Wheat Basis and Problems with Insurance Have Been Noted
Sen. Pat Roberts office aware of problem; says it will be 'huge issue'
Published on: July 1, 2010
Dozens of Kansas farmers are getting an ugly surprise this summer as wheat cash prices have fallen significantly lower than the July futures contract (or September contract for that matter).
The issue is how Revenue Assurance and Crop Revenue insurance programs pay out. May farmers were under the assumption that the precipitous drop of prices in the month before harvest would trigger insurance payments. But "harvest price" is figured on a futures price formula and insurance payments are triggered by that price.
That leaves many farmers who did not forward contract their crop stuck with selling at low cash prices but not being able to reap an insurance payment to cover their losses.
I contact the office of Sen. Pat Roberts about this problem in the language of the crop insurance title of the 2008 Farm Bill. His office sent this reply: "Yes, we are aware and
the Senator’s aware it will be a huge issue going forward."