An ag economist cautions farmers about reducing their crop insurance coverage even in the face of potentially higher premiums.
Gary Schnitkey with the University of Illinois says it’s best not to lower coverage.
“So we could take a situation where we will have losses and make them bigger losses if we lower those coverage levels and prices do go down further than we might like.”
Schnitkey says it looks like premiums could go higher.
“If we use the same projected price and volatility that existed last year this year—we see higher premiums for this coming year and those premiums are in the area of being 10 to 15 percent higher.”
Even if they don’t go higher, he says, premiums likely won’t be any lower.
“If we do have a lower projected price or lower volatility than last year we could have the same or comparable premiums to last year. We’ll have to wait and see what the month of February brings to us as far as the projected price and volatility.”
Schnitkey says there is “still considerable downside price risk and downside revenue risk” and farmers may want to consider increasing their crop insurance coverage for this year.
Source: www.brownfieldagnews.com