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By JAMES M. MOORE
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Virginia Tech
Should a fanner insure his crops?
Extension specialists say the most important question is whether the farmer can stand the financial loss if he doesn’t.
Crop insurance may be described as income assurance. If a farmer insures his crop at the highest level and at the highest price he can be pretty sure that he will get back at least his out of pocket cost. Some of his income will be from crop sales or in the value of products used on the farm. The rest will be from insurance if there is a yield reduction.
Every fanner has nine alternatives levels at which he can insure his crop. He can insure at 50, 60 or 75 percent yield levels^ Then he will receive indemnity payments if his yield falls below the level he has chosen. For example, if his normal corn yield is 100 bushels and he has insured at the 75 percent level, he will receive insurance payments if his yield falls below 75 bushels.
He can also choose one of three price alternatives. The price alternatives for corn are $2.00, $2.60 and $2.90.
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