making informed crop insurance decisions… rochester, ny june 18, 2002

1

Making Informed Crop Insurance Decisions…

Rochester, NYJune 18, 2002

Brent GloyCornell University

2

Overview of Presentation

NY Field Crop Production

Why buy crop insurance?

Crop Insurance Products

Crop Insurance Decisions

Case-Farm Break-out

3

NY Field Crop Production

4

NY Grain Production Statistics

Corn is # 1 field crop… In total acres planted and harvested

New York Field Crops

-

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001

Year

Harv

este

d A

cre

s Corn-AllCorn-GrainCorn-SilageWheatOatsBarleySoybean

5

Grain vs. Silage 50% of corn acres are harvested for grain and 50% for silage

NY Corn Production

New York Corn - Grain vs. Silage

-

100,000

200,000

300,000

400,000

500,000

600,000

700,000

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001

Year

Haveste

d A

cre

s

0%

10%

20%

30%

40%

50%

60%

70%

% G

rain

Corn-Grain Corn-Silage %Grain

6

NY Corn for Grain Production

Top 10 Corn Acre Counties

Top 10 corn counties are located in central ‘Upstate’ New York

#6 #7#8 #4

#2

#3

#9

#5#1#10

7

NY Corn ProductionTop 10 Corn Acre Counties

Top 10 NY Corn Counties Total Corn Acres Planted 39% Total Corn Acres Harvested for Grain 59% Total Grain Corn Production 61% % of Corn Acres Harvested for Grain 78%

Compared to State Average of 51%

Year 2001County Planted Harvested % Grain Yield Production

CAYUGA 62,800 44,300 71% 132 5,841,000 LIVINGSTON 55,100 44,000 80% 90 3,960,300 ONTARIO 44,700 40,000 89% 110 4,386,300 WAYNE 41,600 39,100 94% 103 4,013,000 SENECA 31,700 30,100 95% 113 3,400,500 NIAGARA 37,300 29,900 80% 88 2,641,700 ORLEANS 33,300 26,700 80% 106 2,830,200 MONROE 26,900 24,100 90% 104 2,509,300 STEUBEN 35,300 21,800 62% 87 1,900,400 GENESEE 44,200 21,600 49% 103 2,232,000

Total 412,900 321,600 78% 102 33,714,700

‘

‘‘

‘ Higher %to grain

8

Is there a need/role for crop insurance in

NYS?Some facts: Not all corn in NYS is harvested for silage

In top counties nearly 80% harvested for grain

Value of corn for grain production in top 10 counties approaches $70 million

9

Some Corn Trivia

In 2001, McLean County IL (#1 county in U.S.) produced 50,180,80 bu of corn

IL had the top 6 producing counties in the U.S. NY state produced 56,700,000 bu of corn in 2001 NY ranked 20th in corn production in 2001 The highest yielding county (with at least 20,000,000 bu

produced was Phelps County NE, South Central (194 bpa) The top 10 counties in the U.S. produce 4% of U.S. corn

production There were 115 counties in the U.S. that produced over

20 million bushels of corn. Of these the highest average yeild was 194 bpa and the lowest was 111 bpa Nobles county MN

# of these counties by state IA = 41, IL = 35, IN = 3, KS = 1, MN = 12, ND = 1, NE = 19, TX = 1, WI = 1

These counties produce 31% of U.S. corn Top 4 states are IA 1.66 bb, IL 1.65 bb, NE 1.1 bb, IN 884

mb and account for 54% of production

10


11

Profit = Total Revenue – Total Cost

grain price * grain produced- input costs * inputs- other costsprofit


Risk = variability in profits and cash flow If you are committed to certain cash flows, debt service, family

living, etc., how can you manage the risk of failing to achieve cash flow?

It’s about Profit!

priceuncertainty

productionuncertaintyinput price

uncertainty

12

Risk Means Something to Everyone

Usually it’s different to everyone We will view risk as a financial phenomena Care because it has financial

consequences Ability to pay bills Ability to maintain lifestyle Ability to meet business goals and objectives

13

Sources of Risk

On the cost side… input price variability unplanned input needs liability

Tools to manage… hedging planning/maintenance insurance/management practices

On the revenue side… grain price variability grain yield variability

Tools to manage… hedging/marketing timeliness Insurance Management practices

Crop Insurance tools…Production and/or Revenue Insurance

14

How prevalent are price and yield risks in NY?

