Minding Ag's Business

Official reports aren't yet tallied, but farmers are likely to have insured higher levels of revenue coverage for 2013 crops when they enrolled in crop insurance March 15. More than half of the 439 farm subscribers surveyed by DTN in early March planned to buy the same level of revenue coverage as in 2013; another 29% intended to boost their insurance levels. While not a scientific sample, responses reflect the anxiety I detected when interviewing corn and soybean farm leaders at the annual Commodity Classic convention in Florida a few weeks ago. Fears of lingering drought in the western Corn Belt--or the risk of $4 corn if timely rains make a record harvest--meant insurance was an easy sell this season.

It's no surprise that readers from some of the states with the most potential for drought were upping their coverage, including 43% of the survey responders in Iowa, 40% in Nebraska, 40% in Kentucky, 36% in Minnesota, 35% in Missouri and 30% in South Dakota. Again the margin of error may be high, but it shows which way farmer sentiments leaned.

Shrinking the deductible greatly increases odds of a payout, especially on revenue-based policies. Spring prices for the majority of grain states guaranteed crop insurance coverage at $5.65 for corn, $12.87 for soybeans and $8.57 for spring wheat. As Kansas State's Art Barnaby pointed out, someone with normal APH corn yields and 85% coverage will begin to trigger a revenue claim if RMA's harvest corn price hits $4.52. By the same token, the "strike price" for someone with a 70% policy and normal yields would be $3.95. Let's hope we don't go there.

Follow me on Twitter@MarciaZTaylor

(SK)

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