To assist farmers with 2014 crop insurance and pre-harvest crop marketing decisions, Iowa Farm Bureau is hosting a webinar February 17 at 1 p.m. The webinar will highlight key updates to help farmers make crop insurance and grain marketing decisions. With lower crop prices already here margins are expected to shrink this year and the webinar will provide insight to assist farmers in managing their 2014 crop revenue risk.
"This timely update on crop insurance will highlight new changes in 2014 including lower premium ratings, lower projected prices, and trend-adjusted yield option factors," says Steve Johnson, an Iowa State University Extension farm management specialist. He'll present information enabling farmers to make informed choices on 2014 crop insurance coverage and options. Ed Kordick, IFBF commodity services manager, will also be a presenter at the webinar and cover how the tools work with Revenue Protection crop insurance to manage downside revenue risk.
Strategies to conquer the common hesitations of selling a crop not yet harvested have never been more important to farmers. "Today's farmers face numerous challenges, and understanding the updates to crop insurance is important," says Kordick. "With farmers facing added uncertainty heading into the 2014 planting season, crop insurance will be a vital tool this year."
There's no cost for you to participate in this webinar, and no need to pre-register
Farmers can access the webinar from their home or farm office by going to the Iowa Farm Burea website, clicking on the webinar banner and entering the forum as a guest on the day of the event. Pre-registration is not required for online viewing. Participants will have the opportunity to text questions to the speaker during the webinar. For more information contact Kordick at [email protected].
"We are currently in one of the periods when corn and soybean prices are being set for crop insurance revenue protection—they're set in February and October," says Kordick. What does he tell farmers who ask, "What do you think we should be doing? What election should we choose for crop insurance coverage in 2014?" "Everyone has to make an individual decision as to what is best for their farming operation," says Kordick.
Farmers entering 2014 planting season with corn and soybean prices significantly lower than a year ago
He adds, "Farmers need to realize we're going into 2014 planting season with corn and soybean prices much lower than last year. A year ago the February average for December corn futures was $5.65 a bushel. We're probably looking at a price more like $4.50 this year. That will drop the revenue guarantee by $150 or so an acre. We probably won't be able to have a revenue guarantee very close to cost of production. It looks like we'll be a little underwater on both corn and soybeans in 2014." That's where having a sound pre-harvest crop marketing plan can help.
Deadline to have your crop insurance coverage finalized for 2014 is March 15. One part of the insurance decision farmers will make is—Do you want to update your APH yields by using the trend-adjusted yield average? "The TA is a very good choice," says Kordick. "We'll talk about that in the webinar. Also, we'll discuss the lower projected prices for the 2014 crop, lower revenue guarantees, and lower premiums—you need to realize that lower premiums come, of course, at a cost of having lower revenues."
Is there a way farmers can lock in at least their cost of production in 2014, using crop revenue insurance?
It depends on what part of your cost of production you want to lock in. Kordick uses ISU's cost of production estimates—for 180 to 190 bushel corn per acre the cost of production is now up around $770 per acre. It doesn't appear we'll have revenue guarantees this year that are within $100 of that number. "The point is, compared to the past few years, we're now back in a risky time period, when we have to be using risk management tools, to build a floor and then go from there," he says.
Crop revenue insurance is being recommended by lenders for pretty much every farmer in 2014
Predicting grain prices is about impossible, Kordick points out. That's where crop revenue insurance comes in handy. "Steve Johnson and I are very strong advocates—and we'll talk about this in the webinar—of farmers trying to avoid emotions that sometimes get in the way of making good crop marketing decisions. You need to plan your marketing and try to fight against something I call 'sellers remorse.' That is, a farmer wants to sell at a price but it if the market goes higher he or she is emotionally tied into that sale they already made. So, we are very strong advocates of talking to farmers about their marketing options, and using minimum pricing and scale-in sales."
What are good targets to look for regarding 2014 corn and soybean prices? If prices can get back up to your cost of production, you should figure out your APH and if you can start to use a minimum price at your cost— at least you'd know you are going to be farming next year, says Kordick. He doesn't have a specific price target but says everyone has to pencil out their own cost of production and work to use revenue guarantees as a building block, then scale-in from there using a crop marketing plan.
Will Iowa farmers plant more corn in 2014? Or switch to planting more acres to soybeans?
In December, farmers were asked—Will you plant more corn or more soybeans in 2014 than in 2013? Farmers at the end of 2013 were leaning toward planting more soybeans in 2014. Kordick isn't so sure now, what will actually happen this spring. Maybe corn could be king again?
Corn tends to be a "go-to" crop. If the nation has just a little bit of an increase in corn yield—with 93 million acres of corn in 2014 in the U.S., such production would really add to corn supplies and the market is already reflecting that possibility. It's always the unseen factor that will influence prices. Now, in February farmers should be making crop rotation decisions on acres that could still be planted either to corn or soybeans this spring, Kordick says. Often now, when asked if they'll plant more corn or beans this spring, the general answer from farmers is "I'm sticking with what I'm doing. I'll plant the same percentage of my farm to corn and to soybeans this year as I did last year."
Many farmers say they'll plant the same number of their acres to corn and to soybeans in 2014 as they planted in 2013
It'll be interesting to see what happens statewide with planting in Iowa this spring, says Johnson. He also is hearing more farmers in Iowa indicate they'll probably stick to their planned crop rotation in 2014—with the same mix of corn and soybean acres as they planted in 2013. That is, of course, assuming good weather for planting corn on a timely basis. If the weather window for spring is early, corn planters will roll.
The webinar begins at 1 p.m. on Feb. 17. No need to pre-register and there's no cost. Farm Bureau is cooperating with ISU Extension to put on the webinar as they've done in previous years. This webinar is a good time for farmers to get updated on crop insurance for 2014 and updated on preharvest marketing considerations. "We're back to the basics now, dealing with much tighter crop profit margins," notes Kordick. "This webinar is an opportunity for everyone. There's no limit to the number of people we can handle. Best way to get there is go to www.iowafarmbureau.com. We'll have an easy link for you to access the webinar."