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Corn+Soybean Digest

Focus On Agriculture

Crop Insurance Decisions

During the next couple weeks, many farm operators will be finalizing their crop insurance decisions for the 2007 crop year. March 15th is the deadline to purchase crop insurance for 2007. Producers need to analyze how crop insurance fits into their risk management and grain marketing strategies for the coming year. There are very few changes in the various types of crop insurance policies for 2007, as compared to last year. Most producers have a pretty good handle on the mechanics of standard APH (yield only) Multi-Peril Insurance policies, compared to RA and CRC revenue coverage policies (yield and price). There has been more interest in the past couple of years in Group Risk Income Protection (GRIP) insurance policies that are based on county average crop yields, and Chicago Board of Trade (CBOT) prices, due to the lower premium prices for GRIP policies.

2007 APH Market Price
Corn: $3.50/bu.
Soybeans: $ 7/bu.
NOTE:2006 APH prices were $2 for corn and $5.15 for soybeans.

CRC and RA-HP “Price Guarantee” Calculations:
Base Price is the average settlement price for December CBOT corn futures in February.
Harvest Price for CRC is the average settlement price for December CBOT corn futures in October during the year of harvest. (Average price in November is used for RA-HP.)
Limit – Harvest price is limited to the base price plus or minus $1.50/bu. for CRC.


Base Price is the average settlement price for November soybean futures in February.
Harvest Price for CRC and RA-HP policies is the average settlement price for November CBOT corn futures in October during the year of harvest.
Limit – Harvest price is limited to the base price plus or minus $3/bu. for CRC.

RA and CRC base prices for 2007 will be finalized on March 1. As of February 23, they were estimated at:
Corn: $4.03/bu.
Soybeans: $8.04/bu.

Other Crop Insurance Considerations
View crop insurance decisions from a risk management perspective. How much financial risk can you handle if there are greatly reduced crop yields due to weather problems and/ or lower than expected crop prices

Take a good look at the 80% and 85% coverage levels, especially on soybeans.
You will be surprised how much additional protection can be added at these higher coverage levels for a modest increase in premium costs. Many producers will be able to guarantee over $500/acre for corn and near $300/acre for soybeans.

Potential crop losses fromAsian soybean rust and/or soybean aphidswill be covered in 2007, provided reasonable efforts were made to control the problems.

Take the time to verify yields and keep good yield records from year to year.
You can greatly enhance your insurance protection with APH or CRC and RA-HP options at little or no extra cost by doing a good job of maintaining the maximum APH on farm units.

Utilize an “optional unit” structure to maximize crop insurance protection with APH and CRC or RA-HP policies.
In most years, you will have more crop insurance protection by establishing the smallest “optional units” that are possible on your farms, with the exception of GRIP Insurance.

Be cautious when considering GRIP or GRIP-HP policies for 2007.
GRIP policies are available up to the 90 % coverage level, and premiums on GRIP policies are usually significantly lower than CRC or RA-HP policies. However, GRIP policies are based on county-average yields, and do not necessarily cover yield losses from isolated storms or crop damage that affect individual farm units.

More Information on 2007 Crop Insurance Alternatives:
A reputable crop insurance agent is the best source of information to make 2007 crop insurance decisions.The University of Illinois Farm Management web site has some good crop insurance information, and an on-line Crop Insurance Premium Calculator and Comparison Spreadsheet.The web site is:

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

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