PHOTO: Stephen Patton, UK Agricultural Communications
The safety net for soybean revenue insurance provides more protection as compared to 2016, and that’s good news for producers who are still weighing their options ahead of the March 15 deadline, according to Todd Davis, agricultural economist in the University of Kentucky College of Agriculture, Food and Environment.
The safety net, also known as a revenue guarantee, is established each February based on futures prices for the December corn and November soybean contracts. The 2017 prices are $3.96 per bushel for corn and $10.19 per bushel for soybeans.
“The November 2017 projected price for soybeans is a $1.34 per bushel increase over the 2016 futures price,” Davis said. “The revenue guarantee may cover all expenditures at the 85-percent coverage level. At the 80-percent coverage level, it could pay $59 more per acre compared to 2016 and could limit losses to $11 per acre based on the University of Kentucky’s crop budgets.”
Davis used Kentucky’s average soybean historical farm yield of 55 bushels per acre, average total input costs and average cash rent prices in the estimated calculation. He said the risk protection provided by the insurance will vary by farm based on each farm’s cost structure, actual input prices and cash rents paid, yields and the cost of the insurance.
More risk protection coverage comes at a cost, however.
“Producers should work with their insurance agent to understand the potential revenue protection benefits versus the cost of increased coverage for soybeans,” Davis said.
The 2017 corn futures price for December was only up by 10 cents a bushel per acre compared to 2016 and would result in losses of more than $100 per acre despite the coverage level based on University of Kentucky corn budgets.
“There hasn’t been much change in the corn safety net this year,” Davis said. “At 75-percent coverage level, corn will still net a loss of $161 per acre while the soybean loss would only be $39.”