February marks the beginning of our tracking season for the 2022 spring projected prices for your multi-peril crop insurance policy. Given the current pricing environment, producers have an opportunity to establish high levels of coverage to start the year.
If we look at where we are now in 2022 compared to where we were last year at this time, we can already see a significant increase in coverages. Your overall revenue guarantee is higher, which is extremely important in a year where we have seen some significant increases to inputs. Starting the year with a high projected price carries over into all aspects of your policy - such as prevent plant and replant - and how the revenue protection portion will play out depending on where the fall price comes in.
If we look at the corn example below, we can see how coverage so far in 2022 compares to where we were in 2021:
A question you may be asking is: we have good prices now but what happens if corn falls to $5.00 futures this fall? Or maybe you are thinking the opposite. Maybe you think prices will hold or even increase. How does my guarantee change? Using the same parameters as above, here is a quick refresher on how those scenarios would play out:
Remember, your revenue protection policy is meant to give you the flexibility to take advantage of this market and allow you to forward contract a portion of your crop if you choose too. Your initial guarantee sets that base coverage. Depending on where the price goes from there, you know you have that minimum set. If a disaster strikes your farm, you have the protection to cover yourself if we are not able to fill those contracts later.
The final projected insurance price will be set March 1st. Currently, we are seeing that price reach levels we have not seen since 2013. With the increased cost of inputs for 2022, being able to start the year with adequate coverage will hopefully be able to provide some peace of mind to you as the producer.