Crop Insurance and ARC-County: Do You Really Need Both?

January 27, 2016 03:36 PM
Crop Insurance and ARC-County: Do You Really Need Both?

When you’re trying to cut every input you can, crop insurance seems like a good place to look for savings, especially given current farm bill safety next programs.

But slicing your coverage could easily end up being penny-wise and pound-foolish, according to Gary Schnitkey of the University of Illinois in a recent farmdoc Daily article.

He arrived at that conclusion after looking at likely harvest prices, county yields, ARC-county payments and crop insurance payments for a handful of policy types at varying coverage levels for corn farmers in McLean County, Ill.

“This analysis suggests lowering coverage levels may be imprudent,” Schnitkey said.

Why? Because ARC-county only provides a limited amount of protection. “The presence of ARC-CO increases the average and lower revenue levels,” Schnitkey said. “However, there still are considerable amounts of downside risk,” especially given the variability of individual farm yields.

That’s worrisome since achieving profitability is expected to be tough this year for many growers. “Expectations are for costs to exceed revenue even with the inclusion of ARC-CO and crop insurance payments,” Schnitkey said. “This is not a year in which crop insurance can be used to assure a profit. Rather, crop insurance this year will limit losses to hopefully more manageable levels.”

For the full article, please visit farmdoc Daily:



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Spell Check

Josh Sewell
Washington, DC
1/29/2016 10:40 AM

  There is a two-year lag in payments. Payments for crop year 2014 started going out Oct 1, 2015. Crop Year 2015 will go out starting Oct 1, 2016. You can track the 2014 payments at USDA's website

Hard Rock
hallsville, MO
1/27/2016 07:53 PM

  I do not know where all you ate getting the idea that ARC CO is so much of a safety net!!! Here in Missouri 2015 was so wet almost no crops were planted Eastern 1/2 and you know what happened to prices!NO PAYMENTS FROM FARM BILL HERE. and no disaster payments so if it weren't for CROP INS Mo. Farmers would not exist!! WHO IS GETTING ALL OF THIS ARC. MONE ???

Tipp City, OH
1/28/2016 07:08 PM

  Referencing the comment about arc as a safety net in disaster areas. As I understand it 2015 payments do not come out until fall of 16. If your county was a disaster you should get a good arc payment but there is a dollar limit rather low compared to crop insurance payouts.


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