During the next few weeks, many farm operators will be finalizing their crop insurance decisions for the 2017 crop year. March 15 is the deadline to purchase crop insurance for the 2017 crop year. Profit margins for crop production this year remain very tight, which makes this year’s crop insurance decisions even more critical. Producers have several policy options to choose from, including yield protection policies and revenue protection policies, as well as other group insurance policy options. There also are decisions to be made about using “enterprise units” versus “optional units” and whether to take advantage of the “trend adjusted” actual production history yields for 2017. Yield protection policy options provide for “yield only” insurance protection, based on actual production history yields on a given farm unit. Yield protection prices are based on average Chicago Board of Trade prices for December corn futures and November soybean futures during the month of February, similar to revenue insurance products. Producers can purchase yield protection insurance coverage levels from 50 percent to 85 percent, and losses are paid if actual corn or soybean yields on a farm unit fall below the yield guarantees. Revenue protection policy options provide for a guaranteed minimum dollars of gross revenue per acre (yield multiplied by price), based on yield history and the average Board of Trade prices for December corn futures and November soybean futures during the month of February. The revenue guarantee is increased for final insurance calculations if average Board of Trade prices during the month of October are higher than the February prices. Producers purchase revenue insurance coverage levels from 50 percent to 85 percent, and losses are paid if the final crop revenue falls below the revenue guarantee. The final crop revenue is the actual yield on a farm unit multiplied by the Board of Trade December corn futures price and November soybean futures price during the month of October. Revenue protection with harvest price exclusion policy options function the same as revenue protection policies, except that they have a minimum revenue guarantee (yield and price) that is fixed, based on the February Board of Trade corn and soybean prices, and cannot be increased later. As of Feb. 6, the 2017 estimated crop prices in the upper Midwest for all three previously mentioned categories of policies were $3.95 per bushel for corn, $10.13 per bushel for soybeans and $5.62 per bushel for spring wheat. Yield protection prices and revenue protection base prices will be finalized March 1. Many producers in the upper Midwest have been able to enhance their insurance protection significantly in recent years by utilizing the trend-adjusted yield endorsement, with only slightly higher premium costs. The actual production history yield exclusion option allows specific years with low production to be dropped from crop insurance actual production history yield guarantee calculations. Several counties in central and northern Minnesota, for example, are eligible for yield exclusions for corn and soybeans in some of the past 10 years. For information on which counties, crops and years are eligible for the yield exclusion option, go the USDA Risk Management Agency website at www.rma.usda.gov. Given the tight profit margins for crop production in 2017, producers might have a tendency to reduce their crop insurance coverage to save a few dollars per acre in premium costs. However, a producer first must ask the question: “How much financial risk can I handle if there are greatly reduced crop yields because of potential weather problems in 2017 or lower than expected crop prices?” Revenue protection policies serve as an excellent risk management tool for these situations, and 2017 might not be the year to reduce insurance coverage. In recent years, many Midwest corn and soybean producers have been using a minimum of 80 percent revenue protection coverage with “enterprise units,” but this year might be the time to consider upgrading to the 85 percent coverage level. In many cases, the 85 percent coverage offers considerably more protection with only a modest increase in premium costs. Many producers will be able to guarantee $550 to $650 per acre for corn and $350 to $450 per acre for soybeans at the 85 percent coverage level in 2017, especially when they’re also using trend-adjusted actual production history yields. A reputable crop insurance agent is the best source of information for more details of the various coverage plans, to get premium quotes and to finalize 2017 crop insurance decisions. Source - http://www.tristateneighbor.com