By Andi Anderson
In 2023, the agricultural industry faced challenging circumstances that led to lower harvest prices for both corn and soybeans. The Harvest Prices for these crops were finalized after the October price discovery period. Corn's 2023 Harvest Price stood at $4.88 per bushel, representing a significant 17% drop from the Projected Price of $5.91 per bushel. Meanwhile, soybeans experienced a 7% decline, with a Harvest Price of $12.84 per bushel, down from the $13.76 Projected Price. These price reductions had implications for revenue insurance policies, specifically RP and RP-HPE.
For corn, the Harvest Price being below the Projected Price resulted in both RP and RP-HPE policies triggering the same level of indemnity payments. An 85% coverage policy would start making payments even with yields slightly above the farm's Average Production History (APH) yield. For those with 80% coverage, a minimal 3% yield loss was required for payments, while 75% and 70% coverage policies demanded yield losses exceeding 9% and 15%, respectively. To illustrate, a farm with a 200-bushel per acre APH yield would trigger an 85% RP or RP-HPE payment of $28.70 per acre with a 200-bushel yield, whereas a 160-bushel yield would yield nearly $223 per acre for the same policy.
Soybeans followed a similar pattern, with an 85% coverage policy necessitating approximately a 9% yield loss. For instance, a farm with a 65-bushel per acre APH yield would trigger payments at or below 59.2 bushels per acre. Lower coverage levels increased the required yield losses, with indemnities becoming accessible for 70% coverage policies only when yield losses reached at least 25%.
The agricultural sector's challenges extended further, as abnormally dry conditions affected most corn and soybean production regions in the U.S. during the 2023 growing season. These conditions made yield losses likely in many areas, potentially resulting in substantial insurance payments.
Additionally, a 2023 Payment Calculator was made available for farmers to assess payment outcomes by entering their own APH yields, considering various coverage levels and different yield scenarios.
In 2023 Harvest Prices were $4.88 for corn and $12.84 for soybeans, reflecting a 17% and 7% decline, respectively, from their respective Projected Prices. The Harvest Price being below the Projected Price meant that revenue policies would trigger the same payments, whether including the Harvest Price option (RP) or not (RP-HPE). Corn policies with 85% coverage would make payments for yields slightly above the farm's APH, while lower coverage levels required greater yield losses. For soybeans, yield losses were necessary even at the 85% coverage level. The dry conditions in 2023 meant that insurance payments would likely be substantial in many areas.
Photo Credit: gettyimages-creischl.
Categories: Illinois, Crops