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crop insurance
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84TURBOGN
Posted 3/8/2007 11:06 (#116653 - in reply to #116525)
Subject: Re: crop insurance


Ok,

It looks like I wont get my questions answerd here.
Rob, I agree and I said it before, yes crop insurance gives me THE BACKSTOP to market grain, however I do not think you are qualified to say that using a revenue based product is cheaper and better than options. Please explain how.? I like to have puts on 75%. Did the same thing the last two years. Crop insurance gives me two months to look at price. If we rally this summer can you roll your insurance floor higher? NOPE! If the market crashes, do you have a PRICE floor under your crop? NOPE Yes if the market is higher in the fall I have some protection with CRC and I have a short crop but like I said before, the guarente's from crop insurance are a little misleading since as a producer, I still need to sell the crop localy. My CI indemnity (after premium) will not pay me the difference if I sold corn at -40Z and the basis goes to +25 and the market rallies and I need to buy those bushels back. Also if the basis stays wide or goes even wider, my ACTUAL, PAID TO ME REVENUE will not be the same as what the actual revenue calculated by crop insurance. I am also not saying that I wont use insurance because it is needed as a backstop but broad based statements about crop insurance replacing option based marketing is reckless. Also, as far as grip, yep 2005 It paid out real nice. last year it did not because the price rallied. GRIP is a bearish product. If I use it, the upside needs to be open on the grain price, = options

In closing, Rob, I would be careful about the statement you made to bpak. saying that you would send him a calander and more than likley a GRIP payment as well. The GRIP payment is not guarenteed because it depends upon his county, his farm and the price. 3 things you nor anyone can predict. I took it that if he used you instead of his agent he has a better chance of getting a payment back. Be careful with that. That is really no different than a commodity broker or stock broker guarenting profits on a trade, SEC, CFTC would have a field day over a statement like that if you were in those industries. maybee you did not mean it that way but just pointing out as to how I interpeted the statement.
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