# Insurance implications



## deadmoose (Oct 30, 2011)

Question:

Does crop insurance promote peaks and valleys in crop prices? Heard cash prices (low) again on radio today. Got me thinking. To the farmer guaranteed x amt this year for said crop what is the incentive to getting a better price? If either way the end result is the same why not sell corn for a dollar and beans for 5?

I do not know much but bits and pieces about how insurance works. I have only paid attention to commodities and crops for a few years. What am I missing?


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## swmnhay (Jun 13, 2008)

deadmoose said:


> Question:
> 
> Does crop insurance promote peaks and valleys in crop prices? Heard cash prices (low) again on radio today. Got me thinking. To the farmer guaranteed x amt this year for said crop what is the incentive to getting a better price? If either way the end result is the same why not sell corn for a dollar and beans for 5?
> 
> I do not know much but bits and pieces about how insurance works. I have only paid attention to commodities and crops for a few years. What am I missing?


Crop revenue insurance is not based on the price you sell it for.IIRC.Soybeans are the average price in Oct and corn Nov.I think its based off CBOT prices so guys in terrible basis area could get screwed bigtime.

So if price is low at harvest and collect on Revenue Ins.Then keep the grain until price rebonds is what would be best case for toatal $


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## haybaler101 (Nov 30, 2008)

And is not price insurance, it is revenue insurance. Which is cbot average price for December corn in October multiplied by your yield. Our yields are high enough here that price would have to drop to about $2.50 to trip a payment.


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## Waterway64 (Dec 2, 2011)

Insurance company's do well regardless! Mel


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## cmd (Oct 26, 2012)

Your potential insurance returns are also based on your prior yields. If you are honest in your dealings with your crop insurance claims, there is no such thing as "farming for insurance money" if you were doing that piss poor job, after a few short years you would have your average yields beat down so far you would not be getting paid when you really needed it.


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## prairie (Jun 20, 2008)

All I can say is whatever you do, don't take the USDA welfare, and pay ALL of the premium yourself. That is what we have done. It is hard for me to understand why anyone would want to take welfare if they don't need it. It is no different than food stamps, heating assistance, WIC, and etc. Crop insurance is a cost of doing business just like land rent, fertilizer, repairs, fuel, etc. Why doesn't he government pay for part of all those things also? it was a great feeling when we exited the "Farm Program" last year. Since farming fulling time starting in 1994, I have only boufght crop insurance 1 year, 2013, which will probably be my last. We paid the complete premium ourselves, no welfare involved.


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## Vol (Jul 5, 2009)

Saw this today. Not a complete article unless you subscribe but it gives the basics of the discussion.

Regards, Mike

http://www.dtnprogressivefarmer.com/dtnag/common/link.do?symbolicName=/free/news/template2&forceNavUpdate=false&product=DTN/Ag/Markets&vendorReference=308a8cb9-d7c9-5745-994a-cb97a4791064__1413401381360


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