Is Crop Insurance Values That Much Lower Than Last 10 Years
Expanding on our previous post, I decided to work up a table showing the insurance values over the last 10 years plus an estimate for this year. I based it on an APH for 2015 of 185 with a 2 bpa adjustment for each year going back. Below is the chart showing these values for 2006 to 2015 based on actuals with an estimate for 2016 using a corn spring price of $3.90. The chart assumes that the farmer elected 85% coverage in each year.
I then calculated an average insurance amount at $686.56 and a median amount of $652.59. The estimated amount of insurance for 2016 is $619.91 which is about $33 lower than the median amount and about $67 lower than the average. Now we know that many of the inputs are higher than they were 10 years ago, but yields are also higher and crop insurance is still insuring a substantial amount of the costs of inputs going into the corn crop. After all, that is what crop insurance is designed to do.
Here is the chart:
| Year | 2006 | 2007 | 2008 | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 |
| Price | 2.59 | 4.06 | 5.4 | 4.04 | 3.99 | 6.01 | 5.68 | 5.65 | 4.62 | 4.15 | 3.9 |
| APH | 167 | 169 | 171 | 173 | 175 | 177 | 179 | 181 | 183 | 185 | 187 |
| Insurance | 367.65 | 583.22 | 784.89 | 594.08 | 593.51 | 904.20 | 864.21 | 869.25 | 718.64 | 652.59 | 619.91 |
Paul Neiffer is a certified public accountant and business advisor specializing in income taxation, accounting services, and succession planning for farmers and agribusiness processors. Paul is a principal with CliftonLarsonAllen in Walla Walla, Washington, as well as a regular speaker at national conferences and contributor at agweb.com. Raised on a farm in central Washington, he has been immersed in the ag industry his entire life, including the last 30 years professionally. Paul and his wife purchase an 180 acre ranch in 2016 and enjoy keeping it full of animals.
Comments are closed.