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Corn+Soybean Digest

Now: Crop Insurance Designed By Farmers

Question: Why are some of the new crop insurance policies catching on so fast with corn and soybean farmers?

Answer: Because corn and soybean growers helped develop them! The policies zero in on loss of revenue, not just crop loss.

One example is Crop Revenue Coverage (CRC), developed by American Agrisurance.

"We sat down with farmers, commodity organizations, ag economists, cooperative extension service personnel and others. We listened to what farmers wanted and needed," a company official told Soybean Digest from its Council Bluffs, IA, headquarters.

Result: CRC, the crop insurance policy "designed to reward producers for both their risk management and marketing efforts."

CRC became the first privately developed policy to be approved for government reinsurance as an alternative to Multiple-Peril Crop Insurance (MPCI). CRC is available in most states this year for corn, soybeans, wheat and cotton.

Another farmer-designed plan is Revenue Assurance (RA), a pilot program in Iowa in its second year. RA had farmer input from the get-go.

Craig Hill, a Warren County, IA, corn-soybean-hog producer, is one of its "founding fathers" and was a member of the Iowa Farm Bill Study Team that first proposed this type of insurance to help offset the loss of government aid such as deficiency payments.

"We had the Iowa Farm Bureau and the Farm Bureau Mutual Insurance Co., as well as Iowa State University professors, help us construct the Revenue Assurance plan and get it approved by the Federal Crop Insurance Corp.," Hill says.

It received official approval in December 1996, so 1997 was the first year RA was available.

"Although the Iowa Farm Bureau spearheaded it, any crop insurance company can market RA, since it is reinsured by FCIC," Hill says.

"One problem was that the software was late being developed and many insurance agents didn't get it in time last year. That problem should be solved this year."

He considers RA a risk management tool - not a marketing tool.

"There's no more crop disaster money coming out of Washington, so we must provide our own safety net," he notes.

"We farmers need to know we'll have a certain level of revenue, and past government programs did not stabilize income. This crop insurance plan is based on revenue."

RA likely will work quite well for Iowa corn and bean producers, so other states will monitor the pilot program this year. However, some crop insurance observers feel that RA may not be that good a fit outside the tall- corn state, because Iowa is unique.

Regardless, growers in Iowa and every other area have several solid crop insurance programs to consider for '98.

Hill makes the point that, with RA (or any revenue insurance), "you can take it to bank," meaning bankers tend to be more friendly when customers insure revenue, with the potential to maximize profits.

RA won't cost as much as CRC, but CRC offers both up and downside price protection, while RA has downside price protection only.

It's a little like buying a new pickup. There are all kinds of options available, and only you can decide which ones you really need - and want to pay for.

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