A New Year’s Resolution for Crop Insurance
Every growing season has its own set of challenges, and 2023 is likely to be no exception. Prices for grain and oilseeds are strong coming into the year, but high input prices are likely to continue to press farm profitability. In addition, industry projections for 2023 farm income are not as rosy as in the past couple years, so it’s important from an insurance standpoint to make sure you’re covered and taking advantage of everything you can in the marketplace.
Specialized crop insurance options allow producers to be more aggressive in their production methods to achieve higher yields. There are also options to increase the yield a producer would like to insure to achieve specific goals.
For more than a decade, ADM has worked with Crop Risk Services (CRS), a leading crop insurance provider, to offer high-value risk management policies to producers. In 2023, CRS will offer upgraded options for early plant coverage and a new product that allows producers to cover more soybean bushels than what’s available with federal policies.
Jon Scheets is a National Sales Manager for CRS, but he’s also a producer in central Illinois. Like many producers, he uses a multi-peril policy to take advantage of federal subsidized dollars, but sometimes he wants more protection than what the federal policy offers. For example, he likes to get his soybeans in the ground early each spring to maximize yields. So, he takes advantage of early plant and replant options from CRS to offset the risk of adverse growing conditions in early spring.
When there is a replant situation, the Replant 75 policy pays $75/acre and starts paying on the first acre, unlike a federal policy. With rising input costs, this additional payment can go a long way toward covering extra expenses. The cost of this policy starts at $1/acre. In addition, the following can be used with Replant 75:
- Early Plant 75 – This is an endorsement on top of the Replant 75 that allows a grower to plant up to two weeks earlier than the RMA plant date. Early Plant 75 provides an additional $75/acre to any replanting indemnity payments made during the traditional planting window. This endorsement costs an additional 30-cents/acre in premium.
- Early Plant 100 – A step up from Early Plant 75, this endorsement offers the freedom to plant two weeks earlier than the RMA plant date and the security of $100 per acre to replant the first time. If a second replanting is necessary, it pays an additional $75, or up to $175 total. The cost is $1/acre in addition to the Replant 75 cost, so $2/acre. The Early Plant 100 endorsement has a sales closing deadline of January 15.
CRS also offers a new product that extends coverage to your proven yield potential, rather than just your average production history (APH).
- Boost X – This policy endorsement to a Revenue Boost Policy allows a producer to “buy up” to the highest yield in their soybean APH database. There are many reasons why this option might be attractive for a producer, including for higher coverage levels, lending reasons, cash rent situations, and so on – essentially any time where the APH number doesn’t get the producer where they need to be for what they want to accomplish.
Educational and Planning Resources
Crop insurance is also a useful tool to support grain marketing efforts. To learn more about how you can capitalize on your revenue protection for grain marketing, ADM offers a free e-learning course called Shift that delves deep into crop insurance in the second lesson.
In it you’ll find a helpful link to this planning worksheet. Use this to calculate your guaranteed bushels per acre, forward contracted revenue, spring revenue guarantee, fall revenue guarantee and total revenue guarantee, so you can see your expected gross revenue.
If it’s challenging to start filling out this worksheet on your own, you can watch recorded demonstrations in Shift for a frame of reference. The demos show how a basic revenue policy works and how other scenarios, such as higher or lower harvest prices and lower harvest yields, can impact the numbers.
“Working with your CRS agent and ADM early in the year can help you maximize revenue per acre,” says ADM Crop Risk Specialist Dave Rosenmeyer.
There are details behind the policies highlighted in this article that need to be fully understood, so reach out to an ADM Crop Risk Specialist or your CRS agent for more details. Policy sign-up deadlines can sneak up on you, so don’t wait long.
Here’s to a profitable 2023!
ADM is providing this communication for informational purposes, and it is not a solicitation or offer to purchase or sell commodities. The sources for the information in this communication are believed to be reliable, but ADM does not warrant the accuracy of the information. The information in this communication is subject to change without notice. If applicable, any information and/or recommendations in this communication do not take into account any particular individual’s or company’s objectives or needs, which should be considered before engaging in any commodity transactions based on these recommendations. ADM or its affiliates may hold or take positions for their own accounts that are different from the positions recommended in this communication.