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Revenue Insurance Revenue Assurance (RA): Standard Revenue Assurance: Harvest Price Optional
Crop Revenue Coverage (CRC) Income Protection (IP) (SW Iowa) Group Risk Income Protection (GRIP)
Indemnity Payments Made in Iowa for 2003 Crop
$1.42 $2.80
$17.53
$24.84
$0.00
$5.00
$10.00
$15.00
$20.00
$25.00
$ per acre
Corn Soybeans
Indemnity Payments Made in Iowa for the 2003 Crop
Yield Insurance
Revenue Insurance
2003 Soybean Settlement
Purchased 75% RAGuarantee is
40 bu. APH x $5.26 x 75% =$156Actual yield was 28 bu./acreFall price was $7.32Actual revenue: 28 bu x $7.32 =$205Under standard RA no payment
2003 Soybean Settlement
Under RA with harvest price option the guarantee increased to:
40 bu. X $7.32 x 75% = $219.60
Payment = $219.60 - $205 = $14.60
Or, 2 bu. of loss paid at $7.32 per bu.
CRC and RA-HPO
Feb. futures price Harvest futures price
Replace lost bu. at CBOT price
Replace lost revenue - $
What is Your Marketing Pattern?
If you price before harvest: use CRC or RA-HPO to guarantee
bushels
If you only price after harvest: use standard RA or APH
(lower premium)
What is Your Feed Balance?
Feed fed equals feed raised (flexible) Buy yield insurance Price doesn’t matter
Feed deficit (must buy feed if short) Buy CRC or Harvest Price RA to insure replacement bushels
Group Risk Insurance may be appropriate
when:
Individual yields closely track county yields
No production history is available or APH is low
Can stand more risk
What are your crop insurance goals?
•To insure bushels? APH•To insure cash flow? Basic RA•To forward price? CRC,RA-HPO•To protect equity? CAT •To make a profit? GRP,GRIP
0%5%
10%15%20%25%30%35%
50 65 70 75 80 85
% Guarantee
Level of Guarantee Purchased--Iowa 2003
Corn
Soybeans
0%5%
10%15%20%25%30%35%40%
50 65 70 75 80 85
% Guarantee
Level of Guarantee Purchased--Iowa 2003
Yield Ins.Revenue Ins.
How Many $ to Insure?
Consider cost of production Seed, fertilizer, pesticides Machinery and hired labor Land rent or payments Debt payments Family living
Subtract your “deductible”
Higher Coverage Levels are Available in 2004
Proven yields will increase for most people (at least corn).
Drop 1993 yields, add 2003.1993 2003
Corn 80 bu. 157 bu.Soybeans 31 bu. 32 bu.
2004 Insurance Prices
Corn SoybeansCRC,RA $2.78? $6.47?APH $2.45 $5.60Loan rate $1.90 $4.93(Iowa average)
Cost of Higher Coverage
Raising coverage from 65% to 75% roughly doubles the premium
Raising coverage from 75% to 85% roughly doubles it again
Winneshiek Co. Premiums(140 bu. corn, basic units)
Level APHRA BASIC
RA-HPO CRC GRP GRIP
65% $3.74 $3.55 $5.39 $6.21
70% $4.89 $5.24 $7.74 $8.22 $2.19 $1.34
75% $7.28 $8.17 $11.75 $12.31 $2.73 $2.44
80% $11.40 $12.97 $18.26 $19.35 $4.21 $4.73
85% $18.20 $20.70 $28.65 $31.04 $5.65 $7.62
Winneshiek Co. Premiums(45 bu. soybeans, basic
units)
Level APHRA BASIC
RA-HPO CRC GRP GRIP
65% $2.07 $2.14 $3.12 $3.56
70% $2.94 $3.36 $4.72 $5.04 $ .92 $1.00
75% $4.50 $5.43 $7.44 $7.70 $1.05 $1.24
80% $7.10 $8.83 $11.87 $12.18 $1.49 $2.77
85% $11.33 $14.33 $18.96 $19.57 $2.39 $4.87
Crop Insurance Premium Calculator
University of Illinois Extensionhttp://www.farmdoc.uiuc.edu/
cropins
What Units to Choose?
Optional Units: Each farm separateBasic Units: Can combine owned and
cash rented acres in same countyEnterprise Units: Can combine all
acres of the same crop in same co.Whole Farm: Can combine crops
Black Hawk Co. Premiums145 bu. corn, RA-standard
Level Enterprise
Units
BasicUnits
OptionalUnits
65% $2.94 $3.55 $4.16
70% $4.55 $5.24 $5.43
75% $7.32 $8.17 $8.09
80% $11.87 $12.97 $12.67
85% $19.25 $20.70 $20.22
Important Points for 2004
1.Proven yields will increase for most people, especially corn.
2. Indemnity prices will be higher. More downward price risk.
3.Higher $ coverage available.4.Premiums will be higher at each
% guarantee.