Higher crop prices this fall have increased the payout of crop insurance coverage for key cash crops. American Farm Bureau breaks down how the trend will impact certain policies for corn, soybeans, and cotton.
The fall commodity markets rally means crop insurance coverage under the Revenue Protection Policy will be based on the fall harvest price for corn, soybeans, and cotton. American Farm Bureau Federation Chief Economist, John Newton says that the Revenue Protection Policy with the harvest price option is one of the most popular crop insurance products.
According to Newton, “When a farmer suffers a crop loss, the harvest price option indemnifies the growers at the higher of the spring price of the harvest price, and the spring price is discovered in February, and the harvest price was discovered during the month long period of October.”
This is the first year since 2012 the harvest price was triggered for corn, and the first time since 2016 for soybeans and cotton.
“The spring prices for corn, soybeans, and cotton were announced earlier this year at $3.88 per bushel of corn, $9.17 for soybeans, and 68 cents per pound of cotton,” Newton states. “All three of those crops have a higher harvest price this year. Soybeans are now $10.55 per bushel, $3.99 per bushel for corn, and 69 cents per pound for cotton. So, crop insurance policies will use these higher prices when determining the revenue guarantees.”
Newton says that the harvest price option provides more support for farmers and ranchers who suffered a crop loss this year.
“Well, for any producer that suffered a crop loss during 2020, this growing season, or reduced yields due to adverse weather, the higher harvest price will help a producer by indemnifying at the replacement value of the new crop,” he adds. “So, this does provide more support for those farmers and ranchers that have suffered a crop loss this year.”
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