Doug said this year's benchmark revenue guarantee for ARC in Rock Island county is roughly $30 more for corn and $70 more for soybeans than last year.

Natural disasters, changing markets and varied input costs impose risk on farmers and their operations. A crop insurance expert said programs including Title 1 of the farm bill and crop insurance (Title XI) are options farmers invest in to mitigate risk. 

Country Financial Crop Agency Manager Doug Yoder said lower soybean commodity prices may have some farmers reevaluating their insurance options and adding coverage this year.

"There's always tweaks to the program," he said. "There's always new prices to consider."

"I truly believe this is to provide American citizens a stable, safe, and abundant food supply. It's not to support individuals, um, such as farmers. That's not the premise. The premise is, like I said, to give us a stable, safe, and abundant food supply.

What is ARC and PLC? 

The Agriculture Risk Coverage (ARC) and the Price Loss Coverage (PLC) programs are included in Title 1 of the farm bill. The program provides assistance for farmers when on farm revenue or markets fall below historical data or set reference prices. Twenty-two commodities, including corn and soybeans are covered under the program. Farmers work with the U.S. Department of Agriculture's Farm Service Agency to decide their yearly coverage. 

The two programs use a rolling, five-year average of commodity prices and country yields to figure when farmers are eligible to receive a payment. 

WHAT IS CROP INSURANCE? 

"Crop insurance is, is um a risk management tool," Yoder said. The public-private policy is a federal program sold by private companies. Crop insurance offers farmers coverage during natural disasters like floods, wind, and tornadoes. Commodity prices are evaluated twice a year to calculate premiums based on revenue. 

"The coverage very expensive. Even though it is subsidized from the government, farmers still spend an incredible amount of money each year on it, but they know they need it," Yoder said. 

This Year's Trends

Yoder said the countywide average guarantee for ARC is higher this year. Higher prices and increased corn and soybean yields in almost every county in Illinois increase the likelihood that farmers could receive a payment.

He said this year's benchmark revenue guarantee for ARC in Rock Island County is roughly $30 more per acre for corn and $70 more per acre for soybeans than last year. "The combination of higher county yields over time and the higher commodity prices used in those formulas has led to that higher guarantee," he said.

Yoder said although prices are still being averaged in February, crop insurance guarantees are expected to remain similar to last year for corn. However, the guarantee will not be as strong as in 2022 and 2023, when commodity prices were higher.

For soybeans, Yoder said farmers may want to continue using the same coverage level, but those policies will not provide the same level of protection this year due to lower commodity prices.

Yoder said federal crop insurance is a cornerstone of risk management for farmers, but not necessarily the whole puzzle. "It's not a cure-all. It doesn't cover everything, nor should it." 

He added that because of fluctuating commodity prices, he has received more questions this year about additional crop insurance coverage beyond farmers' base policies. One main add-on product is the Enhanced Coverage Option (ECO). This county-based supplemental coverage can give farmers a higher level of protection, stacking on top of other policies.

"There's no one-size-fits-all," Yoder said. "I really encourage them to run their own numbers for their farm and their counties."

Source - https://www.wqad.com