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New policy covers contract deliveries
This season, there’s a new player in the crop insurance game. John Deere Risk Protection, Inc. (JDRP) is offering an expanded policy to cover producers’ risks when they contract corn and soybeans with companies or cooperatives, including ethanol and biodiesel plants.
JDRP’s Crop Delivery Contract Policy provides coverage in the event a producer is unable to satisfy delivery contracts due to a yield shortfall, and when the replacement cost rises above the federal crop insurance coverage price and the contract price. The policy is available to growers who have a revenue-based Multi-Peril Crop Insurance (MPCI) policy with JDRP. Crop delivery policies are available in Missouri, Iowa, Kansas, Arkansas and seven other Midwest states.
“We understand that when farmers consider forward contracting as part of their crop marketing strategy, they may have concerns about being able to fulfill their delivery contracts,” said Don Preusser, JDRP president. “With this new policy, growers have another risk management tool to help reduce a loss, should they experience a yield shortfall on contracted grain.”
Here’s how the policy would work (This is for example only; prices here may not represent the up-and-down values of corn and soybeans): A grower contracts with an ethanol plant to deliver 50,000 bushels of corn at $5 per bushel. Before harvest, a flood wipes out half of the crop and the ethanol plant has to pay $5.50 per bushel for the replacement grain. The multi-peril coverage purchased earlier has a harvest price of $4.75. Since the grower had a yield shortfall and the plant’s replacement price is higher than both the contract price and the MPCI harvest price, the payout for the contract delivery insurance would be 50 cents per bushel, based on the difference between the $5.50 replacement price and the $5 contract price. A shortfall of 25,000 bushels (half the crop) multiplied times the 50-cent difference would mean a contract delivery insurance payment of $12,500 over and above any potential payment from the MPCI policy.
For more information about contract delivery insurance, contact your local John Deere Risk Protection insurance agent.
A challenge for agriculture 
Your idea could change policy and win some money Here’s a chance to influence the thought stream of public agriculture policy. And, you just might make some money. Farm Foundation, an non-partisan agriculture think tank, is offering what they call the 30-Year Challenge. It’s a competition for to evoke innovative and promising public policy options to address the challenges agriculture may face in providing food, feed, fiber and fuel over the next 30 years. The competition is open to anyone with an interest in the public policy issues outlined in the Foundation’s report, and it will pay out money for winning ideas. Farm Foundation intends to award cash prizes totaling $20,000, including $2,500 for the most innovative and promising public policy idea in each of the six challenge areas, and $5,000 for the best overall policy idea among these categories. 1. Global financial markets and recession
2. Global food security
3. Global energy security
4. Climate change
5. Competition for natural resources
6. Global economic development
While the 30-Year Challenge project is directed and led by Farm Foundation, contributing financial assistance to the project are: the Alliance for Abundant Food and Energy, the American Farm Bureau Federation, the National Corn Growers Association, the National Pork Producers Council and the United Egg Producers. So sharpen your pencil and offer up some change you can believe in. Farm Foundation intends to disseminate winning entries widely to policy makers and food system stakeholders as part of a summary document. Check out the details at www.farmfoundation.org. Deadline is June 1. |
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FAPRI outlook: bumpy and upward
Demand for energy and ag products will bring back market in the long run
The recent market turbulence in the advanced economies spreads and slows world economic expansion in 2009. However, recovery is projected in 2010, with long-term real growth in world gross domestic product of 3.5 percent reached by 2011 according to analysts with the Food and Agricultural Policy Research Institute, who briefed Congress in March on their 2009 agricultural economic baseline projections.
A bright spot in the outlook is that after the recovery, China, Vietnam, and India still post solid growth of 8.6, 7.7, and 7.5 percent, respectively. After substantial projected appreciation of the U.S. dollar in 2009, the U.S. dollar depreciates (inflation adjusted) over the rest of the decade against the currencies of most trade partners and competitors in international export markets, with the exception of the Brazilian real.
FAPRI expects the world ethanol price to fall in the short run because of weak crude oil prices and large supplies driven by previous oil price increases. However, bioenergy mandates translate into growing demand, which again strengthens the price of ethanol through 2018. Global net trade in ethanol is projected to increase by 3.68 billion gallons and reach 4.90 billion gallons by 2018. Biodiesel mandates in the Americas and Europe sustain the high price of biodiesel, with growth in consumption mostly met by domestic production, as the traditional South American exporters also face domestic mandates.
Other highlights from FAPRI’s 2009 world agricultural outlook:
Shortages in exporting countries and strong import demand drove grain prices up sharply in 2007/08. An adequate response to the demand softened prices in 2008/09. The world wheat price is projected to decrease further in 2009/10 because of high carryover stocks. The world corn price decreased in 2008/09 with the lower import demand in world markets. It is projected to decrease further in 2009/10. In the long run, grain prices are expected to remain strong because of growing demand for food, feed and fuel purposes.
World prices of oilseeds and vegetable oil retreat from their historic highs of 2007/08 because of weaker demand. World trade of soybeans, soy meal, and soy oil grows by 33, 31, and 37 percent, respectively, over the next decade. Argentina, Brazil, Paraguay and the U.S. account for 85 percent of the 296 million metric tons of world production in 2018/19. China continues to dominate world soybean imports and expands its net trade to 56 million metric tons by 2018/19. Palm oil remains the cheapest and most widely traded edible oil.
Sanitation and food safety concerns in China continued to impact the world meat market, as did issues with traceability. Sustained growth in world population and income raises per capita meat consumption and fuels a 24.3 percent expansion in world trade. Trade is projected to end at 21.1 million metric tons in 2018. A recovery in demand, coupled with strong grain prices, pushes all meat prices to historically high levels. Brazil and the United States gain significant shares in the world meat market.
World dairy prices are retreating from the record-breaking levels posted in mid-2007. With uncertainty about economic conditions as well as increasing supplies, world dairy prices continue to decline in the next couple of years. In the long run, growth in population and incomes continues to put upward pressure on dairy prices. Australia, New Zealand, and the European Union remain the big exporters. But as excess supply from the EU dwindles, Argentina and Brazil expand their dairy exports.
FAPRI is an economic research group with centers at Iowa State University and the University of Missouri-Columbia. The outlook projections incorporate recent macroeconomic forecasts and currently adopted agricultural policies.
MFA and Red Brand Wire support FFA
Albany MFA Agri Services manager David Cooper, left, presents a $500 donation Feb. 6 to Albany FFA Chapter’s advisor Rustin Jumps, president Kourtne Messner and chaplain Derek Williams. Cooper received the money after winning a giveaway from Red Brand.
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