15

Corn Yield HistoryFor Select NY Counties

70

80

90

100

110

120

130

140

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001

County by Year

Yie

ld (

bu

/ac)

CAYUGA


70

80

90

100

110

120

130

140

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001

County by Year

Yie

ld (

bu

/ac)

CAYUGA LIVINGSTON


70

80

90

100

110

120

130

140

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001

County by Year

Yie

ld (

bu

/ac)

CAYUGA LIVINGSTON ONTARIO

Production Uncertainty

Uncertain yields County average yields ranged from - 84 bu/ac to 132 bu/ac A 40 bu/ac yield difference was observed in 2001 between Cayuga

and Livingston County Farm or even field yields are much more variable!

Sources:Select NY county yields: NASS county yields


70

80

90

100

110

120

130

140

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001

County by Year

Yie

ld (

bu

/ac)

CAYUGA LIVINGSTON ONTARIO WAYNE


70

80

90

100

110

120

130

140

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001

County by Year

Yie

ld (

bu

/ac)

CAYUGA LIVINGSTON ONTARIO WAYNE SENECA

16

Production Uncertainty

Uncertain yields For Lewis County, yields over the past 12 year typically ranged from 75

to 125 bu/acre 4 out of these 12 years, yields varied out-side of one standard deviation Farm or even field yields are much more variable!

Sources:Cayuga county yield: NASS Cayuga county yield

Corn Yield HistoryFor Lewis County

65

75

85

95

105

115

125

135

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001

LEWIS LEWIS LEWIS LEWIS LEWIS LEWIS LEWIS LEWIS LEWIS LEWIS LEWIS LEWIS

County by Year

Yie

ld (

bu

/ac)

17

Price Uncertainty

Uncertain prices are another source of risk National average corn prices have varied around $2.40 (’90-’01)

Harvest Futures Corn Price

$1.50

$1.75

$2.00

$2.25

$2.50

$2.75

$3.00

$3.25

$3.50

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001

Year

Avg N

ov C

orn

Futu

res P

rice

CRC Harvest Price

$2.40 avg.Oct. Corn -

Dec. Futures Price

Source:Harvest futures price: October average daily close price of the December CBOT futures contract

18

The Natural Hedge

When production is down; prices go up

Principles of Supply and Demand

LowProduction

HighPrices

Revenue Balances

19

Harvest Price – Harvest Yield

Relationship National yields and harvest futures prices exhibit a relatively weak negative relationship Beginning stocks and corn demand also factor into the equation This weak relationship reflects the ‘double whammy’ of low prices and

low yields in the same year!

R2 = 0.3192

$1.50

$1.70

$1.90

$2.10

$2.30

$2.50

$2.70

$2.90

$3.10

$3.30

$3.50

90 100 110 120 130 140

Corn Yield - Bu/ Acre

Corn

Pri

ces -

$/B

u

National Price - Yield Relationship 1990-2001

Correlation = -0.56

Sources:Harvest futures price: October average daily close price of the December CBOT futures contract National yield: NASS US National yield

20

U.S. Corn Production and Harvest Futures Prices

National Production and Prices 1990-2001

Price = -0.1673*Production + 3.8695

$1.50$1.70$1.90$2.10$2.30$2.50

$2.70$2.90$3.10$3.30$3.50

5 6 7 8 9 10 11

National Yield (billion bushels)

Pri

ce p

er B

ush

el (

$'s)

Correlation = -0.51

21

NY and National Price/Yield Relationships: an

Example

Cayuga County Yield - National Prices Relationship 1990 - 2001

y = 0.0045x + 1.909

R2 = 0.0159

$1.50

$1.70

$1.90

$2.10

$2.30

$2.50

$2.70

$2.90

$3.10

$3.30

$3.50

75 85 95 105 115 125 135 145

Cayuga County Yield

Nati

on

al P

rice

$/B

uCorrelation = 0.13

Cayuga County yields do not tend to follow to National Yields NY low yields do not affect national yield averages This increases the risk of low yields with not price response – ‘double

whammy’ of low yields low prices As a result, Cayuga County yields have a very weak

relationship with National Prices In the past 10 years, 1992, 1999, and 2000 were years of low yields and

low prices Low yields & low prices

Cayuga County Yield - National Yield Relationship, 1990 - 2001

y = 0.019x + 123.65

R2 = 0.0003

75

85

95

105

115

125

135

145

75 85 95 105 115 125 135 145

Cayuga County Yield

Nati

on

al Y

ield

Correlation = 0.016

22

Basis forConsidering Crop

Insurance Grain production is relatively important in

many counties

Natural hedge tends to be weak in NYS

Some variability in prices and yields

Individual producer need for insurance is also (highly) dependent upon their financial situation

