Crop Insurance Information from the farmdoc Team
The following is a series of crop insurance links related to information produced by the University of Illinois agricultural economist since March 1. You may find them useful in making crop insurance decisions. The first is a webinar the team hosted in which Bruce Sherrick and Nick Paulson detail both crop insurance and farm safety net (ARC/PLC) decisions.
The above webinar was aired on Monday of this past week. Tuesday the team posted an article titled “Budget-Driven Crop Insurance Coverage Options for 2024“. It details options for holding crop insurance for corn in the $23-$35 per acre range.
The summary of the article follows here;
Historically, evidence has shown that producer crop insurance decisions may be at least partially budget-driven, with per-acre premium expenses often falling within a range on a dollar-per-acre basis. The budget approach to insurance decisions may be even more likely to impact insurance choices in a year like 2024 where margins are expected to be very tight due to lower prices and continued higher production costs.
Lower prices have also resulted in lower projected prices and guarantees for insurance products. Producers may be interested in insurance coverage options which manage premium expense without giving up significant risk reduction through lower guarantees.
The supplemental area insurance plans, SCO and ECO, can be combined with an underlying plan of insurance (RP, RP-HPE, or YP) to increase coverage. Premium expense can be managed through individual coverage level adjustments and or unit structure choices. However, using supplemental plans while also keeping total premium costs within the target range of $23 to $35 involves tradeoffs between farm-level and county-based coverage as well as potential gaps in coverage. Producers need to consider and evaluate these tradeoffs to determine if they make sense for their operation.
An example for Champaign County Illinois shows that total premium cost in the $23 to $35 per acre range can be achieved for RP with SCO and ECO 90% coverage if the producer is willing to lower RP coverage to 80% or lower. Combinations with ECO 95% which also control premium costs are more difficult to achieve with RP. Shifting to RP-HPE or YP as the underlying plan of insurance creates more options for coverage combinations that include ECO 95% and/or optional or basic units.
Final Note: Crop Insurance Decision Tools
The premium estimates in this article for both individual and county-level supplemental insurance plans were generated using the iFARM Premium Calculator in the Excel-based 2024 Crop Insurance Decision Tool, one of a suite of crop insurance decision tools available on farmdoc. This Excel spreadsheet tool can be downloaded and used offline.
Other crop insurance tools available on farmdoc include:
Crop Insurance Premium Calculator (web-based): The web-based Premium Calculator tool will provide premium estimates for different policies, coverage levels, and unit structures customized to the user based on their location (State and County) and individual insurance parameters such as their actual production history yield, rate yield, trend adjustment, practice, etc.
Crop Insurance Payment Evaluator: This web-based tool will provide the user with estimates of the net cost of insurance and risk reduction provided by different policy and coverage level combinations. Results are generated for case farms at the county level for corn and soybeans with near complete coverage of counties in 10 States within the major corn and soybean producing regions of the US.