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January 2025
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Ag Update: 2025 Crop Insurance Decisions1/29/2025 During the next few weeks, farm operators will be finalizing their crop insurance decisions for the 2025 crop year. March 15th is the deadline to purchase crop insurance for the 2025 crop year. The 2025 Spring price for corn should be similar to last year, while the soybean Spring price is likely to be reduced from the base price level in 2024. There still should be some favorable crop insurance guarantees again this year at reasonable premium costs. USDA has increased the premium subsidies for ECO and SCO insurance products, which may enhance crop insurance choices for farmers in 2025.
Producers have several crop insurance policy options to choose from, including yield-only (YP) and revenue protection (RP and RPE) policies, SCO and ECO policies, and other private insurance options. In recent years, most farm operators have chosen revenue protection (RP) insurance options, which provide a guaranteed gross revenue per acre (yield x price). This guarantee is based on yield history (APH) on a farm unit times the Spring (base) price, which is the average of the CBOT prices during the month of February for December corn futures and November soybean futures. As of January 23, the 2025 crop insurance Spring price estimates in the Upper Midwest for YP, RP, and RPE policies were estimated near $4.60 per bushel for corn and $10.40 per bushel for soybeans. The 2025 Spring prices will be finalized on March 1. The current 2025 base price estimates compare to recent base prices $4.66/bu. for corn and $11.55/bu. for soybeans in 2024, $5.91/bu. for corn and $13.76/bu. for soybeans in 2023, and $5.90/bu. for corn and $14.33/bu. for soybeans in 2022. The final 2025 crop revenue will be the actual fam yield times the crop insurance harvest price, which is the average CBOT prices during October for December corn futures and November soybean futures. Another insurance option that is a lower premium than a typical RP policy with harvest price protection is a RPE (harvest price exclusion) policy, which functions similarly to a standard RP policy except that the guarantees on RPE policies are fixed at the base price level and are not affected by harvest prices that exceed the base price. The revenue guarantee for standard RP policies is increased for final insurance calculations, if average CBOT prices during the month of October are higher than the February CBOT prices, which is what occurred for corn and soybeans in both 2020 and 2021, as well as for corn in 2022. The RPE option is not recommended to protect against losses due to large crop disasters, such as a drought or other disaster that affects a large portion of the Midwest, or other situations that could lead to price increases during the year. An analysis for the past eighteen years (2007-2024) shows that the final crop insurance harvest price for corn has been lower than the Spring base price in twelve of the eighteen years, including a decrease of ($.50) per bushel in 2024. The corn harvest price was also lower from 2013-2019. That trend was reversed from 2020-2022, when the harvest price for corn rose above the Spring price by +$.11 per bushel in 2020 +$.79 in 2021, and by +$.96 in 2022. The only other years that saw an increase in the harvest price were 2010, 2011 and 2012. An analysis of the past eighteen years for soybeans, shows that the harvest price has increased in seven years (2007, 2009, 2010, 2012, 2016, 2020 and 2021) and decreased in ten years (2008, 2011, 2014-2019, 2022, 2023 and 2024), while staying the same in 2013. The range has been from an increase of +$2.84 per bushel in 2012 to a decline of ($3.00) per bushel in 2008. In 2024, the harvest price was $10.03/bu., which was a decrease of ($1.52) per bushel from the Spring price of $11.55/bu. The range of price variation from Spring prices to harvest prices for corn and soybeans, both up and down, further solidifies the importance of having a solid crop insurance policy in place for the 2025 crop year. SCO and ECO Insurance Coverage Improved for 2025 The Supplemental Coverage Option (SCO) coverage is only available to producers that choose the Price Loss Coverage (PLC) farm program option for the 2025 crop year. The farm program enrollment deadline is April 15 in 2025; however, the crop insurance enrollment deadline is March 15, 2025. This means that farm operators will need to consider both choices by March 15 if they want to utilize SCO insurance coverage. SCO allows producers to purchase additional county-level crop insurance coverage up to a maximum of 86 percent coverage. For example, a producer that purchases an 80% RP policy could purchase an additional 6% SCO coverage. The Enhanced Coverage Option (ECO) provides area-based insurance coverage from 86 percent up to 95 percent coverage, with producers having a choice between 90 or 95 percent ECO coverage. Unlike SCO coverage, the purchase of ECO coverage is available with selection of either the PLC or ARC-CO farm program choice for 2025. Producers can utilize both ECO and SCO together, in addition to their underlying RP, RPE, or YP insurance policy. SCO and ECO are county revenue-based insurance products that utilize the same crop insurance base prices and harvest prices as RP insurance policies; however, the biggest difference is that SCO and ECO utilize county level average yields, rather than the farm-level APH yields. As a result, the SCO and ECO insurance policies may achieve different results than the underlying RP policy. The federal government has increased the premium subsidies for both SCO and ECO coverage for 2025, which should make premiums more reasonable for crop insurance coverage that include these products. It is estimated that 2025 SCO premiums will decline by 3-5 percent compared to a year ago, while ECO premiums are likely to decline by 30-35 percent in 2025 compared to a year earlier. Many crop insurance companies have combined SCO and ECO coverage with other private insurance buy-up policies to offer some very attractive risk management insurance packages for the 2025 crop year. Interested producers should check with their crop insurance agent for details on 2025 SCO and ECO insurance coverage and premiums, along with private insurance buy-up options, to optimize their crop insurance coverage for 2025. “Enterprise Units” and “Optional Units” “Enterprise units” combine all acres of a crop in a given county into one crop insurance unit, while “optional units” allow producers to insure crops separately in each individual township section. “Enterprise units” usually have considerably lower premium costs (approx. $8.00-$10.00 per acre) compared to “optional units”, for comparable RP and RPE policies. Producers should be aware that “enterprise units” are based on larger coverage areas, and do not necessarily cover losses from isolated storms or crop damage that affect individual farm units, such as damage from hail, wind, or heavy rains that have occurred in recent years. It is important to understand the difference in insurance coverage and to analyze the yield risk on each individual farm unit, when determining if paying the extra premium for insurance coverage with “optional units” makes sense. “Bottom-Line” on Crop Insurance Decisions Producers have the option to purchase RP and RPE insurance coverage levels from 50% to 85%, and losses are paid if the final crop revenue falls below the revenue guarantee. Given the tighter margins for both corn and soybeans, there may be a tendency to reduce the level of crop insurance coverage for 2025. However, producers need to closely analyze their risk exposure for the 2025 crop year and adjust their crop insurance coverage accordingly. At the current estimated Spring prices, many producers should still be able to provide an adequate level of risk protection for corn and soybean production in 2025. Crop insurance remains one of the best risk management tools that is available for farm operators to protect their investment in crop production. A reputable crop insurance agent is the best source of information to find out more details about the various crop insurance products that are offered, to get premium quotes, and to help finalize 2025 crop insurance decisions. Kent Thiesse, Farm Management Analyst, has prepared an information sheet titled: “2025 Crop Insurance Decisions”. To receive a copy of the information sheet please forward an e-mail to: [email protected] For additional information contact Kent Thiesse, Farm Management Analyst, Green Solutions Group Phone - (507) 381-7960; E-mail - [email protected]
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