The following commentary does not necessarily reflect the views of AgWeb or Farm Journal Media. The opinions expressed below are the author's own.
Insurance tools have become an integral part of managing your farming operation. Stay current on insurance tools and how to incorporate them with your current risk management strategies to market your grains throughout the year.
When evaluating the 80% vs 85% one thing you have to look at is what the ratio is of added revenue guarantee vs premium. To give it much consideration you have to get a 3 to 1 ratio or better. For many of the clients I deal with that is generally pretty close to the number that I have seen. More often than not the premium double to make them move and it gets tough at 85% when premiums are $35 and above for corn and $20 or above for soybeans.
An avenue to look at is the Yield Exclusion Option. With the opportunity to remove subpar yields from your APH it is a way to improve your revenue guarantee. Much like the Trend Adjusted Yield it is an alternative way to increase your coverage level. It may not get an 80% policy to perform quite like an 85% policy but if should get you to about 83% depending on geography. You can also elect this field by field which is another positive for this option. There is a fee associated on the fields you use this option on but it is a fraction of the price versus going from 80% to 85% across the board. If you utilize the YE and use the 85% level it should perform closer to a 88% policy.
Another option to look at if applicable is the ability to utilize the different coverage levels if you have both Irrigated and Non-Irrigated land. If you have blended yields as long as you have production history by practice you can create an APH for both. Even if you have only a small fraction of your farm irrigated it is still worth separating this two practices especially if you utilize the Enterprise Unit Discount. In this case consider a CAT policy on the irrigated ground unless you have an extremely good APH but with spring prices being much lower I am not sure if it is worth buying up coverage if your irrigated ground is not a significant portion of your overall operation.