The deadline to make your crop insurance decisions is a month away, and Dave Jansen with Strategic Farm Marketing says there have been major changes to this year’s products.
“I think this is probably the most revolutionary change we’ve seen in crop insurance here in the Midwest in 15 years–some of it with federal products and some of it with private products,” Jansen says.
He recently joined the Top Producer podcast with host Paul Neiffer to explain some of those changes, as well as how you can get the most bang for your buck in coverage.
“ECO (Enhanced Coverage Option) had a 44% subsidy, and that’s now 65%. ECO is, mathematically, probably the best buy we can have in crop insurance today,” Jansen says. “We’ve had some people who are 85% buyers and dropped down to 80% so they could afford the ECO. Some have used SCO (Supplemental Coverage Option), for corn in particular, in order to be able to afford the ECO.”
It’s important to note ECO is a county-based private product - meaning it pays a loss based on your county’s yield or revenue losses instead of your individual numbers. But Jansen says that shouldn’t necessarily scare you off.
“I think the biggest mistake people make when looking at these county-based products is they say, ‘Well, my APH (Actual Production History) is above the county, so I should be looking at this product.’ or ‘My APH is below the county, so I can insure a lot more.’ In either case, it’s the correlation between you and the county that means far more. When the county goes up, do we go up with it? Or, more importantly, when the county goes down, do we go down together,” he explains. “Some farming operations just mirror the county really easily, and some almost go in the opposite direction. That tells you the county-based product isn’t that attractive.”
Catch up on episodes of the Top Producer podcast with Farm CPA Paul Neiffer
If you decide to take advantage of ECO, your premiums could be a 6:1 ratio - depending on where you live. For example, a farmer in Illinois might pay $17 in ECO premiums to get $92 of liability on an acre of corn.
“Only the farmer can determine whether the premium is worth the advantage at that point in time, but has definitely created a tremendous amount of buzz,” Jansen says.
He adds a similar product, called MCO, will be hitting the marketplace soon.
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