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FEFO Archive: Crop insurance

2014 Loss Experience for Revenue Protection on Corn, Soybeans, and Wheat
Gary Schnitkey
FEFO 15-07, 4/14/2015
 

Abstract

This article describes loss performance for Revenue Protection (RP), a revenue insurance plan used to insure most acres in the United States. Corn, soybeans, and wheat had loss ratios of 1.04, .54, and 1.12, respectively. Loss ratios were above 1.0 in many counties of Iowa and Minnesota for corn and soybeans. Counties in the southern Great Plains had loss ratios above 1.0 for wheat. In Illinois, RP loss ratios were .40 for corn and .24 for soybeans.
 
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Yield Exclusion: Description and Guidance
Gary Schnitkey, Bruce Sherrick, and Jonathan Coppess
FEFO 15-01, 1/13/2015
 

Abstract

The Yield Exclusion (YE) allows specific years to be dropped from the calculation of guarantee yields for crop insurance. This article describes YE, provides an example of Actual Production History (APH) yield calculation and premium quotation under YE, and provides guidance for YE’s use.
 
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Crop Insurance Revenue Guarantees Likely Lower in 2015
Gary Schnitkey
FEFO 14-20, 11/7/2014
 

Abstract

Next year, crop insurance guarantees likely will be lower than those for recent years. As a result, farmers will face more downside revenue risks. Revenue guarantees for crop insurance products will be below total costs of production.
 
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Supplemental Coverage Option (SCO) in Wheat
Gary Schnitkey
FEFO 14-14, 8/5/2014
 

Abstract

The basics of SCO are illustrated with an example from Washington County, Illinois. SCO will have risk management benefits when the maximum coverage level for the COMBO product is 75%. In counties where 85% coverage levels are available, SCO products offer limited potential to reduce the probability of low gross revenues.
 
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Coverage Levels on Crop Insurance and the SCO Alternative
Gary Schnitkey and Bruce Sherrick
FEFO 14-09, 4/29/2014
 

Abstract

Coverage level choices tend to be highest for corn and soybeans in the heart of the Corn Belt. Because SCO will be more attractive where lower coverage levels predominate, SCO use likely will be more attractive outside of the Corn Belt.
 
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2014 Crop Insurance Decisions: The 2014 Farm Bill and 2014 Product Recommendations
Gary Schnitkey
FEFO 14-04, 2/11/2014
 

Abstract

Because the 2014 Farm Bill does not change crop insurance programs in 2014, the 2014 Farm Bill will not impact 2014 crop insurance decisions. Like last year, most farmers will find adequate protection with a Revenue Protection (RP) policy at a 75% or higher coverage level using enterprise units and the Trend Adjusted Yield Endorsement.
 
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Coverage Level Choices for Revenue Protection in 2014
Gary Schnitkey
FEFO 14-02, 1/8/2014
 

Abstract

Over time, farmers have increased coverage levels on crop insurance. Perhaps this trend will not continue into 2014. However, lowering coverage levels will expose farmers to the potential of larger losses.
 
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Area Risk Protection Insurance Policy: Comparison to Group Plans
Gary Schnitkey
FEFO 14-01, 1/7/2014
 

Abstract

RMA has introduced a new county-level crop insurance product called the Area Risk Protection Insurance policy Coverage under ARPI is similar to Group policies.
 
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Crop Insurance Premiums and Guarantee Levels for 2014
Gary Schnitkey
FEFO 13-23, 12/10/2013
 

Abstract

For corn, insurance premiums likely will be slightly lower than in 2013. Guarantees will be much lower in 2014 as compared to 2013.
 
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Prevented Planting Payments versus Planting Soybeans
Gary Schnitkey
FEFO 13-10, 6/18/2013
 

Abstract

Returns from taking prevented planting payments are compared to planting soybeans in late June. A corn prevented planting payments almost always will be larger than the expected returns from planting soybeans. Prevented planting payments for soybeans become more attractive as soybean plantings are delayed further.
 
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GRIP-HR: A Good Product for 2013
Gary Schnitkey
FEFO 13-03, 2/12/2013
 

Abstract

Group Risk Income Plan with the Harvest Revenue Option (GRIP-HR) has features that make it an attractive crop insurance product this year. GRIP-HR will make large payments in a drought year and also in years of large price declines.
 
