2023 was the perfect opportunity to lock in profit using crop insurance.

Many crop insurance products are sensitive to price. In 2023, the spring time Projected Price for corn was $5.91. At harvest time, the price declined to $4.88. This was over $1 decrease in price per bushel.

The beauty of using Revenue Protection crop insurance is that you guarantee yourself revenue.

Price x Bushels x Coverage = Guaranteed Revenue

85% Example: $5.91 Price x 220 APH x 85% RP Coverage = $1,105 Guaranteed Revenue

95% Example: $5.91 Price x 220 APH x 95% Coverage = $1,235 Guaranteed Revenue

When price decreases, the bushels have to increase to make up for it. In the spring, the guaranteed bushels for 85% RP was 187 and 209 bushels per acre on 95% coverage. Below show the new bushel triggers after the harvest price was determined at $4.88. 85% coverage picked up 39 bushels per acre guarantee and 95% coverage picked up 44 bushels of guarantee. This demonstrates the how crop insurance protects against price decline.

85% Example: $1,105 Guaranteed Revenue / $4.88 Harvest Price = 226 Bushel Trigger

95% Example: $1,235 Guaranteed Revenue / $4.88 Harvest Price = 253 Bushel Trigger

At the end of the day, you are guaranteed revenue.

Revenue – Cost of Production = Profit

The high spring price allowed the opportunity for many farmers to lock in a profit.

 

To learn more about how the different crop insurance performed in 2023, read Did Crop Insurance Trigger in 2023?

In 2024, price is at a much lower level making tighter margins. Read Re-thinking Crop Insurance in 2024 for more information.