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SD | How many miles are between your fields? Do you own a majority of your ground? Do you ever have hail? Does your lender need guaranteed protection?
Selecting MPCI coverage is actually more complicated than what most folks would lead you to believe.
I believe the government subsidizes the 70 or 75% level the most. (I'm sure someone on here would know for sure.) This is usually a safe bet, but your banker may want protection of their assets and require you to buy up to 80-85% coverage.
If you are spread out optional units would be nice, but the premiums are usually out of this world. This forces most producers to select enterprise units, which reduces premium and value of protection to a certain extent.
If you have hail in your area it is a good idea to reduce your coverage levels and use the money saved to buy up hail insurance OR buy up to 80-85% and pray 20-25 percent of your crops don't get taken out.
Local basis also comes into play. You may be guaranteed $50,000 for total crop production, but you have to remember the bushels you produce are valued at spring/harvest guarantee whichever is higher IF you choose harvest price option. You may end up with only $30,000-$35,000 after MPCI premium is paid and your local bushels are sold minus the basis. Which is why some older/wealthier farmers who can afford a crop failure usually go withough MPCI protection. (Payouts are generally few and don't amount to much.)
Alot of marketing folks like to use the MPCI as a marketing tool, but if your area historically has a negative basis.... be very careful forward contracting too many bushels as you could go backwards in a hurry.
Worst case scenario is shallow loss and no payout from MPCI, but you still have the nice premium to pay!
I have dealt with several Crop Insurance Agencies and half of them don't even know what they are selling. Always read the fine print.
I hope this makes sense and helps. If you have any questions please ask. Somebody on NAT will know the answer or try help you out. | |
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- RE: Crop Insurance, more, less or same? - carlsoncl : 2/20/2017 17:35
- RE: Crop Insurance, more, less or same? - ehoff : 2/20/2017 18:27
- RE: Crop Insurance, more, less or same? - Curt Keiser : 2/20/2017 18:43
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Crop Insurance, more, less or same?