23

Risk Management is an Expense

The trade off:reducing risk vs. the cost of risk reduction

High Risk Low Risk(very uncertain profits) (future profits with relative certainty)

Amount of risk

Cost of risk management

24

Crop Insurance Expense Provides a Safety Net

Crop Insurance Places a Safety Net Beneath Cash Flow Various crop insurance products provide a safety net by paying producers

when yields or revenue falls. Protect against the down-side potential of yields and/or prices.

Low YieldsLow Prices

Farm Revenue

25

Crop Insurance Expense Provides a Safety Net

Crop Insurance Places a Safety Net Beneath Cash Flow Various crop insurance products provide a safety net by paying producers

when yields or revenue falls. Protect against the down-side potential of yields and/or prices.

Low YieldsLow Prices

26

Crop Insurance Products

27

Crop Insurance Products and Coverage

Levels

Production Risk… Yield Insurance Products


Catastrophic Coverage (CAT)

Actual Production History (APH)

Price Risk… Revenue Insurance Products

Indexed Income Protection (IIP)

Crop Revenue Coverage (CRC)

Income Insurance ProductAdjusted Gross Revenue

(AGR)

Coverage Levels

Cost of risk management

28

What product & coverage level should grain producers choose?

0 100 200

0

5

10

Yield

Fre

quen

cy

Histogram of Yield, with Normal Curve

1.75 1.80 1.85 1.90 1.95 2.00 2.05 2.10 2.15 2.20 2.25

0

5

10

15

20

25

Price

Fre

quen

cy

Histogram of Price, with Normal Curve

-100 0 100 200 300 400 500

1

510

20304050607080

90

95

99

Data

Perc

ent

AD* 0.797

Goodness of Fit

Normal Probability Plot for RevenueML Estimates - 95% CI

Mean

StDev

164.966

92.9337

ML Estimates Identify cash flow needs

Factor in risk tolerance

Establish a cost effective safety net

Sounds Complicated

29

2001 New York CornCrop I nsurance Plan by Coverage Level

14 35 16 1 2 21 6 6 11 47 13 12 5 18 2 28

120

1,826

-

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

CAT CRC IIP APH CRC IIP APH CRC IIP APH CRC IIP APH CRC IIP APH CRC IIP

50 55 60 65 70 75

Plan by Coverage Level

# o

f P

olic

ies

50%

55%

60%

65%

70%

75%

80%

85%

90%

95%

100%

Cum

mula

tive %

Policies Sold Cummulative %

What product and coverage level are NY corn producers choosing?

The minimum – CAT

30

Making Informed Crop Insurance Decisions

31

Multi-Peril Insurance Products – NY Grain Crops

Corn and Soybeans Actual Production History (APH)

Includes: Catastrophic Coverage (CAT)

Indexed Income Insurance (IIP) Crop Revenue Insurance (CRC) Adjusted Gross Revenue (AGR)

Pilot Program in select NY counties

Small Grains – Wheat, Barley, Oats, & Rye Actual Production History (APH)

Includes: Catastrophic Coverage (CAT)

32

Farm Insurance Products

Yield Insurance Catastrophic Coverage (CAT) Actual Production History (APH)

Revenue Insurance without Guarantee Increase Indexed Income Protection (IIP) Crop Revenue Coverage (CRC)

Income Insurance Adjusted Gross Revenue (AGR)

33


Available for the following Field Crops: Corn Soybean Wheat Barley Oats Rye Flax

Producer choices:

No insured unit choices

No coverage level choices

Protection provided against:

Low yieldsIndemnity Trigger =

Actual yield < 50% of APH yield

NY Sales Closing Date

March 15

Type of product:

Basic multi-peril crop insurance product

34

Available for the following Field Crops: Corn Soybean Wheat Barley Oats Rye Flax

Producer choices:

