Purdue ag economist offers comparisons of crop insurance

decrease font size  Resize text   increase font size       Printer-friendly version of this article Printer-friendly version of this article

Farmers still considering crop insurance for this year can learn about the various types of coverage outlined by a Purdue University agricultural economist and compare them to select a plan that best meets their needs.

The deadline to enroll in crop insurance is March 15.

"Crop insurance can be a very effective tool in mitigating downside risk, often defined as the chance of having low returns, on crop farms," said Michael Langemeier, associate director of Center for Commercial Agriculture, based at Purdue.

Langemeier wrote a report comparing crop insurance products and a second one illustrating crop insurance guarantees and potential insurance payments under several yield and price scenarios. The reports are available at http://www.agecon.purdue.edu/commercialag/resources/insurance/index.html

About 75 percent of Indiana crop acres were insured in 2012, when widespread drought wilted corn and soybean crops and drastically lowered yields.

"As with last year’s crops, in 2013 there are several crop insurance products to choose from in Indiana," Langemeier said.

Crop insurance can ensure against production losses and revenue losses. Though Langemeier noted it is difficult to predict yields and prices, he said historical data and recent U.S. Department of Agriculture projections indicate that price declines are more likely this year for farmers than a decline in yields.

"This suggests that it is imperative to closely examine the revenue policies," he wrote.

Revenue polices protect against revenue loss from price, low yield or a combination of both. Such policies consist of a risk protection plan, which is based on the production history of the farm, and a group risk income plan, based on county yields.

Insurance based on production losses include a yield protection policy and a group risk plan. A yield production policy insures against yield losses from an individual farm. A group risk plan insures against production losses based on county yields.

Producers typically have three considerations when choosing among crop insurance: its cost, the likelihood of yield and revenue losses, and the level of risk, Langemeier said.

"Though the relative cost of the insurance products does vary across counties, yield policies tend to be cheaper than revenue policies," Langemeier said.

Farmers with less tolerance for risk are more likely to choose insurance that includes a higher level of coverage, he said. Although the size of potential indemnity payments increases as coverage level increases, such policies are more expensive.


Buyers Guide

Doyle Equipment Manufacturing Co.
Doyle Equipment Manufacturing prides themselves as being “The King of the Rotary’s” with their Direct Drive Rotary Blend Systems. With numerous setup possibilities and sizes, ranging from a  more...
A.J. Sackett Sons & Company
Sackett Blend Towers feature the H.I.M, High Intensity Mixer, the next generation of blending and coating technology which supports Precision Fertilizer Blending®. Its unique design allows  more...
R&R Manufacturing Inc.
The R&R Minuteman Blend System is the original proven performer. Fast, precise blending with a compact foot print. Significantly lower horsepower requirement. Low inload height with large  more...
Junge Control Inc.
Junge Control Inc. creates state-of-the-art product blending and measuring solutions that allow you to totally maximize operating efficiency with amazing accuracy and repeatability, superior  more...
Yargus Manufacturing
The flagship blending system for the Layco product line is the fully automated Layco DW System™. The advanced technology of the Layco DW (Declining Weight) system results in a blending  more...
Yargus Manufacturing
The LAYCOTE™ Automated Coating System provides a new level of coating accuracy for a stand-alone coating system or for coating (impregnating) in an automated blending system. The unique  more...
John Deere
The DN345 Drawn Dry Spreader can carry more than 12 tons of fertilizer and 17.5 tons of lime. Designed to operate at field speeds up to 20 MPH with full loads and the G4 spreader uniformly  more...
Force Unlimited
The Pro-Force is a multi-purpose spreader with a wider apron and steeper sides. Our Pro-Force has the most aggressive 30” spinner on the market, and is capable of spreading higher rates of  more...
BBI Spreaders
MagnaSpread 2 & MagnaSpread 3 — With BBI’s patented multi-bin technology, these spreaders operate multiple hoppers guided by independent, variable-rate technology. These models are built on  more...


Comments (0) Leave a comment 

Name
e-Mail (required)
Location

Comment:

characters left


Quickveyor

Made of high quality 304 stainless steel, the Quickveyor is one of the strongest trailers on the market. It’s belt ... Read More

View all Products in this segment

View All Buyers Guides

Feedback Form
Feedback Form