& Policy Update Graphic owner: UKZN SAEES: school website
2017 Revenue Protection Insurance Safety-Net Potentially Much Improved for Soybeans
February 27, 2017 Volume 17, Issue 2 Edited by Will Snell & Phyllis Mattox
2017 Revenue Protection Insurance Safety-Net Potentially Much Improved for Soybeans - Todd Davis
February is when the projected price for Revenue Protection (RP) crop insurance is established based on the December 2017 corn and November 2017 soybeans futures contracts closing prices for this month. With the price discovery period halfway completed, the projected price for corn and soybeans are estimated at $3.96 and $10.20 per bushel, respectively. A projected price for corn at $3.96 would only be a $0.10/bushel increase over last year’s price and would be $1.69 per bushel below the guarantee in 2013 the year before the enactment of the current Farm Bill. The 2013 coverage may have been sufficient to provide a revenue guarantee that covered per acre input costs and cash rent, which is not the case this year. In contrast, soybeans are projected to have an improved safety net in 2017 due to the rally in the futures market throughout fall and winter. The current projected price for soybeans at $10.20/bushel would be a $1.35/bushel increase over the 2016 price. Figure 1 compares the expected crop insurance guarantees for corn and soybeans compared to the budgeted total variable costs plus cash rent for corn and soybeans. The combination of lower production costs and better safety net protection reinforces the anecdotal evidence of acreage shifting from corn to soybeans in Western Kentucky. While farmers have historically not purchased RP insurance at the 85% coverage level, managers should work with their crop insurance agent to evaluate the potential safety net for the farm provided by buying up coverage in 2017. Corn ($3.96)
Soybeans ($10.20)
$50
$18
Bale Grazing: Increasing Fertility While Reducing Costs - Greg Halich
$0 70%
Policy Briefs: Tobacco, Trade, and Farm Bill - Will Snell
80% -$10
85%
-$38
-$50 -$66
$/Acre
Beef Herd Expansion Continues Despite Lower Prices - Kenny Burdine
75%
-$100 -$101 -$131 -$150 -$161 -$200
-$190
-$250
RP Insurance Coverage Level (%)
Figure 1. 2017 Corn (blue) and Soybean (red) Revenue Protection Guarantee Compared to Total Variable Costs Plus Cash Rent for Various Coverage Levels.
PAGE 2 Educational programs of Kentucky Cooperative Extension serve all people regardless of race, color, age, sex, religion, disability, or national origin. UNIVERSITY OF KENTUCKY, KENTUCKY STATE UNIVERSITY, U.S. DEPARTMENT OF AGRICULTURE, & KENTUCKY COUNTIES COOPERATING.