Start Locking In Your 2015 Crop Insurance Spring Price
Apr 15, 2014
2015 Price Flex: The following states have been approved: AL, CO, GA, IA, ID, IL, IN, KS, KY, MI, MN, MS, MO, NE, NC, ND, OH, PA, SC, SD, TN, TX, VA, WI
Price Flex is a private insurance that allows the producer the opportunity to “lock” a potentially higher revenue protection guarantee than the spring or harvest price set by the RMA for both the RP and ARP policies. The additional months to determine the 2015 insurance price starts this month and goes until April of 2015. (ex. The CZ15 futures price will be averaged during the above mentioned months to determine the additional monthly spring price opportunity for 2015 corn insurance).
Price Flex is available for corn, cotton, soybeans, and wheat in the states mentioned above. Price Flex has a limit on the difference in price between the highest Price Flex additional price discovery price designated and the price determined by the RMA. The limits are $1.00/bu for corn, $1.50/bu for wheat, $2.00/bu for soybeans, and $0.20/lb for cotton. Producers may choose from several options for price caps that are less than these policy limits.
The current April price average is $4.96. If you purchased the month of April then this will act as your spring price for 2015 as long as the government Feb price is lower. If the Feb 2015 price comes in higher than the final April 2014 average you will still get to use the higher Feb average and the April average will expire worthless. Due to the $1.00 cap in corn if the Feb price happens to go below $3.96 then it will bring down the April price along with it but you are assured at that point that your spring price will still be $1.00 higher than the government spring price.
The current April price average is $11.70. If you purchased the month of April then this will act as your spring price as long as the government Feb price is lower. If the Feb 2015 price comes in higher than the final April 2014 average you will still get to use the higher Feb average and the April average will expire worthless. Due to the $2.00 cap in soybeans if the Feb price goes below $9.70 than it will effectively lower the Nov average but again you will be $2.00 higher than the government spring price.
As a risk management consultant and farmer it is always disheartening to watch the futures prices/ insurance revenue guarantee for the following year go lower. In the past the only way to hedge this price drop was on the board. That is fine for some but many do not want to do that. Now there is an opportunity to put on a strategy through a private product. The other nice feature about this product is that it is like insurance is the sense that you can buy now and not have to pay until October, 2015.
The Deadline for this month is April 20th.
If you have any questions about Price Flex or want to look into buying this product contact an agent or give me a call at 707-365-0601.