Farmers already seeing corn and soybeans prices plummet as the markets expect bountiful harvests have some potential safety nets that might help protect them financially, two
Corn and soybeans futures prices have dropped to their lowest levels since 2010 - corn below
"Midwest crop producers have been shocked by the sharp drop in corn and soybean prices as favorable weather has increased yield prospects this summer,"
Langemeier and Hurt said producers should evaluate how two safety-net programs might help protect them:
* Crop insurance: Revenue policies - those that consider both yield and price - are the most popular. The economists said that even with above-normal yields, prices could drop low enough to trigger insurance payouts on some high-coverage policies. As an example, a farm with an 85 percent policy and yields this year 10 percent above its base actual production history of 170 bushels per acre might trigger an insurance payment if December corn futures in October average below
The same farm with an 80 percent policy, however, would not trigger an insurance payout until the December corn futures average in October drops below
Soybean insurance payouts because of low prices seem much less likely for all coverage levels.
* Agricultural Risk Coverage-County Option: This new government program, also referred to as ARC-CO, currently has a higher probability of adding support to corn and soybean farmers, the economists said. They explained that under the current projections of above-normal yields, the program would begin making payments when the marketing year average of corn drops below about
For soybeans with above-normal yields, ARC-CO payments might begin with a marketing year average price below about
Langemeier and Hurt noted that the
"The important point for producers is that the new government program now appears to have a high potential of providing some protection against low revenues for corn and maybe some assistance with low soybean revenues," they said. "However, 2014 corn and soybean government payments will not be available until the fall of 2015 and thus will not be available to meet more immediate cash-flow needs.
"Crop insurance currently appears less likely to be of assistance for producers with strong yields, although those with high corn coverage levels have some chance of triggering crop insurance payouts."
TNS 30TagarumaMar-140730-4812788 30TagarumaMar
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