Record-high crop prices: What does it mean for insurance?

Did you notice higher premiums when you talked to your crop insurance agent this month? There’s a reason – Spring 2022 crop insurance guarantees are among the highest on record, keeping up with surging input costs to offer some revenue protection through an uncertain growing season.


The spring crop insurance guarantee for wheat has been set at $9.19 per bushel, up 41% from last year. The guarantee for corn is $5.90 per bushel, compared to $4.59 in 2021.


These prices are calculated by averaging the daily closing prices of the December corn, November soybean and September spring wheat contracts throughout February. Based on those numbers and the farm’s actual production history (APH), a level of revenue is determined. Anywhere from 50-75% (in some areas up to 85%) of that revenue can be insured.


Jim Hickey, Director of Sales for Farm and Personal Lines at Farmers Union Agency, explains what’s happening in the farm and crop economy and how it affects insureds.


“The cost to put crops in the ground this upcoming season is now significantly higher than farmers may have expected last fall and winter – mainly the cost of gasoline or diesel fuel and fertilizer,” he said. “But the expected return on harvest is through the roof right now, too. Whether those equal each other or not is debatable by farmers.”


From an insurance standpoint, Hickey says that the main goal is to make sure farmers’ input costs are covered and to keep insureds educated amid some of these uncertainties.


“Crop insurance prices are up because you’re protecting more value,” Hickey added.


Livestock Revenue Protection 


While the deadline to enroll in Agriculture Risk Coverage or Price Loss Coverage programs passed on March 15, other federal crop programs for livestock coverage are available year-round.


Input costs to raise cattle have risen similarly to crops – from feed for nourishment to gas for heating farm buildings, added production costs have ultimately led to higher sticker prices at the meat counter.


“If you are a livestock farmer or dairy farmer, there are programs to help protect those input costs or a portion of the revenue you expect to come in,” Hickey said.


Have a question about farm or crop insurance? Reach out to your local FUA agent. 


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