Insured unit

Yield election: % of AHP yield

Price election: % of MPCI price


Low yieldsIndemnity Trigger =

Actual yield < Yield election*APH yield


March 15

Type of product:

Multiple peril crop insurance product at the selected level of coverage


35

Available for the following Field Crops: Corn Soybean


Low yields Low prices

Indemnity Trigger =

Actual yield * Harvest Price < Coverage level * APH yield * Higher of HP/BP


March 15

Type of product:

A multiple peril crop insurance product with a revenue insurance component

Indexed Income Protection (IIP)Producer choices:

No insured unit choice Coverage level: % of revenue

36

Available for the following Field Crops: Corn Soybean


Low yields Low prices

Indemnity Trigger =

Actual yield * Harvest Price < Coverage level * APH yield * Higher of HP/BP


March 15

Type of product:

A multiple peril crop insurance product with a revenue insurance component


Producer choices:

Insured unit Coverage level: % of revenue

37

Producer eligibility:

If more than 50% of expected income will be derived from a crop or combination of crops

No more than 35% of expected allowable income can be from animals or animal products


Low yields

Low prices


January 31

Type of product:

Whole farm revenue insurance Multiple commodities under

one insurance product

Adjusted Gross Revenue (AGR) – Pilot Program

Producer choices:

% of Coverage

% of Payment

38

Practical Approaches to Making Crop Insurance

Decisions

39

Making the Crop Insurance

Decision Could dedicate the rest of your life to this

one decision Let’s balance costs and returns What do you need? What should be considered? What is the goal?

40

Cost of Coverage ($/acre)– Premiums Only*

CAT

$0

50% Yield55% Price

Cayuga County - Corn APH Yield = 100 bu/acre 2002 MPCI Price = $2.00 CRC Yield = 100 bu/acre 2002 CRC Base Price = $2.32

IIP Yield & Base Price = CRC Base Price & Yield

* Premium only, does not include the administrative fee

$5.73 $7.51 $11.13$3.28

CR

C $4.04

AP

H

55% 65%

$2.31 $3.96 $5.18 $7.71

70% 75%60%

$2.81

IIP $3.71 $4.66 $6.50$2.07 $2.61

41

Costs versus Returns

Although not trivial the cost of these products are not overwhelming Likely means the returns won’t be either Should dedicate an amount of time to this decision

that is appropriate

The major amount of time lost to these decisions involves trying to find the “profit maximizing” product and coverage level

The real benefit to crop insurance is not in profit maximization

The benefit is that the products can help avoid financial stress

42

Avoiding Financial Stress

If the benefit is in risk reduction let’s evaluate these products ability to reduce risk

Let’s answer these questions, “To what extent do crop insurance products… help maintain liquidity? help maintain solvency? help keep future plans on track?

Then consider how much this protection costs

Let’s not waste time on whether they increase expected profitability – maybe they do but we’re not going to get rich

43

Costs of Products

Increases substantially with coverage level

Increases with the types of risk they guard against

Are difficult to evaluate from a profit standpoint without solid data

One way to examine is to look at the marginal costs of additional protection

44

Marginal Cost of Additional Coverage Levels

Marginal cost of coverage generally increases as coverage level increases

Marginal costs have fallen due to higher subsidy rates

$0.00

$0.50

$1.00

$1.50

$2.00

$2.50

$3.00

$3.50

$4.00

60% 65% 70% 75%Coverage Level

Marg

inal

Pre

miu

m C

ost

($/

acre

)

APH IIP CRC

CRC

APH

IIP

45

Our Approachto Crop Insurance Decisions

We seek to answer these fundamental questions:

1. What are the consequences if the operation experiences a revenue shortfall?

2. How likely is it that a shortfall will occur?3. How willing is the producer to accept

these risks?4. Including their costs, how do various crop

insurance products alter the likelihood of such a shortfall?