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Impacts of Limits on Crop Insurance Risk Subsidies
Gary Schnitkey
FEFO 12-10, 5/1/2012
 

Abstract

Discussion has centered on limiting crop insurance risk subsidies.  Between 2006 and 2012, acres required to reach the limit for average farms in Illinois are between 1,600 and 2,700 acres, not particularly large grain farms. 
 
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Crop Insurance Use in 2011 and Suggestions for 2012
Gary Schnitkey
FEFO 12-06, 2/28/2012
 

Abstract

In 2011, most corn and soybean acres in Illinois were insured using Revenue Protection (RP) at a 75% or higher coverage level.  At these coverage levels, most acres where insured using enterprise units.  Similar percentages are likely in 2012.
 
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Is RP With the Harvest Price Exclusion a Good Option for 2012?
Gary Schnitkey
FEFO 12-04, 2/20/2012
 

Abstract

Revenue Protection (RP) with Exclusion is a viable alternative to RP, particualarly if RP with Exclusion is purchased at a 5 percent higher coverage level.
 
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Group Risk Income Plan (GRIP) in 2012
Gary Schnitkey
FEFO 12-02, 1/24/2012
 

Abstract

GRIP premiums will increase in 2012 due to re-ratings. This may lead some farmers to re-evaluated using GRIP.
 
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COMBO Crop Insurance Premium Changes in 2012
Gary Schnitkey and Bruce Sherrick
FEFO 12-01, 1/18/2012
 

Abstract

Reductions in 2012 Revenue Protection crop insurance for corn and soybean policies in Illinois are shown in this paper.
 
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Trend-Adjusted APH Yield Endorsement
Bruce Sherrick and Gary Schnitkey
FEFO 11-23, 12/6/2011
 

Abstract

Beginning with the 2012 crop year, farmers purchasing crop insurance for corn and soybeans in fourteen Midwestern states will have the option to use the Trend-Adjusted Actual Production History (TA-APH) Yield Endorsement. The TA-APH yield endorsement allows farmers to increase yields used in calculating crop insurance guarantees.
 
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Economics of Prevented Planting in Corn
Gary Schnitkey
FEFO 11-10, 5/25/2011
 

Abstract

In this article, net returns from taking a prevented planting are compared to expected net returns from planting corn and soybeans. Examples suggest prevented planting have returns competitive with planting corn or soybeans.
 
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Planting Delays and Switching to Soybeans: A New Fast Spreadsheet
Gary Schnitkey and Ryan Batts
FEFO 11-08, 4/27/2011
 

Abstract

Based on defaults in a Planting Decision Model, switching from soybean on farmland scheduled to be planted to corn is several weeks away.
 
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Crop Insurance in 2011
Gary Schnitkey
FEFO 11-04, 3/11/2011
 

Abstract

Most Illinois farmers will purchase RP or GRIP-HR for insuring corn and soybeans.
 
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Higher 2011 GRIP Premiums Still Below Expected Payments
Gary Schnitkey and Bruce Sherrick
FEFO 11-03, 2/23/2011
 

Abstract

GRIP-HR premiums will be higher in 2011 than in 2010. Over much of Illinois, expected payments are projected to exceed farmer-paid premiums.
 
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Premiums on Farm-Level Revenue Crop Insurance Products Higher in 2011
Gary Schnitkey and Bruce Sherrick
FEFO 11-02, 1/28/2011
 

Abstract

The 2011 premiums for Revenue Protection, a farm-level crop insurance product, will be considerably higher than 2010 products primarily due to higher projected prices and volatilities.
 
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COMBO’s Product Released for 2011 Crop Insurance Year
Gary Schnitkey
FEFO 10-15, 8/30/2010
 

Abstract

The COMBO product is being released to insure 2011 crops. Revenue Protection, Yield Protection, and Revenue Protection with Exclusion plans in the COMBO policy replace CRC, RA, IP, and APH policies.
 
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Illinois Corn and Soybean Yields and GRIP Payments in 2009
Gary Schnitkey
FEFO 10-06, 4/5/2010
 

Abstract

Corn yields in 2010 were generally above trend, except for some counties in northern Illinois. Soybeans yields were mixed. GRIP payments for corn will occur in six counties. Soybean GRIP payments will occur in Jasper County.
 
