Revenue protection (RP) policies account for almost all of the crop insurance policies sold to Illinois corn farmers.
In fact, nearly 6,000 of the 7,000 insurance policies Illinois corn farmers bought were of the RP variety, according to crop insurance data.
And that’s the preference for farmers in surrounding states, too.
In Iowa, corn farmers bought revenue protection policies 92 percent of the time. In Indiana, corn farmers bought revenue protection policies more than 80 percent of the time.
“Farmers have sent us signals for quite a few years now, probably 13 or 14 years now, that they’re willing to spend considerably more money on a revenue-based policy,” said Doug Yoder, a senior director of affiliate and risk management with the Illinois Farm Bureau, “because it protects and gives them some revenue guarantees, as opposed to just a yield guarantee.”
Income from crop yields can be low – even if yields are high – if crop prices plummet, said Yoder. Insurance against poor crop yields has been available for many years, but now farmers are able to insure themselves against poor crop prices with insurance policies such as the revenue protection option.
A review of federal crop insurance data for 2013 specifically focusing on RP policies found:
- In Illinois, revenue protection policies insure about 8.6 million of its 10 million acres of corn, and 6.4 million of its 7.5 million acres of soybeans.
- In Iowa, revenue protection policies insure 12 million of its 13 million acres of corn, and 8.2 million of its 8.7 million acres of soybeans.
- In Indiana, revenue protection policies insure 3.8 million of its 4.6 million acres of corn, and 3.2 million out of its 4 million acres of soybeans.
In 2012, revenue protection policies paid U.S. farmers more than $14 billion of the more than $17 billion in total crop insurance payouts.
“One issue with farming and trying to make a living farming is that so many things are out of a farmer’s control,” said Yoder. “Revenue insurance gives farmers a chance to protect certain levels of revenue instead of just yields, so it’s all encompassing and more complete coverage for them.”