Editor's note: We’ve gathered several experts to offer suggestions on trimming expenses in light of tighter margins in 2014. This is one of 10 money-saving tips.
This year, farmers can get more federal crop insurance coverage for the same or less money. However, with guarantee levels tied to futures prices, revenue protection (RP) will likely fall below most cost-of-production estimates.
Does that mean crop insurance is one area that can be trimmed as farmers look for ways to cut costs?
"Don’t make that mistake," says Steve Johnson, Iowa State University farm management specialist. There is already more risk for 2014, he says, adding that input costs will lag commodity prices in their movement down, which squeezes margins.
"Farmers insured at 75% with RP last year should consider going up to 80% or 85% levels of coverage," he says, explaining that if your APH for corn is 180 bu. per acre and you’re insured at the 75% level, with 2013’s $5.65 per bushel price level, the per-acre guarantee was $763. This year’s guarantee might be $4.50, which will protect revenues at $608 per acre. That’s $155 less than last year.
That’s because lower futures prices mean less crop insurance revenue protection. Premiums won’t be released until March 3 or 4, but producers must make any changes by March 17. Read more.
AgDay: Don't Cut Crop Insurance Coverage
While the price of corn and shrinking margins might cause some to look at minimizing crop insurance coverage, one analyst says now's not the time to cut coverage. Look at all the crop insurance tools available today and find what best suits your needs.
Want to learn more?
Register now for a free AgWeb webinar: "How to Avoid Getting Caught in the New Farm Safety Net." It will take place on Thursday, March 6 at noon CST.
Jonathan Coppess of the University of Illinois will highlight the key provisions of the new farm bill, sorting through the critical decisions farmers need to make so that they don’t get ensnared in the new farm safety net. Several of these decisions will be set in stone for the next five years.
Keep Your Production Costs in Check for 2014
With grain prices dropping, it’s time to get creative. There is no one-size-fits-all-farmers answer, but there are numerous ways to more closely align costs with returns. Here are the money-saving tips we've gathered.