Will You Have a Crop Insurance Revenue Loss for 2023?
Revenue Protection (RP) provides coverage against yield losses due to natural weather causes and the decline of the commodity price between the Projected Price and Harvest Price. As we reach the end of October, the Chicago Board of Trade (CBOT) has been tracking the harvest price for corn and soybeans in the Midwest. This dollar amount will be released in early November and plays an important factor when determining if a grower or policyholder will have a revenue loss for the 2023 growing season.
While RP is a common insurance plan across the industry, there still can be some questions when determining a harvest loss. This plan of insurance guarantees a specific level of revenue and a set bushel guarantee. The revenue guarantee is calculated by using this equation: APH x MPCI Coverage Level X Share % X Projected Price. When an RP policy is elected by the insured, they receive the better of the Spring Price or Harvest Price on the overall revenue guarantee.
KEY INFORMATION: IS THE HARVEST PRICES HIGHER OR LOWER THAN THE PROJECTED PRICE?
If the Harvest Price (Fall) is HIGHER than the Projected Price (Spring), to collect a crop insurance harvest claim payment, there must be a bushel loss. The bushel guarantee is based on the APH and coverage level that was elected by the Sales Closing Deadline and can be found on the Schedule of Insurance that was provided to the policyholder after Acreage Reporting. This does not seem to be the case for the 2023 growing season as the Harvest Price is currently tracking well below the Projected Price on both corn and soybeans in the Midwest.
HARVEST PRICING FOR 2023-Tracking LOWER
This year we can predict the Harvest Price will be LOWER than the Projected Price, which means there could be potential revenue losses due to the price decline. If the Harvest Price drops (which is currently happening for 2023 corn and soybeans) from the Projected Price, a potential revenue loss may occur even if the bushel guarantee is reached on the MPCI coverage. If you have any questions or concerns regarding a crop loss due to the drop in revenue, we recommend that you contact your crop insurance agent to file a claim.
Peoples Company Crop Insurance Department will also post the Harvest Prices when they are announced in early November. If you have any questions regarding Crop Insurance, please don’t hesitate to contact our office and we will be happy to assist. We understand the overall complexity of this industry and welcome the opportunity to speak with you.
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