46

A Three Step Process to Answer these Questions

1. Assess cash flow and financial situation

2. Perform a sensitivity analysis on cash flow and financial situation

3. Evaluate the types of risk and protection provided by the crop insurance products

47

Information Needs

Coordinated financial statements Crop budgets Yield and price history and projections Insurance product information including

mechanics and premium information Ideally in spreadsheet format – we’ll help

with that

48

Practical Approach to Making Crop Insurance Decisions

Assess Cash Flow NeedsGoal: To determine your operation’s level of critical

cash flow…

Sources of Cash… Additional borrowing Savings From business earnings Others

Uses of Cash… Debt service Operating needs Family living Special needs Health Insurance Others

49

Assessing Critical Cash Flow

Develop a crop budget Cost and return information are critical So is financial information Where to get information

Historical records CBOT USDA RMA

Once a budget and pro-forma finanicals are developed can begin to assess critical cash flow

50

Build the Budget

What costs must be paid what could be put off

How much borrowing capacity is available How willing are they to use it –

retirement, expansion, etc. Come up with a bottom line # How likely is it that the number will be

hit? What can be done to avoid hitting the

number

51

What is Critical Cash Flow

Cash flow not profitability should be first concern

Monitor things like: Credit reserves Liquidity Solvency Family living draw

Concentrate on cash flows not economic costs – for now

What is necessary and what is not

52


Perform a sensitivity on your cash flowGoal: To determine the likelihood of not achieving your critical level of cash

flow

The Bottom Line

Low Prices Low Yields

53

Performing a Sensitivity Analysis

Computerization is helpful, but not mandatory Can lead to information overload How to summarize

The key is to account for variability in prices and yields What about covariance?

Historical data is useful but not absolutely necessary Consider deviations from budget values Perils of relying too heavily on historical information

54

Historical Price and Yield

Information10 Years of History Yield Prices

High 145 3.08$ | 143 2.84$ | 125 2.73$ | 125 2.70$ | 120 2.68$

100 2.59$ 99 2.57$

| 85 2.51$ | 76 2.46$ | 72 2.40$

Low 43 2.32$ Average 103 2.63$

to

55

An Approach to Sensitivity Analysis

Scenario Yield Prices 1 High (145) High ($ 3.08) 2 Low (43) Low ($ 2.32) 3 Average (103) High ($ 3.08) 4 Average (103) Low ($ 2.32) 5 Average (103) Average ($ 2.63) 6 High (145) Average ($ 2.63) 7 Low (43) Average ($ 2.63)

Construct several “scenarios”

56

An Approachto Sensitivity Analysis

Apply various yield and price combinations to the budget and pro-forma financial statements

Monitor key cash flow and financial variables

What to look for: try to isolate key variables that you need to act upon

Apply various crop insurance products

57


Examine the types of risks that crop insurance products coverGoal: To determine the appropriate crop insurance product and coverage level

Production Risk… Yield Insurance Products




Price Risk… Revenue Insurance Products

Indexed Income Protection (I IP)


Income Insurance ProductAdjusted Gross Revenue

(AGR)

Coverage Levels

Cost of risk managementCost of risk management

58

Some Intuition on the Products

Harvest prices matter for comparing across products

CRC revenue guarantee increases with price increases

APH pays back at the MCPI price Take a look at some alternative

assumptions on ending prices Examine the protection provided by

different products and different coverage levels

59

Premiums for APH and CRC: Cayuga County 100bpa APH

Yield

$-

$2

$4

$6

$8

$10

$12

50% 50% 55% 60% 65% 70%

Coverage Level

$'s

pe

r A

cre

APH CRC

60

Effect of APH on Revenue per Acre

$-

$50

$100

$150

$200

$250

0 20 40 60 80 100 120

Yield BPA

Rev

enu

e p

er A

cre

CAT APH 65% APH 75% No Ins.

Harvest Price = MPCI Price = $2.00100 Bu APH

61

Effect of APH on Revenue per Acre

$-

$50

$100

$150

$200

$250

0 20 40 60 80 100 120

Yield BPA

Rev

en

ue

pe

r A

cre

APH 65% APH 75% No Ins. CAT

Harvest Price = $2.60MPCI Price = $2.00

100 Bu APH

62

Effect of CRC on Revenue per Acre

$-

$50

$100

$150

$200

$250

0 20 40 60 80 100 120

Yield BPA

Reven

ue P

er

Acre

CRC 65% CRC 75% No Ins.

Harvest Price = MPCI Price = 2.00

63

Effect of CRC on Revenue per Acre

$-

$50

$100

$150

$200

$250

0 20 40 60 80 100 120

Yield BPA

Rev

enu

e P

er A

cre

CRC 65% CRC 75% No Ins.


