Protecting Profit Potential
A Revenue Insurance Success Story

Getting paid on an insurance claim in 2008 was a bonus for Wes Veach who operates 1700 acres in Coles, Edgar, Douglas, and Clark Counties. He raised 185 bushels per acre of corn and 56 bushels per acre of soybeans. It was a good crop with near average yields. However due to a record decline in harvest prices, Veach received an insurance payment for the year due to revenue loss. Why? Because he and other farmers like him had 85% level Crop Revenue Coverage (CRC). On corn, Veach received $133 per acre and he received $91 per acre on soybeans.

That’s just part of how Veach benefited from CRC in 2008. Veach noted, “The replant reimbursement on the CRC helped me out a bunch, because I had a lot of replant.” Due to flooding, Veach replanted 150 acres of corn and 520 acres of soybeans. CRC and similar plans reimbursed policyholders up to $43 per acre for corn and up to $40 per acre for beans.

"Wes Veach started farming in the early 1980's but has only been carrying crop insurance with Farm Credit Services since 2005,” said Farm Credit Crop Insurance Specialist Brent Becker. “I think Wes hadn’t ever had anyone explain to him all the mechanics of how it works and assumed crop insurance was just a stop gap disaster aid that seldom paid. But once he understood all the different ways crop insurance can work, he saw it as a wise business investment.”

Wes prefers the 85% Enterprise Unit (EU) structure because he can get the maximum guarantee for his operation and earn a discount on his premium. According to Veach, “It’s affordable and covers my needs as far as marketing.” Veach said that CRC gives him the confidence to forward sell everything up to his guaranteed bushels. According to Veach, those extra forward sales in 2007 and 2008 earned him more than twice the amount of the 2008 claim paid. “Marketing is the main thing for me," says Veach. "I use that CRC 85% to market and I have done so the last few years even though I hadn’t had a claim until this year."

When asked what he would have done in 2008 without insurance, Veach said, “Oh, I might have had some sleepless nights there when it was flooding out the river bottom and I wouldn’t have marketed so heavily.” For Wes Veach and others like him, the marketing protection insures the minimum bushels at the higher of base or harvest price. Something new in 2009 that makes CRC even more attractive is that the harvest price can go up or down the full amount of the base price. Previously, there was a $1.50 limit on corn and $3.00 limit on beans. For example, at an estimated base price for corn of $4.00 and Veach sells his guarantee ahead but then raises 20 bushels per acre less, CRC will pay up to $8.00 per bushel to replace those bushels.

In 2009, the Enterprise Unit (EU) structure on Crop Revenue Coverage (CRC) and Revenue Assurance (RA) is even more attractive because of the increased premium subsidy. The benefits of CRC are many -- from replant and prevented planting protection to forward marketing support when prices are good to an eventual harvest loss payment. Wes Veach has seen them all and made CRC work for him as a management tool.