Don't Waste Your Crop Insurance

Friday, January 23, 2015

Over the next few months you‘ll be asked to make decisions that affect your farm for years to come.   

Right now, the spotlight is on the new government farm programs and which election to choose for your operation. These programs have the potential to significantly impact farm revenue. Once you make these choices, they’ll be locked in for the next five years. When developing these new programs, the government specifically designed them to complement the other major component of the farm bill: federal crop insurance.

Crop insurance remains a critical production and price risk management tool that approximately 92% of U.S. row crop farmers utilize. But all too often, insurance is viewed only as a vehicle to protect against yield shortfalls. In reality, it can be used as a critical component of your grain marketing activities, and one that helps ensure more consistently profitable grain sales.  

Plan Your Crop Insurance With Forward Marketing In Mind.

With commodity prices lower than they have been in years and operation costs not following suit, it’s more important than ever to evaluate your crop insurance decisions between now and the sign up deadline in late February or mid-March (depending on the region where you farm).  

First, begin by reviewing the past year, and ensuring your production records are complete. Accurate and complete records are necessary when discussing options with your crop insurance agent. There’s no time like the present to recalibrate your production, since it will give you accurate bushel guarantees for making decisions.

The key elements of your crop insurance discussion should revolve around three factors: your break-even point, your insurance guarantee, and ultimately how you can leverage your existing crop insurance policy to confidently sell your guaranteed bushels when the market provides profitable opportunities to do so. These factors will give you the foundation to move forward with all other marketing decisions for your operation. Understanding where your guarantee is will give you a baseline to evaluate how and when you can market your grain over the next year. These conversations are fundamental to determining the right plan and coverage that will protect your operation. In the end, it’s critical to work with the right people to help you execute on your plan.

Profitable selling opportunities will likely arise over the coming months. Make sure you have coverage that supports forward selling so you can capitalize on these opportunities when they arise. These are discussions you should expect your crop insurance agent to have with you. If you aren’t completely confident your current agent can help you make more profitable marketing decisions based on the crop insurance coverage they provide, please contact your local Cargill Farm Marketer or Cargill Crop Insurance Agent. Nobody understands how to do this better than Cargill.