Wednesday, August 29, 2012

Crop Insurance

Last week I read a thoughtful blog post from Farm Policy Facts, a "coalition of farmers and commodity groups created to educate Congress and Americans about agriculture's contribution to a strong and vibrant United States." They focused on some of the misunderstandings about crop insurance.

One popular misconception is that farmers purchase crop insurance policies to guarantee they will make a profit - which as the author states is "an assertion that anyone with any experience in the high-cost, high-risk farming business has immediately dismissed as ridiculous."

The blog post includes a telling quote from Jason Williamson, who is a crop insurance agent from Payne, Ohio, which provides some levity to the argument: "Do you think that drivers who purchase car insurance are secretly hoping for a car wreck to get a check from the insurance company? It's an absurd idea. You purchase insurance for protection, not to make a buck."

Every farmer I know is dedicated to their craft and would prefer to never need crop insurance. But like with car insurance, it is a prudent aspect of business that can help protect against things we can't control - like the weather, or droughts. After a house, a car is often a family's largest expense/investment. It would be hard for many families to simply replace a car after a car wreck if they didn't have some form of insurance; imagine how hard it would be to replace an entire crop!

Thanks to Farm Policy Facts for sharing this meaningful information with people!

Noah Hultgren

Monday, August 13, 2012

Drought taking a toll on corn crop

Though corn crops are looking good in our immediate area, many farms to the south and west are going to struggle with poor yields this year as the drought continues to spread. I read an article from Jim Suhr of the Associated Press (USDA cuts corn outlook as drought takes toll) that detailed the current status of the nation's corn and soybean crops, which is dire in many parts of the country.

According to the article, the USDA dropped its projection of national corn production almost 20 percent from its forecast just one month earlier - from nearly 13 billion bushels to 10.8 billion bushels - due to the drought. That would be the lowest amount since 2006, and 13 percent lower than last year's result. The USDA is also "predicting what could be the lowest average corn yield in more than 15 years as the worst drought in decades continued punishing key farm states."

It's troubling because the downward revisions are in stark contrast to the year's projections, as "corn farmers forecast a record year when they planted, sowing 96.4 million acres - the most since 1937. But the USDA now forecasts the area to be harvested at 87.4 million acres."

Likewise, "soybean production is now forecast at 2.69 billion bushels, a 12 percent decline from last year and well off the 3.05 billion bushels the USDA had expected last month. Expected yields on average of 36.1 bushels per acre would be the lowest since 2003."

This will likely lead to increased food prices, especially for beef and pork. The prices will likely also rise for farmers, with corn and soybean markets climbing.

The high corn and soybean prices may sustain the high farmland prices we're currently seeing; or it may lead to a change in the next year as the market starts to correct itself. If you're interested in selling your farmland, or getting a new appraisal to see what your farmland is now worth in this market, please call me at 320-894-7528.

Noah Hultgren