Looking Back and Protecting Your Future.
If we only knew what mother nature had instore for us. If we only knew what the markets will do. It is easy to look back and regret not making a marketing decision, or question if you did everything right to produce your next bumper crop. That being said, one thing you can do is use Revenue Protection (RP) as a tool in your marketing program and to provide you crop protection in the form of a REVENUE guarantee, not PRICE guarantee.
Looking back at 2023 corn, we started in February with a Base Price of $5.91, and a Harvest Price in October of $4.88. Remember with RP, price is only half of the equation. To determine if you have a loss or not, we still take into account your harvested production. See below an example.
Corn APH (Actual Production History) 180bu / Coverage level 75%
180 bu avg x 75% level =135 bushels x $5.91(base price) = $798.00 guarantee per acre.
Harvest price of $4.88 x _______bu Harvested production = Harvest Value
If your harvest value is less than the revenue guarantee, you will be paid the difference. Please remember that you will NOT be paid the difference between the spring and fall price on what your harvest. The policy protects against Revenue, not just price. You will always need to account for your harvested production to determine if you have a loss or not. In the example above, if you divide the harvest price of $4.88 into the $798.00 guarantee that was originally set in February, your new bushel trigger becomes 163.5. In summary, with a lower harvest price, it takes more bushels to meet your revenue guarantee.
In many areas, tremendous yields were reported even with the dry start to the growing season. Last minute rains saved the crop for a lot of producers, but not everyone was that fortunate. We still had many areas affected by drought and did not see the yields that others did. Remember, these tremendous yields go into your 10-year APH raising your coverage and protecting your future. We are protecting against what we cannot control no matter when it happens.