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Prairie Farmer - February 2008

Compare Insurance

Garrett Stoerger
Department of Agricultural and Consumer Economics
University of Illinois at Urbana-Champaign

Even though we're only two months into 2008, one of the hardest decisions for farmers to make comes in March: crop insurance.

This year, there are several crop insurance polices to choose from. To better understand these products, University of Illinois ag economists have developed a spreadsheet tool: the Crop Insurance Decision Tool.

As one of the newest programs FAST has added to its suite of spreadsheets, this tool is essentially five tools rolled into one. To begin, it can quote premiums for seven crops and 26 states across the Midwest and southeastern United States . The tool can also estimate payments for the year to come, display historical insurance performance for every county in Illinois , and calculate a yield trend for the county and your individual farm.

The spreadsheet is available for free download at www.farmdoc.uiuc.edu/fasttools . Note that the tool is a large file and may take awhile to download if you have dial-up Internet access.

Check out the features

Once you have downloaded the tool, the best place to start is with insurance premiums. In the drop-down menus at the top of the page, select the state, county and commodity you wish to quote. Keep in mind that until Risk Management Agency releases final numbers in early March, quotes will only be an estimate.

Moving on, when using the "What if" tool, you can estimate the insurance payments given the criteria they provide. This is extremely useful when you run different scenarios of price and yield, and can help you identify pros and cons of different insurance products.

Further exploration shows a "Historical premium and payment" section. The data in this report is remarkable. It shows the actual number of acres insured per county, the average premium paid per acre, the average payment per acre and the average net effect of insurance. Essentially, it is a report card for how each insurance product has performed over the past decade.

The graphic here illustrates one of the "What-if" tool's capabilities. This chart is the estimated insurance payment generated for corn given the following scenario: an actual production history yield of 165 bushels, an expected county yield of 165 bushels and a base price of $4.35. The three boxes would represent actual harvest data: a farm and county yield of 165 bushels per acre and a harvest price of $3.50. The best part is that you can change any one input while holding all others constant to see how that will affect the payment.

Whether you are a farmer, landowner, agribusiness professional, or a crop insurance agent, I strongly encourage you to take a look at the Crop Insurance Decision Tool. Its user-friendly format and versatility is what sets this tool apart from other insurance "quoters." Also, the built-in historical insurance data, the "What-if" tool, and other features should make it one of your first stops on your way to crop insurance decisions for 2008.

Stoerger is FAST coordinator with University of Illinois Extension .