Hindsight is 20/20. And some years it's just painful. Such is the case this year for one of our customers who opted for a lower coverage level on his wheat crop. This Illinois farmer raises about 500 acres of wheat and this was the first year he was buying crop insurance on wheat. Crop Insurance Specialist Dale Peters evaluated the operation, and recommended 75% Crop Revenue Coverage. That was going to be $38/acre in premium. Too expensive. The farmer opted for a lower coverage level (50% CRC) at a $5/acre premium.
Come harvest, the yields were coming in lower than this farmer's 73 bushel guarantee. So he called Dale to check on his crop insurance. Because of the 50% coverage level, the news was not good news. No claim. But let's look at what it could have been. The guarantee was locked in at $8.58/bushel. The harvest price hit $5.19/bushel (Chicago).
75% of the 73 bushel APH = 54.75 bushels/acre x $8.58 = $469.75. That's the guarantee. Actual yield: 60 bushels/acre x $5.19 = $311.40
$469.75 (Guarantee) - $311.40 (Actual) = $158.35/acre claim. Subtract the premium out -- and this farmer would have been ahead by $120.35/acre during this past cropping season.
Dale Peters says the situation changes from year to year. The important thing is to sit down with an experienced Crop Insurance Specialist each year to figure out the best strategy.