Ugly: Likely crop insurance guarantees for 2014
The farm management specialist said the current example of relative lower levels of protection show the weakness of the crop insurance program to be the sole safety net for agriculture. He said it works well when there are periods of high prices, and high guarantees, but when there is little or no financial assistance offered by crop insurance, such as 2014, it is important for Congress to establish a farm program with safety nets across years, not just individual years. Ironically, Schnitkey says 2014 will closer to the norm, than recent years with high revenues and high indemnity payments.
Lower commodity prices are pointing to lower spring and fall crop insurance guarantees for 2014 crops. Those are currently near $4.50 for corn and $11.50 for soybeans. While the spring guarantees are not set yet until next February, there is no reason for 2014 prices to be much different than they are now. Those prices would provide an acreage guarantee of $684 for corn and $478 for soybeans, based on an 80 percent Revenue Protection policy.