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The last 2 years have been big ones for the crop insurance industry. More than 60% of corn farmers in Illinois, for example, used revenue protection (RP) products at coverage levels between 70% and 85%, and just shy of 81% of that state's 12.8 million crop acres were insured, with numbers for soybeans at almost the same levels.
If history's any judge, those numbers are likely to increase this year, though probably just slightly, says University of Illinois Extension ag economist Gary Schnitkey, with the trend toward more RP policies and fewer Revenue Protection with the Harvest Price Exclusion (RPHPE) continuing, for better or worse.
"It is likely that 2013 insurance use will be similar to 2012 use. If anything, crop insurance may increase as crop insurance use often increases after a high payout year. The 2012 year will be a high insurance payout year in Illinois," Schnitkey says. "In 2012, RPHPE has significantly lower payments at the same coverage as compared to RP. This occurred because harvest prices were above projected prices. Larger payments for RP may cause a movement to RP and away from RPHPE in 2013. Of course, this could be chasing last year's result. RPHPE is a good product with lower premiums than RP. It is useful for those individuals who do little pre-harvest hedging. Hence, RPHPE may still be a good choice for certain individuals."