Crop Insurance and Grain Marketing By Nathan Nordstrom, Director of Grain Merchandising
Chances are you recently signed up for federal multi-peril crop insurance, but you may not be considering the price protection you are receiving through that policy. Crop insurance can serve as an important cornerstone in any marketing plan. It’s one of the lowest-cost ways to add price protection early in the season. Crop insurance also includes the potential for upside if prices improve by harvest. This is why it is often compared to a futures option. However, insurance will also protect against yield loss, and an option will not.
At the same time, it is also important to note some of the shortcomings of crop insurance as price protection: • Higher-than-average yields will reduce the price guarantee. • February and October averages do not take advantage of summer weather markets. • Protection offered by crop insurance expires once the crop is harvested.
A diversified marketing plan with UFC can help overcome some of these shortfalls without the expense of additional insurance. We can review historical data to formulate realistic target prices and come up with a Plan B if markets remain flat. To discuss this further, call the UFC Grain Division at 507-647-6601. ●
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Fieldviews is a publication of United Farmers Cooperative located in Southern Minnesota.