by Bruce Sherrick, Gary Schnitkey, and Nick Paulson, Department of Agricultural and Consumer Economics, University of Illinois
The 2024 price discovery period used to determine projected prices and volatility factors for Federally-sponsored corn and soybean crop insurance products is completed for areas with a March 15th sales closing date (SCD). For the majority of the corn belt, the approved Projected Price (PP) for corn is $4.66 and the Volatility Factor is 0.19, and for soybeans, the Projected Price is $11.55 with a Volatility Factor of 0.15. These represent substantially lower prices than in recent years and will result in lower premiums in general and correspondingly lower insured revenue levels.
For corn, the projected price is $4.66 or 21% below last year’s PP, and for soybeans the PP is $11.55 or 16% below the 2023 projected price. In simplest terms, a producer with a 225 bushel APH insuring at an 85% coverage level would have $891 of insured revenue (0.85 x $4.66 x 225) compared to $1,130 in 2023 (0.85 x $5.91 x 225).
Evaluating Your Federal Crop Insurance Options
The following materials provide one approach for evaluating the most important crop insurance product and election choices facing corn and soybean producers using the University of Illinois iFARM crop insurance evaluator. The case presented is for McLean County, a large and high yielding county in central Illinois. This case, and similar analyses for approximately 750 other counties throughout 10 states (IL, IN, IA, MI, MN, ND, OH, SD, and WI) largely across the Midwest for both corn and soybeans under both basic and enterprise elections, are available at the farmdoc website in the crop insurance section at: https://fd-tools.ncsa.illinois.edu/evaluator
The tool is free to use as are all the other tools at the site. Importantly, there can be large differences in premiums even over short distances or among contiguous counties, and over the choice of unit structure (i.e. enterprise, optional, or basic) and APH endorsement. Thus, while the case farm information provided for each county is helpful in understanding the relationships among choices, it is important to compare to conditions that most closely match your own case. It is also important to carefully discuss final options and decisions with a qualified insurance agent to ensure accurate information about the specific costs.
The case farm from McLean County, Illinois uses starting price and yield conditions shown in the table below. It is assumed that the case farm qualifies for the Trend Adjusted APH endorsement which takes its average Corn APH from about 203 to 214 bushels per acre. The case shown is for an enterprise Unit on 100 acres (the online version can be selected for any county/crop of interest and toggled across units, and actual acreage).
The county standard deviation of yields is estimated to be about 32.09 bu./acre and the farm yield risk is about 8 bu./acre higher. Some basic risk information is given related to yield risk. There is a 30% chance that the farm yield will be below 195 and a 1 in 10 chance that the farm yield will be below about 160. At the county level (against which Area Plans of insurance are settled) there is a 30% chance of average yields being below 199, 1 in 5 years or 20% likelihood that yields will be less than about 188 and so on.
To read the entire report click here.
