The Spring Base Price for Crop Insurance Has Been Set

Finance First

Consider it your parachute for 2013

Published on: March 11, 2013

We now have a guaranteed price for our 2013 corn and soybeans if we take advantage of it.  At the beginning of this month, the RMA officially announced the spring base price for corn is $5.65 per bushel, and for soybeans, it's $12.87. Remember what a huge deal crop insurance was for the 2012 crop? There's not much time left to make sure we're doing a good job of protecting our next crop on both price and yield.

$5.65 is pretty close to last year's spring price of $5.68. While that might not seem like a great corn price compared to where prices have been the past couple of years, it's possible that it offers some excellent protection, especially if you have a hard time parting with your crop, or putting marketing strategies in place. If we have a big crop this year, prices could slide, making $5.65 look pretty good.

That's not to suggest that you ignore the harvest price piece of the equation this year. Some farmers did that last year and ended up kicking themselves. There's also a possibility again that we could have a continued dry trend bringing prices higher at harvest again. In that case, having the option in crop insurance to select a higher harvest price could again offer great protection. Don't sacrifice coverage to save on premium.

I'm going to preach about high coverage levels as well here. If you've already signed up for something lower than 85% RA, it's not too late to go back and change that. Remember that the 85% you're covering is 85% of your APH and not 85% of what you grow in a good year. You have a lot of risk out there with the cost of land and inputs. Make sure you're covered. This doesn't have to be Las Vegas.

One of the real benefits of crop insurance is just the fact that we have to make this decision now, before there's a crop even planted, before emotions start to enter into the picture. We always make better decisions when emotions are not in the picture.

Arlan Suderman has an analogy about this that I like. A friend of his went sky diving. Some might think that's a foolish thing to do. His friend made the decision to jump out of that airplane while he was still on the ground, filling out all of the paperwork…before his emotions climbed to ten thousand feet. Crop insurance is the equivalent of making a risk management decision on the ground, locking in a level of protection for the next crop before emotions take off with the growing season.

And one more piece of advice before we take off - make sure you have a trusted, knowledgeable crop insurance agent packing your parachute.