Managing risk these days is no easy task. Farmers walk a crop tightrope between investment and profit, but a growing body of evidence that investing in all aspects of crop protection can lead to more crop production is getting more attention. One company - BASF - is moving to offer a different kind of incentive to help you make the investment decision.
Called BASF Investment Advantage, it supports a grower's investment in higher crop productivity in a volatile crop price market. In a recent study, the company found that the volatility of today's commodity markets is causing growers to be more focused than ever on managing risk. Of farmers responding to the study, 85% say it would be difficult or somewhat difficult to manage risk associated with commodity price volatility expected in the 2012 growing season. In the reverse, 86% of growers say they would be more willing to invest in their crops when commodity prices are high.
With Investment Advantage, growers who purchase 300 acres worth of three products within the BASF High Yield Package by March 15, may receive a partial rebate of their qualifying purchase if the BASF harvest price for the corresponding commodity ends below the BASF established starting price.
"If a farmer uses our high yield system we'll have some skin in the game as well," says Paul Rea, vice president of U.S. Crop Protection, BASF. Rea told Farm Progress that going beyond the traditional production system with advanced technology can offer more corn and soybean production per acre. "If commodity prices decline significantly, we'll refund partial cost of the investment."
After the sign-up deadline, a starting price for corn and soybeans will be set. Rea explains that at the end of the season using a BASF proprietary pricing model the company will calculate if a rebate is owed. "We'll disclose a starting point early in the season and at another point we'll disclose the harvest price," Rea says. "We'll be transparent with the actual prices for corn and soybeans."
He notes that the company is sending a signal that there are a lot of benefits to BASF technology but that the company is concerned about price volatility risk that growers face. "BASF is willing to share some of the load," he says. "In the last couple of years, the harvest price has gone up, but in the back of everyone's mind is 2009."
Rea adds that this new program is "a demonstration of commitment that [BASF wants] to partner with our growers and we understand the uncertainty they face."
The program starts in corn and soybeans and will add wheat in 2012. To qualify, farmers would purchase 300 acres of BASF high-yield products including Kixor technology, a fungicide (Headline or Headline AMP) and for soybeans the program would include Respect insecticide.
Other programs for 2012
Investment Advantage is just the newest tool BASF offers, the company is expanding on some existing programs for 2012.
Headline Advantage adds to the portfolio of eligible fungicides for the new year. Growers who purchase two BASF products by March 15 may qualify to save up to 20% on certain purchases of Headline fungicide, Headline AMP fungicide and TwinLine fungicide. TwinLine is used in the the wheat market.
Finance Advantage is a program BASF started where the company partners with John Deere Financial. Growers who choose to finance the qualifying purchase of two or more BASF products by March 15 will receive no payments and no interest until December 2012. Under the rules of the program a farmer would have to purchase at least $10,000 in product value with the second product making up at least $2,000 of the total to qualify.
Insurance Advantage expands in 2012 with two more states added to this partnership between BASF and Rural Community Insurance Services. Qualifying growers who protect corn acres with a Crop Hail Policy and Green Snap Lodging wind protection endorsement through RCIS can qualify for free Extra Harvest Expense coverage by using Headline or Headline AMP fungicide. Growers in 10 states are eligible for the offer including Iowa, Illinois, Indiana, Minnesota, Missouri, Nebraska, Ohio, Wisconsin and new for 2012, Michigan and Kentucky.
For more information about any of these programs, talk to your local BASF dealer or visit growersadvantage.basf.us