Stellar yields, dismal commodity prices or both ensured many producers did not get payments for 2016 crops. Even if the outlook is the same for 2017, farmers still need to work closely with their crop-insurance agents to try to secure at or above-breakeven profitability with any available tools.
“It’s very, very important that they take that opportunity once a year to review that policy,” says Sherri Tomhave, crop insurance product and training specialist with Farm Credit Illinois. This annual review is pertinent to the accuracy of the policy regarding all entity and personal information, as well as the actual coverage attached. Examples to consider are whether the people with substantial business interests in the policy have changed.
Make your decisions before the federal government’s spring average price is locked in this February and as global fundamentals tilt away from U.S. producers, particularly on the soybean side of the balance sheet.
“Soybeans have considerable downside price risk under normal Northern and Southern Hemisphere yields,” says Jamie Wasemiller, an analyst and crop insurance agent at the Gulke Group in Chicago.
Here are five tips farmers should consider this winter.
Buy the harvest price option.
Priced at 2¢ to 3¢ per bushel, the harvest price option is the closest thing to a cheap call option that producers can buy, Wasemiller says. If harvest prices go above the spring average price, producers can realize higher revenues on their 2017 crops. The Harvest Price Option is there to help farmers in scenarios that mainly involve low production.
By: Nate Birt
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