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GRIP Premiums in 2010
Gary Schnitkey
FEFO 10-04, 3/11/2010
 

Abstract

Group Risk Income Plan (GRIP) is a county revenue product that bases guarantees and payments on county yields rather than on farm yields. Premiums on GRIP products have changed between 2009 and 2010, with most counties experiencing premium declines. Premiums on GRIP with the harvest revenue option (GRIP-HR) for corn at the 90% coverage level and 100% protection level have an average premium reduction of $15 per acre across all Illinois Counties.
 
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2010 Crop Insurance Update: Model Programs and Common Questions
Gary Schnitkey
FEFO 10-03, 3/5/2010
 

Abstract

Most Illinois and Midwest farmers will find crop insurance choice coming down to one of the following two programs: Crop Revenue Coverage (CRC) or Revenue Assurance with the harvest price option (RA-HP); Group Risk Income Plan with the harvest revenue option (GRIP-HR). These programs are specified given that the farm faces risk that cannot be self insured. Reasons why these two programs are the most advantageous are covered by answering the following commonly asked questions.
 
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Late Planting Wheat and Crop Insurance
Gary Schnitkey
FEFO 09-17, 10/29/2009
 

Abstract

Wheat plantings have been delayed this fall, again bringing up decisions related to crop insurance. APH, CRC, and RA policies have late planting and prevented planting provisions.
 
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Late Planting and Crop Insurance
Gary Schnitkey
FEFO 09-09, 6/1/2009
 

Abstract

Adverse planting conditions this spring has resulted in many crop insurance questions related to replant, prevented planting, and late planting provisions in crop insurance contracts. This paper provides information on these questions.
 
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GRIP Provides Superior Price Protection to CRC or RA
Gary Schnitkey
FEFO 09-05, 3/9/2009
 

Abstract

If lower prices are a primary concern, Group Risk Income Plan (GRIP) at a 90% coverage level will provide superior protection compared to Crop Revenue Coverage (CRC) or Revenue Assurance (RA).
 
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The ACRE Program Decision and Some Illustrative Examples
Nicolas D. Paulson
FEFO 09-04, 2/27/2009
 

Abstract

A fundamental change in commodity title programs in the 2008 Farm Bill resulted in the creation of the new Average Crop Revenue Election Program (ACRE).
 
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Increased Probabilities of Crop Insurance Payments
Gary Schnitkey and Bruce Sherrick
FEFO 08-16, 10/15/2008
 

Abstract

Recent commodity price declines have increased the probability that crop insurance products insuring revenue will make payments.
 
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Late Planting and Crop Insurance Decisions
Gary Schnitkey
FEFO 08-11, 6/6/2008
 

Abstract

Crop insurance issues related to late planting of crops are addressed in these resources.
 
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Impacts of CRC Price Limits on the Value of CRC Relative to RA
Gary Schnitkey
FEFO 08-04, 2/22/2008
 

Abstract

CRC has price limits when calculating crop revenue. In 2008, there is over a 30% chance that harvest prices will exceed CRC limits for corn. Higher chances of exceeding CRC limits increase the value of RA relative to CRC. In corn, RA is worth about $11 than CRC at a 75% coverage level.
 
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The Biotech Yield Endorsement (BYE)
Gary Schnitkey
FEFO 08-03, 1/30/2008
 

Abstract

The Biotech Yield Endorsement (BYE) will allow farmers to received discounts on crop insurance for grain corn grown in Illinois, Indiana, Iowa, and Minnesota. To receive a discount, farmers must plant hybrids containing Monsanto-based triple-stack traits.
 
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Crop Insurance Decisions Associated with Wheat Failure
Gary Schnitkey
FEFO 07-08, 4/23/2007
 

Abstract

Recent freezes have harmed wheat causing some farmers to consider destroying wheat and planting another crop. For many farmers, planting another crop will have crop insurance implications. This article covers these implication.
 
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Farmland Price Increases Continue: Are They in Line with Farmland Returns?
Gary Schnitkey
FEFO 07-06, 3/30/2007
 

Abstract

Farmland prices in Illinois continue to increase, primarily because ethanol demands have led to higher commodity prices and higher farmland returns. It does not appear that higher farmland prices are out of line with farmland returns in east central Illinois.
 
