View from the Cab: Protecting profit

By Kent Casson

The financial picture is not so great for farmers these days. In fact, current corn and soybean production budgets are projected to be below breakeven on profitability.

University of Illinois Extension says federal crop insurance can be used as an effective tool to protect farm operations from price or yield loss. A coverage option known as “Enhanced Coverage” should be considered, according to experts, as the road growers choose for protection could have a significant positive impact.

Subsidies have been increased on ECO for federal crop insurance which boosts loss coverage from 85 to 95 percent if selected. ECO uses county yield averages to compute losses above the 85 percent guarantee from standard coverage. ECO payments are not based on a farm, but the performance of the county average yield.

While it is not perfect coverage for your farm, it does provide additional coverage at a highlight subsidized rate.

“During challenging times, it is human nature to cut costs,” said a news release from U of I Extension. “An increased cost for income protection by purchasing higher levels of insurance may be very well worth the reduced risk of lower profits from further price erosion or reduced yield due to weather.”

Growers often select Revenue Coverage (FCS) at 75 to 80 percent coverage due to premium savings on Federal Crop Insurance. It is suggested farmers highly consider using 85 percent coverage to protect against loss in 2025.

Budgets from the University of Illinois Farmdoc team can be found at farmdocdaily.illinois.edu/2024/01/revised-2024-crop-budgets.

For more farm financial updates, you can follow the Farm Coach blog at extension.illinois.edu/blogs/farm-coach or check out “Farm Coach U of I Extension” on Facebook. You’ll find detailed information on managing farmland.

Farmers have plenty of information to digest this time of year as we are in the midst of meeting and show season along with crop insurance and farm program signup season. If you’re like me, you have to write all of this down or it may be forgotten.