The rapid rise in new crop corn and soybean prices in recent months will likely lead to challenging crop marketing decisions and much higher crop insurance premiums this year. The 2007 December Corn futures average price during the month of February is expected to be more than 40% higher than the 2006 spring base price. That February price is used to determine revenue guarantees for most crop insurance products. New crop soybean prices are more than 20% higher than those from last year.
According to Steve Johnson, Extension Farm Management Field Specialist with Iowa State University, "producers can create more than $100 per acre larger revenue guarantees for corn and nearly $50 per acre greater revenue guarantees for soybeans in 2007 as compared to last year."
Higher crop prices make big difference
Johnson expects pre-harvest marketing decisions to be influenced by the large increase in crop insurance revenue guarantees. Some producers will likely forward contract bushels directly for harvest delivery at some of the highest fall prices in over 10 years. Others may choose to move to county-based yield products, with even larger potential revenue guarantees but the risk of having their own yields higher than the county average.
The crop insurance decisions farmers have to make in 2007 are setting up to be some of the more interesting choices we've seen since the creation of revenue products in 1996 and 1997. "As these revenue guarantees have increased, so too will crop insurance premiums for the same product at the same level of coverage as those used in the past," notes Johnson.
If you'd like to know more about "Making Crop Marketing and Insurance Decisions" plan to attend a session on that topic. Contact [email protected] for a date and location of a meeting near you.
Prepare now to meet March 15 deadline
The deadline to sign up for crop insurance is March 15, so you need to contact a crop insurance agent now to get the necessary information to help figure out which coverage is best for you.
"For 2007 these increased commodity prices make a difference in your financial situation, and make a difference in your crop insurance decisions as well," says Doug Burns, director of crop insurance services for Farm Credit Services of America in Iowa. "We are looking at 30 to 50% higher commodity prices for corn this year and maybe 5 to 15% for beans than we had a year ago. What that translates into is more coverage and more coverage means a little more premium you'll need to pay for that coverage."
Looking at this year, "we can see for corn $100 more an acre in coverage at the same level as you had last year. Farmers could easily insure their crop this year for the cost of production. Even in some cases, they could insure and lock in a profit at those coverage levels. So we really recommend to customers to get in and make sure that they do a crop insurance check up for 2007, with these higher commodity prices," says Burns.
New tool helps you make decisions
Farm Credit Services of America has a new tool to help producers in making insurance decisions. "It is called Agriview. It allows us to put in information that is tailored for your specific farm operation and situation.
"We sit down with you and plug in your input costs, marketing plans, any type of crop insurance levels or plans, whatever you are looking for," says Burns. "This computer program allows us to tailor a specific risk management tool - a crop insurance plan - to your operation."