Crop insurance: a vital input to consider in 2022
Trade restrictions, COVID, supply chain issues and labor costs are contributing to higher prices in our economy, and agricultural inputs are no exception. A common question among growers for the 2022 season is, “How can we save money without losing results?”
The strategies vary. Some growers are targeting corn acres on their more productive ground and cutting back total corn acres planted. Spreading out purchases might be another option. Using MFA soil sampling and variable-rate spreading might also be an excellent choice. Other growers are treating this as any other year, basing their decisions on the short supply of corn and soybeans driving prices up.
In a time where the “knee-jerk” reaction is to cut costs on inputs, however, crop insurance cannot be the input that growers choose to cut.
To reflect, 2008 was a record year for most cropping inputs. The price of corn for June through December 2008 was $7.87 per bushel, and soybeans from June through November were $15.74. At press time, December 2022 corn futures are $5.53, and November soybeans are $12.76. This is a far cry from 2008 prices. By the time crop insurance guarantees are set—based on month of February average for December 2022 corn futures and the November ’22 soybean futures—market analysts will not be able to see much movement.
The real question is, will prices cover the cost of production when the combines cross the finish line of 2022?
There are a couple of tools to use in managing risk when facing this type of economic environment:
1. Crop insurance and the options it provides.
2. Forward contracting.
Many producers this year will not have guarantees that cover their cost of production. It is vital to consult with a crop insurance professional to help find cost-effective options to improve your levels of risk protection. Those options may include:
- Using a mix of county-based programs with their Revenue Protection policies.
- Exploring the opportunity to “purchase up” the price-per-bushel guarantee.
- Staying status quo.
The latter is not a wise option and is more than likely the result of grower’s anxiety or stress related to crop insurance decision making. If you have a trusted crop insurance advisor, it does not have to be a stressful topic. It is important, now more than ever, to have these discussions, whether it’s how to utilize your policy to capture highs in the market or simply how your premium is being spent.
Here at MFA, we pride ourselves on keeping our agents educated on any changes in the crop insurance industry. For more information, visit with one of the many MFA crop insurance agents across our trade territory. Find your local representative at mfa-inc.com/Services/MFA-Crop-Insurance.
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