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GRIP in 2007
Gary Schnitkey, and Bruce Sherrick
FEFO 07-04, 2/28/2007
 

Abstract

The structure of GRIP has not changed between 2006 and 2007. In most Illinois counties, GRIP in 2007 will be expected to pay out more in indemnity payments than farmers pay in premiums
 
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Higher Prices and Crop Insurance: A Double-Edged Sword
Gary Schnitkey
FEFO 07-02, 1/19/2007
 

Abstract

Premiums for revenue insurance products will be 40% or more higher in 2007 than in 2006. On many farms, it will be possible to insure revenues at levels assuring profits, a situation that occurring rarely when using crop insurance.
 
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2006 Planting Decisions Given the March Planting Intentions Report
Gary Schnitkey
FEFO 06-06, 04/06/2006
 

Abstract

Revised price expectations may cause some farmers to revisit 2006 planting decisions, perhaps shifting some acres from soybeans to corn. Budgeting to compare crop profitability is a useful exercise. Consideration should be given to crop insurance payments as there is a high probability thatinsurance will make payments.
 
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Choice of Revenue Products: Base and Harvest Prices
Gary Schnitkey
FEFO 06-04, 03/06/2006
 

Abstract

Perspective on decisions to take revenue crop insurance products with or without a guarantee increases is provided by evaluating base and harvest prices for corn and soybeans from 1972 through 2005.
 
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GRP and GRIP Payments: Preliminary 2005 Estimates and Historical GRIP Payments
Gary Schnitkey
FEFO 06-03, 02/27/2006
 

Abstract

This publication shows information useful in calculating GRP and GRIP payments in 2005 for all Illinois counties. Also shown are GRIP payments from 1999 through 2005.
 
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Expected Yield Increases and Choice between Group and Farm Crop Insurance
Gary Schnitkey
FEFO 06-02, 02/13/2006
 

Abstract

The Risk Management Agency (RMA) increased the expected yields used to calculate guarantees for Group Risk Plan (GRP) and Group Risk Income Plan (GRIP). Expected yield increases make group products more attractive and may cause some farmers to switch to group products from farm product.
 
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Premium Reduction Plans for Crop Insurance
Gary Schnitkey
FEFO 06-01, 01/23/2006
 

Abstract

The Risk Management Agency (RMA) allows insurance companies to offer Premium Reduction Plans (PRPs) on 2006 crop insurance policies. The amount, if any, of premium reductions will not be known until after 2006. Reductions may not be paid until 2008.
 
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Soybean Rust Considerations in Share-rent Arrangements and in Crop Insurance
Gary Schnitkey
FEFO 05-06, 03/28/2005
 

Abstract

Some individuals have questioned how fungicide costs should be shared under crop-share arrangements. In addition, significant discussion has ensued concerning crop insurance coverage for rust-induced losses. These issues are covered in the following sections.
 
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Group Risk Income Plans Likely to Pay in Many Counties for 2004 Crops
Gary Schnitkey
FEFO 05-03, 02/02/2005
 

Abstract

Some people have asked whether group products will make payments for the 2004 cropping year. Group products base insurance payments on county yields calculated by the National Agricultural Statistical Service (NASS), an agency of the U.S. Department of Agriculture. NASS will not release 2004 county yields until March or April of 2005. Hence, payments from group products will not be known until March or April.
 
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2004 Crop Insurance Changes And Historical Crop Insurance Use
Gary Schnitkey
FEFO 04-18, 11/01/2004
 

Abstract

Use of federally-subsidized, multi-peril crop insurance products in 2004 is described in this paper. In addition, changes in crop insurance use from 1990 through 2004 are presented. This information allows farmers to compare their crop insurance programs to Illinois averages.
 
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Insurance Premium Higher In 2004
Gary Schnitkey
FEFO 04-03, 02/19/2004
 

Abstract

Premiums for most crop insurance products will be higher in 2004 compared to 2003. Some premiums will increase by over 50%.
 
