Farmers are now focusing on day to day grain marketing in addition to this spring’s seeds, inputs and crop rotations, but one marketing advisor wants them to keep looking at crop insurance if they haven’t gone that direction in the past.
Bob Utterback at Utterback Marketing Services doesn’t sell crop insurance but says it should be looked at aggressively as a safety valve.
“As one guy said, ‘I saved $5,000 not taking crop insurance this year but I lost $190,000 because I had a crop failure,’ I say crop insurance at the current point is the lowest hanging fruit on the table. Essentially if you took 85 percent crop insurance it would be around 5 bushels of production to guarantee you’re going to farm next year. That’s the way I have to look at it. It’s an insurance policy and I know farmers hate insurance, but that’s the way I think you have to look at it. Would you spend 5 bushels so you make sure you can farm next year. It seems to me that’s a pretty simple decision in this level of high volatility.”
Utterback thinks crop insurance could pay off in the coming year because of price rather than yield. He does have clients who don’t take it but they must be much more aggressive in their marketing to protect downside risk.
He does expect the long term insurance picture to change.
“I think even crop insurance companies are becoming very concerned about the fiscal cliff that we’re in, the cutting costs that’s going to be necessary, and I think you’re really looking at we’re in the golden age of crop insurance subsidies and I think long term you have to anticipate the subsidies are going to go down which means farmers are going to have to pay a bigger part of the freight which implies farmers are going to still have to manage their own risk. So today it’s great for 2013-14 and I think you really need to be looking hard at it because I think this summer and fall is going to be as volatile as ever.”
Part of Utterback’s evaluation service is a software program that plugs in the type of insurance, cash basis, and cost of production among other variables to help reach the best decision. Check his website or call 1-800-832-1488.[audio:http://www.hoosieragtoday.com//wp-content/uploads//2013/01/Bob-Utterback-on-crop-insurance.mp3|titles=Bob Utterback on crop insurance]