Some Crop Insurance Premiums Might Move Upward in 2016

January 21, 2016 12:00 PM
Some Crop Insurance Premiums Might Move Upward in 2016

Farmers who buy revenue protection (RP) policies might want to brace themselves: premiums could rise by more than 10% this year.

That’s according to analysis by Gary Schnitkey of the University of Illinois, who used a projected corn price of $4.15, a volatility factor of .21 and Risk Management Agency rate changes to estimate 2016 premium for a handful of key Illinois counties.

The results will be unwelcome to farmers already worried about input costs and profitability in 2016.

“All 2016 projected premiums are above 2015 premiums, with many of the changes being more than 10%,” Schitnkey wrote. “At an 85% coverage level, the RP DeKalb County premium is 11% higher for 2016 ($16.51 per acre in 2015 compared to $18.31 per acre in 2016). Champaign County is 8% higher ($15.97 per acre compared to $17.23 in 2016). Saline County premium is 16% higher ($50.37 per acre in 2015 compared to $56.28 per acre in 2016).”

Of course, these are early estimates. The projected price and volatility factor won’t be finalized until the end of February, and right now, December corn futures stand at $3.90 or so. If that price sticks, it would reduce the jump in premiums, although they would still likely be higher than 2015, based on the .21 volatility factor. 

Click here to read Schnitkey's full analysis.

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Spell Check

Bren Bird
Elk Point, SD
1/21/2016 06:04 PM

  Yay! As if there wasn't enough bad news in this industry. I would like a puff piece about some cool old tractors sent to my email instead of this next time please.

flying farmer
nebraska city, NE
1/21/2016 06:38 PM

  Meh, don't take out crop insurance for a year. Odds are you won't need it, if you have done any forward planning economically speaking, you should be able to live without it even in a bust year. Haven't carried crop insurance for over a decade now and no intention to begin. Put the money aside that you would have wasted on the insurance in a separate account, in a course of years you will then be self insured. Enough people do this and they will have to lower prices to encourage people to use their service (i.e. buy crop insurance). This world of Nerf attitude everyone seems to have nowadays is really kinda pathetic. Take a few risks and reap the rewards instead of having people there to mollycoddle you all the time.

Lewis, KS
1/21/2016 05:31 PM

  Please explain why this is happening. I think it has to do with the new Farm bill. You need to let the reader know why, not just that it's happening.


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