
Two new Web sites to help farmers determine the best form of crop insurance for their enterprises have been launched by University of Illinois Extension. The sites–"Crop Insurance: A Premium Calculator" and "Crop Insurance Evaluator"–can be accessed on the Farm.doc Web site at http://web.aces.uiuc.edu/farm.doc and, once there, by clicking on the "Crop Insurance" icon.
"There has been a real reduction in premiums on crop insurance policies over the past few years and especially since last year," said Gary Schnitkey, U of I Extension farm management and planning specialist. "These new sites should prove helpful to them in determining what is the best route for their enterprises," he says.
At the Premium Calculator site, users input a crop, their county and their actual production history yield. The Calculator then produces premiums for five different types of crop insurance products: Actual Production History insurance; Revenue Assurance; Crop Revenue Coverage; Group Risk Plan; and Group Risk Income Plan.
Schnitkey notes that the Agricultural Risk Protection Act of 2000 instituted a number of changes in crop insurance policies and these are reflected in the calculations.
The "Crop Insurance Evaluator" site allows producers to look at the cost, the frequency of payment, and the level of risk assurance provided by various crop insurance products in each Illinois county.
"The user just has to pick a crop and county at this site and then it produces information based on an average farm for that county," said Schnitkey. "We created the average farm on the basis of Illinois Farm Business Farm Management program results and the economic model that produces the results is the Illinois Farm Analysis and Risk Model.
"The latter is a risk model similar to one a Wall Street firm might use to evaluate potential investments."
The information produced by the Evaluator indicates the amount of premium the average farm owner could expect to pay, how much he or she would receive if the policy was invoked, and how much risk assurance the particular product would supply.
"All of this information for the various products is shown in a number of tables on the site," said Schnitkey. "Producers can then apply the information to their operations, making whatever adjustments are necessary, and get a good idea of what will work best for their enterprise."