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Grip-Hr: An Analysis Of Returns And Risks
Gary Schnitkey
FEFO 04-02, 02/11/2004
 

Abstract

Group Risk Income Plan (GRIP) is a revenue insurance that insures county revenue. In 2004, a harvest revenue option was added to GRIP. At the county level, GRIP with the harvest revenue option (GRIP-HR) is conceptually similar to farm-level products that have guarantee increase provisions (i.e., Crop Revenue Coverage (CRC) or Revenue Assurance (RA) with a harvest revenue option). How GRIP-HR works is described in a previous Illinois Farm Economics: Facts and Opinions entitled "Group Crop Insurance Plans". This previous article also details the working of the other two group products (Group Risk Plan (GRP) and Group Risk Income Plan without the Harvest Revenue option (GRIP-NoHR)). The purpose of this Facts and Opinions article is to quantify the returns and risks associated with GRIP-HR.
 
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Group Crop Insurance Plans
Gary Schnitkey
FEFO 04-01, 01/26/2004
 

Abstract

A new group crop insurance product was introduced in 2004, bringing the total number of group products to three. These three are:
 
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Revenue Guarantees on Crop Insurance Products
Gary Schnitkey
FEFO 03-02, 01/31/2003
 

Abstract

Revenue Assurance (RA), Crop Revenue Coverage (CRC), and Income Protection (IP) are multi-peril crop insurances that provide revenue guarantees. When indemnified revenue falls below the revenue guarantee, these revenue products make payments equal to revenue guarantee minus indemnified revenue. Payments bring revenue back up to the level of the revenue guarantee.
 
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2002 IFARM Insurance Evaluator
Gary Schnitkey
FEFO 02-05, 03/11/2002
 

Abstract

The 2002 version of the iFARM Crop Insurance Evaluator is available for use on farmdoc. The Evaluator shows risks and returns from five different crop insurance products: Actual Production History (APH), Revenue Assurance with the Base Price option (RA-BP), Crop Revenue Coverage (CRC), Group Risk Plan (GRP), and Group Risk Income Plan (GRIP) insurance.
 
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2002 Crop Insurance Decisions
Gary Schnitkey
FEFO 02-04, 02/22/2002
 

Abstract

Multi-peril products available for insuring crops in Illinois during 2002 have not changed from 2001. Moreover, subsidy levels have not changed, causing 2002 premiums to be roughly similar to 2001 premiums. Hence, the criteria for choosing between crop insurance products have not changed between 2002 and 2001. Choices or multi-peril insurance products can be divided into four categories.
 
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2002 IFARM Premium Calculator
Gary Schnitkey
FEFO 02-03, 02/08/2002
 

Abstract

The 2002 version of the IFARM premium calculator has been released for use. This tool calculates per acre insurance premiums for the following insurances: Actual Production History (APH), Revenue Assurance with the base price option (RA-BP), Crop Revenue Coverage (CRC), Group Risk Plan (GRP), and Group Risk Income Plan (GRIP). Premiums can be calculated for corn, soybeans, wheat, and grain sorghum in counties of twelve states located in the greater Corn Belt. The Premium Calculator is in the crop insurance section of farmdoc (http://www.farmdoc.uiuc.edu/cropins/).
 
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Risks, Pre-Harvest Hedging, and Crop Insurance
Gary Schnitkey
FEFO 01-11, 05/17/2001
 

Abstract

Recently, research has examined risk reductions associated with levels of pre-harvest hedging for different crop insurance products. In general, modest levels of hedging decrease risk. In the example shown in figure 1, hedging up to 15 percent of expected production reduces risk. Then there is a range where risk levels change very little. In figure 1, this occurs between 15 and 65 percent of expected production. Hedging increases risk after some point (65 percent of expected production in figure 1).
 
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Tools for Making Crop Insurance Decisions
Gary Schnitkey
FEFO 01-05, 03/06/2001
 

Abstract

Two tools for making crop insurance decisions are available at farmdoc, a web site maintained in the Department of Agricultural and Consumer Economics (www.farmdoc.uiuc.edu). These tools are located in farmdoc's crop insurance section and are 1) a Premium Calculator and 2) a Crop Insurance Evaluator.
 
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Crop Insurance and Marketing Decisions
Gary Schnitkey
FEFO 01-04, 02/20/2001
 

Abstract

The deadline for signing up for crop insurance is March 15th. By this date, farmers must choose between one of the six crop insurance products available in Illinois: Actual Production History (APH), Revenue Assurance (RA), Income Protection (IP), Crop Revenue Coverage (CRC), Group Risk Plan (GRP), and Group Risk Income Plan (GRIP).
 
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