Supplemental policy means peace of mind
John Deere Risk Protection now offers its crop insurance customers who forward contract grain for delivery a new policy that provides additional coverage in the event the crop yield isn't enough to meet their contract requirements and the price per bushel to replace the shortfall is above their contract price and their federal policy's spring and harvest price. The Crop Delivery Contract Policy layers with revenue-based crop insurance such as Crop Revenue Coverage (CRC) or Revenue Assurance-Harvest Option.
"When producers do not have enough bushels to fulfill a contract, they typically must go find the bushels elsewhere and deliver them to the buyer or buy out the contract with a potential penalty,” explains Andy Caruso, underwriting manager for John Deere Risk Protection "Our policy requires the processing facility to procure the grain on the farmer's behalf. The grain buyer must be willing to participate and we encourage potential policy holders to speak with the facilities they work with to make sure they agree to the requirements.”
The policy covers the price gap and transportation costs and other fees [described in the contract] up to $1/bu for corn and $2/bu for soybeans.
Here's a theoretical example how it would work for corn.
Spring CRC price $4/bu.
Harvest CRC price $5/bu.
Contracted bushels 50,000
Harvested bushels 25,000
Contract price $4.25/bu.
The policy holder contacts the buyer about the shortfall. The facility says it will cost $5.50/bu. for the grain, 5¢/bu. for transportation for a total replacement price of $5.55/bu. The loss payout is the replacement price minus the greatest of the spring, harvest or contract price multiplied by the shortfall. The difference in this corn example cannot exceed $1/bu., so: $5.55 - $5.00 = 55¢; 55¢ x 25,000 bu. = $13,750 potential payout to the policy holder (who then pays the grain buyer). This example is for illustrative purposes only.
RA or CRC policy holders who purchased through John Deere Risk Protection may purchase this product in the following states up until the MPCI acreage reporting date of the specified state. Arkansas, Iowa, Illinois, Indiana, Kansas, Minnesota, Missouri, Nebraska, Ohio, South Dakota and Wisconsin. Cost varies depending on your crop revenue coverage, contracted bushels and location. To find a John Deere crop insurance agent near you, call 866-404-9057 . –Linda H. Smith