100 Bu APH

Notice Guarantee Increases

64

CRC vs. APH 75% Coverage Level

$-

$50

$100

$150

$200

$250

0 20 40 60 80 100 120

Yield BPA

Rev

enu

e p

er A

cre

APH 75% CRC 75% No Ins.


65

Adding in CRC 65%

$-

$50

$100

$150

$200

$250

0 20 40 60 80 100 120

Yield BPA

Rev

enu

e p

er A

cre

APH 75% CRC 75% No Ins. CRC 65%


66

Things get more complicated when price assumptions

change…

$-

$50

$100

$150

$200

$250

0 20 40 60 80 100 120

Yield BPA

Re

ven

ue

pe

r A

cre



100 Bu APH

67

because it depends on who is paying

-- market or insurance product

$-

$50

$100

$150

$200

$250

0 20 40 60 80 100 120

Yield BPA

Rev

enu

e p

er A

cre



100 Bu APH

68

It is also possible to look at iso-revenue curves

Allows you to examine various price and yield assumptions

Contours represent areas of equal revenue The following graphs are for return above direct

costs, not just revenue They incorporate some additional assumptions

and NO Government Payments Revenue on a per acre basis

Acres 2,000APH Yield 100Direct Costs (w/o Prem.) 173.64$ MPCI Price 2.00$ Base Price 2.32$ Est. Harv. Price 2.32$

69

No Crop Insurance

$-

$0.5

8

$1.1

6

$1.7

4

$2.3

2

$2.9

0

$3.4

8

$4.0

6

$4.6

4

0

20

40

60

80

100

120

140

160

180

200

Revenue/ Acre

$/ Bu

Yield

Return Over Direct Costs (no crop insurance)

$600.00 - $800.00 $400.00 - $600.00 $200.00 - $400.00 $- - $200.00 $(200.00)- $-

70

65% APH Insurance

$-

$0.5

8

$1.1

6

$1.7

4

$2.3

2

$2.9

0

$3.4

8

$4.0

6

$4.6

4

0

20

40

60

80

100

120

140

160

180

200

Revenue/ Acre

$/ Bu

Yield

Return Over Direct Costs (APH 65% )

$600.00 - $800.00

$400.00 - $600.00

$200.00 - $400.00

$- - $200.00

$(200.00)- $-

71

75% APH

$-

$0.4

6

$0.9

3

$1.3

9

$1.8

6

$2.3

2

$2.7

8

$3.2

5

$3.7

1

$4.1

8

$4.6

4

0

20

40

60

80

100

120

140

160

180

200

Revenue/ Acre

$/ Bu

Yield

Return Over Direct Costs (APH 75% )

$600.00 - $800.00 $400.00 - $600.00 $200.00 - $400.00 $- - $200.00 $(200.00)- $-

72

CRC 65%

$-

$0.4

6

$0.9

3

$1.3

9

$1.8

6

$2.3

2

$2.7

8

$3.2

5

$3.7

1

$4.1

8

$4.6

4

0

20

40

60

80

100

120

140

160

180

200

Revenue/ Acre

$/ Bu

Yield

Return Over Direct Costs (CRC 65% )

$800.00 - $1,000.00 $600.00 - $800.00 $400.00 - $600.00 $200.00 - $400.00 $- - $200.00 $(200.00)- $-

73

CRC 75%

$-

$0.4

6

$0.9

3

$1.3

9

$1.8

6

$2.3

2

$2.7

8

$3.2

5

$3.7

1

$4.1

8

$4.6

4

0

20

40

60

80

100

120

140

160

180

200

Revenue/ Acre

$/ Bu

Yield

Return Over Direct Costs (CRC 75% )

$800.00 - $1,000.00 $600.00 - $800.00 $400.00 - $600.00 $200.00 - $400.00 $- - $200.00 $(200.00)- $-

74

Case-FarmBreak-out

75

The G. W. Shrub Farm

Background – the Shrub farm

Choice between APH, CRC, or no insurance

If insuring, choice of coverage level

Discussion of recommendations

76

Assignments

Task 1: Assess financial situation Is there a need for crop insurance?

Task 2: What are key risks? What insurance product is likely to work best

Task 3: Assess ability of insurance to protect against risk

77

Questions

making informed crop insurance decisions… rochester, ny june 18, 2002

Documents

silageny corn

grainvalue of corn

corn productionthere

bushels of corn

ny corn productiontop

ny county yields

total grain corn production61

millionsome corn triviain