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| Ok, crop insurance 101:
The $1.50 price limit is on CRC and GRIP (although GRIP uses a 1.5 factor, so probably not as much of an issue). CRC/GRIP also have a $3.00 price move limit.
All this means is if the fall price averages more or less than those amounts, your payment is "capped" at that point. This only affects you on an up price move if you have a yield loss. On a down price move (below $2.56 corn), it makes a difference rapidly, if you have a high level of coverage.
Harvest Option guarantees you bushels in the event of a higher price move. Examples of this were last year for corn, and 2003 for soybeans. If you are in an area that has a production problem, and the area is large enough (and/or demand is strong like last fall), your guranteed bushels declines as the price rises without HO.
This would occur at the time you need coverage the most, high fall prices with low yields, especially if you sold your guaranteed bushels (or what you thought were your guaranteed bushels), and now you don't have the bushels, and the cost to "buyback those bushels is higher.
My battery is about out in the Atlanta airport.
good luck, Rob | |
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Crop ins...harvest option
