ARC, PLC deadline March 15: Options for farmers to insure crops

GENESEO, Ill. — The deadline for farmers to make a decision on enrolling their base acres in Agriculture Risk Coverage or Price Loss Coverage is March 15.

“If you don’t need to change anything, then you don’t need to do anything,” said Vince Reincke with Strategic Farm Marketing and Crop Insurance.

“This has a direct implication on your crop insurance decisions because if you don’t pick Price Loss Coverage, you can’t purchase the Supplemental Coverage Option,” said Reincke during a risk management seminar presented by Strategic Farm Marketing and Crop Insurance. “You make the selection by crop and by farm number, but I encourage you not to make it overly confusing.”

SCO is 65% federally subsidized.

“It fills the gap between 86% down to whatever insurance level you choose,” Reincke said. “It is county-based, it uses RMA county yields and it’s not released until June 15 the year after the crop is grown.”

Farmers can adjust their coverage to either reduce their premium or reduce their benefit.

“You can choose from 100% to 50% coverage or anywhere in between,” Reincke said.

The Enhanced Coverage Option became available to farmers in 2021.

“It can get you from 86% to 95% coverage and it basically works the same as the Supplemental Coverage Option,” Reincke said.

Risk Management

To help farmers find the appropriate options for their operations, the company works with nine crop insurance companies.

“We have the ability to search around and see what works best,” said Gary Asay, crop insurance agent, who also spoke during the meeting. “Our company was formed in 1985 and we are one of the largest crop insurance agencies in the Midwest.”

The company is heavily involved in crop insurance development.

“We have a risk management focus, so we do grain marketing and commodity brokerage,” Asay said.

Going Electric

There are many factors impacting the agricultural industry and commodity prices.

“The Biden administration is considering a reduction of the 2022 ethanol blending requirement from the initial proposal,” Reincke said. “It seems like it is a perpetual battle between the blenders and ethanol, and inflation is not helping.”

The switch to electric vehicles by Americans is going to take some time.

“Changing the fleet of automobiles over is going to take 30 to 50 years,” Reincke said. “If we want to find an environmentally friendly way to handle things, we better find a segue because we’re not all going to get to electric vehicles super quick.”

One of the major hurdles for electric vehicles is the infrastructure for charging.

“If you drive 500 miles in a day, that ends up being a problem, so it feels like some type of plug-in, hybrid vehicle makes the most sense,” Reincke said. “The transition to strictly electric vehicles will task our electric grid, so we’re not going to phase one out and jump all to the next. We’ve got to have a blending together.”

Carbon Credits

There are lots of questions about the carbon credit markets, Reincke said, including contract length, payment per acre, length of enrollment period, minimum acres, certification process and whether it requires a new practice or if it is retroactive to practices already implemented by a farmer.

“In the western Corn Belt, they’ve been doing no-till for 20-some years because they don’t get as much rainfall, so it’s not as hard to do,” Reincke said. “To penalize them for doing the right thing for the past 20 years, doesn’t make a lot of sense.”

The overall lack of standards for carbon credit programs is improving.

“Even two years ago, there was very little available,” Reincke said. “Over the last six months, there’s improved understanding, but it is so early, we have so much to learn.”

Grain Markets

The number of acres of corn planted by U.S. farmers is one of many factors that influences the price of corn.

“If we plant 92 million acres of corn and there is a 178-bushel yield, we will add to the corn stocks, which will probably take away from price,” Reincke said.

“But if we take 1 or 2 million acres out of that or if the yield changes, there’s a different result,” he said. “Make sure you look at what could transpire through the course of the year.”

For soybeans, Reincke said, a projection of 88 million acres planted with a 51.7-bushel yield will result in just shy of 400 million bushels of carryout.

“The soybean crush margins have been fantastic with the exception of the Chinese crush margins,” he said. “The December crush at 186.4 million bushels is a new record.”

Reincke encourages farmers to take advantage of pricing opportunities for their crops.

“You should be at 30% to 35% priced at this point for new crop,” he said. “Looking at 10 years of corn prices, we’re hitting areas where we haven’t spent a lot of time, so don’t forget to make some sales to lock in profitability.”

Over the last five years, Reincke said, the corn price has peaked in either May or June.

“The only anomaly was December 2020,” Reincke said.

“We are here to help you filter out the noise,” he said. “There are lots of ways to price your grain, so if you don’t understand them, just ask us.”

For more information about Strategic Farm Marketing and Crop Insurance, call 217-356-0046 or visit www.sfarmmarketing.com.