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| PROBLEM: If prices fall to $10.00, 75% CRC will NEVER pay you w/ an average or above average crop. You said it yourself--"just going to settle for my $13.40 insurance floor on 75%-that works out to $10.05 a bushel."
Don't forget CRC has a price limit of $3.00/bu on soybeans. SO, if you have average beans(50bpa) and the price is $10.00, revenue = $518/acre(50bpa * $10.36) at harvest. Your guarantee is 50bpa * $13.36 * 75% = $501/acre. Because your downside price is capped at $10.36 you will never recover the extra money.
I have seen a number of scenarios over the years I have been involved w/ Crop Insurance and Farming and those that are unhappy w/ crop insurance are because they DON'T SPEND ENOUGH MONEY TO GET GOOD COVERAGE. pbutler you are better off taking 90% GRP on your soybeans than 75% CRC because virtually all you are protecting (w/75% CRC) is yeild problems because of the price caps.
Your agent(no offense intended to him/her) didn't do a very good job of explaining things to you because you CANNOT even come close to buying enough put options w/ the money you spend on crop insurance--the difference GOVERNMENT SUBSIDY!!
There are many holes in your strategy, but it will work great if the price stays high or goes higher and we grow a good crop. If I knew this where going to happen I wouldn't take any crop insurance--but I don't know what will happen.
Let me know if you have questions, | |
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