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Make Crop Insurance Review A Top Priority

November 4, 2013
By: Nate Birt, Top Producer Deputy Managing Editor google + 
corn soybeans1

As of Oct. 31, corn and soybean producers know how much money they can expect from indemnity payments. That makes it an ideal time to evaluate profitability and to plan for future marketing.

"The insurance number came in at $4.39, and the soybean number came in at $12.87," Chris Barron, Carson & Barron Farms, Inc., tells the U.S. Farm Report Market Roundtable. "So on the soybean side of things, we probably won’t see a lot of indemnity payments except for on the yield side of things. But on the indemnity side for corn is a whole other story. There’s going to be some pretty large indemnity payments that will come out."

That’s particularly true for producers who had higher actual production history (APH) and bought higher levels of coverage, such as 80% or 85%, he adds.

Now that those figures are available, it’s a perfect time to evaluate marketing strategy, adds Dustin Johnson, EHedger. The federal crop insurance product remains a valuable product for producers, he says.

"You can guarantee your revenue for the year and feel pretty comfortable to make those cash sales and futures sales against those bushels," Johnson says. "I think it’s a great deal, and Chris brought up a great point that now we have this price set, we can no longer have that corn price readjusted. Now a lot of guys are looking at a payout just because revenue fell so far. They’re still getting decent yields, but revenue was low, obviously, in these unfortunate prices.

"But that doesn’t mean the hurt can stop here. I think that there’s this overwhelming long bushels in the bin that are still unprotected. Now that the insurance is off the board, you really want to look at what the plan is going forward with those bushels, getting them protected."

That means arranging a meeting with your crop insurance agent.

"Make sure you’ve got all your paperwork together and all your settlement sheets and everything ready to go, because you’re going to have to prove that yield," Barron explains. "In the midst of doing that, I think what you really ultimately need to get down to is understand how many cents per bushel is your indemnity payment, so that you can kind of factor that into your marketing strategy."

Click the play button below to watch Part 1 of the U.S. Farm Report Market Roundtable:

Click the play button below to watch Part 2 of the U.S. Farm Report Market Roundtable:

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