Deadline to purchase crop insurance is March 15

The deadline for farm operators to purchase crop insurance for the 2023 growing season is March 15. The 2023 Spring prices for corn and soybean are likely to be similar to the base price levels last year, which should result in some favorable crop insurance guarantees again in 2023. Premium costs for 2023 should also be comparable to a year ago for similar crop insurance products.

Producers have several crop insurance policy options to choose from, including yield protection policies and revenue protection (RP and RPE) policies, supplemental crop option, enhanced coverage option, and other private insurance policy options.

By Kent Thiesse

Table A — Comparison of Revenue Protection and Yield Protection Insurance Coverage for Corn

These figures are based on an actual production history of 200 bushels per acre; an 85 percent yield protection bushel guarantee of 170 bushels per acre; a yield protection market price of $5.90 per bushel; a revenue protection Spring base price of $5.90 per bushel; and an 85 percent revenue protection minimum guarantee of $1,003 per acre.

In recent years, most farm operators have chosen revenue protection insurance policy options, which provide a guaranteed minimum dollars of gross revenue per acre. This minimum guarantee is based on yield (actual production history) history on a farm unit times the Spring (base) price. This price is the average of the Chicago Board of Trade prices during the month of February for December corn futures and November soybean futures. As of Feb. 8, the 2023 estimated crop insurance Spring prices in the Upper Midwest for yield protection and revenue protection policies were estimated at $5.96 per bushel for corn and $13.60 per bushel for soybeans. The 2023 crop insurance Spring prices will be finalized on March 1. The current 2023 base price estimates compare to 2022 base prices of $5.90 per bushel for corn and $14.33 per bushel for soybeans. The final crop revenue for 2023 will be the actual yield on a farm unit times the final crop insurance harvest price.

Another insurance option that is a lower premium than a typical revenue protection policy with harvest price protection is a RPE policy (harvest price exclusion), which functions similar to a standard revenue protection policy except that the guarantees on RPE policies are fixed at the base price level and are not affected by harvest prices that exceed the base price.

Table B — Comparison of Revenue Protection and Yield Protection Insurance Coverage for Soybeans

The revenue guarantee for standard revenue protection policies is increased for final insurance calculations, if average CBOT prices during the month of October are higher than the February CBOT prices, which is what occurred for corn and soybeans in both 2020 and 2021 and for corn in 2022. In situations with major yield loss in a rising price environment, the use of an RPE policy vs. a standard revenue protection insurance policy can result in significantly reduced indemnity payment potential for the year.

Many producers in the upper Midwest have been able to enhance their insurance protection by utilizing the trend-adjusted yield endorsement, with only slightly higher premium costs. The actual production history yield exclusion option allows specific years with low production to be dropped from crop insurance actual production history yield guarantee calculations. For information on counties, crops, and years are eligible for yield exclusion, go the U.S. Department of Agriculture Risk Management Agency web site (https://www.rma.usda.gov)

An analysis for the past 15 years (2007-2022) shows the final crop insurance harvest price for corn has been lower than the Spring base price in 10 of the 16 years, including from 2013-2019. That trend has been reversed in the past three years (2020-2022) when the harvest price for corn has risen above the Spring price by 11 cents per bushel in 2020, 79 cents in 2021, and by 96 cents in 2022 (from $5.90 per bushel to $6.86 per bushel). The only other years which saw an increase in the harvest price were 2010, 2011 and 2012. The range has been from an increase in the harvest price of $1.82 per bushel in 2012 to declines of $1.26 and $1.27 per bushel in 2013 and 2008, respectively.

For soybeans, the harvest price has increased in seven years (2007, 2009, 2010, 2012, 2016, 2020 and 2021), decreased in eight years (2008, 2011, 2014 through 2019, and 2022) and stayed the same in 2013. The range has been from an increase of $2.84 per bushel in 2012 to a decline of $3.00 per bushel in 2008. In 2022, the harvest price was $13.81 per bushel, which was a decrease of 52 cents per bushel from the Spring price of $14.33 per bushel.

Enterprise units combine all acres of a crop in a given county into one crop insurance unit, while optional units allow producers to insure crops separately in each individual township section. Enterprise units usually have considerably lower premium costs (approximately $8-$12 per acre) compared to optional units for comparable revenue protection and RPE policies.

Producers should be aware that enterprise units are based on larger coverage areas and do not necessarily cover losses from isolated storms or crop damage which affect individual farm units, such as damage from hail, wind or heavy rains. So addition-

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