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Senior Advisor

Crop Production vs Crop Insurance ?

Hope everbody is having a good holiday weekend !  But I have been thinking about this subject for the past few years - and being I have been layed up for the psat 6 weeks - Have put some thought into it -

 

I have a VERY small custom app business here - more or less - a rescue type deal - like if its wet , tall corn - bug out break - what ever - 10 years ago I leasted out to a fert company - it was a win - win for both of us - they needed another operator and machine , and I wanted to trade up a machine size . Back then - we had a aphid out break - frogeye out break - Spraying tall corn - you name it . We have lucked out with no bug out breaks - other than 2012 - spidermites + bean leaf bettles - both very heavy - yet - nobody sprayed for them - why ? everyone said why spend the money on it - crop insurance will pay - why save them money was there reply - yet I did spray and seen a + 12 to 15  bpa increase in yeilds - the kicker was - it started to rain in Aug . and they just didn't think it would -

 

About 5 years ago I seen the shift - to more - " Playing " the crop insurance deal - vs the production side I had seen since I was a kid - Not a bad thing - just good business -  I seen it first hand in the custom business - they would give me a call - ask price per acre -  and then that was about it - I went from doing maybe 10 - 12 thousand acres to - if I'm lucky - thousand acres - It's just not me - I have talked to other app drivers in Indiana and Ohio - the one in Ohio was like me but bigger - I talked to him this spring - He was about ready to say screw it - Like me - all you do is talk with no action - why spend all that time for nothing ?

 

So - my question here - I just wonder - IF - most were to farm for production - where would corn - bean prices be today ? higher - lower ? or the same ?????

 

Also - something to think about - I haveread Hobby many times writ about all the hay fields plowed up to be planted - right ?? Why ??? Well my guess is that the crop insurance payed out a lot better than CRP - even if it only was to make - say 50 to 75 bpa - then add a million acres across the country - how many bu. did they add to the total - which really screws the guys that farm that crop for they living ? how many acres were add in dry land Kansas ? and others when the prices were up - Not to pizz anbody off here - just throwing out a question here .

 

Well better get here - Lots to do before it gets hot today - Today is dog bath day ! If any want - stop by - I have 2 to do and would be glad to let you learn - first hand the propure way to wash a Dobie - Smiley Very Happy

8 Replies
Honored Advisor

Re: Crop Production vs Crop Insurance ?

Hey Ken, I have no doubt that the price of grain would be higher if there was no crop insurance subsidy.  In the case of corn, 10 million acres would go back to pasture, golf courses, baseball diamonds, pheasant hunting...anything less risky than that artificial "put option" that crop revenue assurance now provides in planting corn.  We have a cheap food policy, liberals don`t like it when I say that, they somehow think that the farmer is making out like a bandit or something.  But that`s all farm programs are is an incentive to plow up any soil that will "hold up a plant" and on a certain year that the stars line up like 2014 (they tell me) those fringe acres produce pretty good.  Well that extra production weighs on the market for years.

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Senior Contributor

Re: Crop Production vs Crop Insurance ?

Very good question Ken. But we can't go back in time. Now what if prevent planting payments stopped, I believe the cost of production ie: land would drop.  So is the farm program for farmers, landowners, or bank protection?

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Veteran Advisor

Re: Crop Production vs Crop Insurance ?

If you want to know who the farm bill is for just look at who did the lobbying.

The main reason bills take so long to pass Congress is so they have time to shake the money tree!!

 

http://www.bloomberg.com/bw/articles/2014-01-30/farm-bill-draws-lobbyist-horde

 

http://www.netnebraska.org/article/news/927265/hundreds-lobbying-interests-influenced-farm-bill

 

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Veteran Advisor

Re: Crop Production vs Crop Insurance ?

No doubt here, either, that the average producer makes less money because of govt involvment in ag production. Prices would have much wilder swings, and a lot of acres of marginal land would never get planted each year as the risk vs. reward ratio would be too high.

 

A lot of people understand this, and realize that we have a "cheap food" policy in the USA, but there are a few fruitcakes that think its just a giant welfare program for the farmers..

 

The CSP program, whick pays farmers to do what they are already doing, should be held up into the sunlight more often and debated.

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Senior Advisor

Re: Crop Production vs Crop Insurance ?

BA - you think it would be higher ? Be'n a gray beard here - I sure remember some pretty low prices - when Crop Insurance was the same as nothing - Smiley Happy Yet - When the Gov- put in the ethenal madate - they needed that extra corn to run them and not add price to the corn = keep it lower - but they didn't figure on  2012 - IF it had not been dry then corn would not have been 8 bucks - but to me - more in line with what it is today - they need us to say in business yet keep food cheap - and thats all crop insurance is for -

 

One other thing - back when I was a Kid -  how many of you remember the big talk was PP ??? I don't - some way it got planted = No crop insurance - to speak of - It's just out there to protect the bankers And i still think if there was NO PP - It would still get planted  - may not make much - but if you don't have that net - then what would you do ? Plant it - right

 

Well better get - btw - got the 2 Dobies washed yesterday - I think I got wetter than the pup - but then again - wife was running the hose on that one - Smiley Very Happy

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Honored Advisor

Re: Crop Production vs Crop Insurance ?

Ken, i got snow on the roof too Smiley Very Happy  ..year around, but at least I still got a full load of snow, not bare shingles showing.

 

The thing with prevent plant..around here anyway, I did it on 50 acres back in `13...thee only way that I could pencil it out was it was corn and I had a high guaranteed yield on the field.  Also, it was a deal the only chance to have planted it was May 16th that year, I got through with the digger but the elevator didn`t get it squirted and rain set in that night and the next chance I had to get into that field was June 26th.   Now, I would`ve planted up to June 12th, but there was no way, that in combination that I didn`t have N or chemical down made that a easy decision to go PP.   But, I went through that insurance check like hot butter and 2013 was a very lean fall. 

 

Doing the math, I don`t know how anyone comes out going PP on soybeans, it`d keep you on live support a little but a couple years back to back would break a stout man.

 

This is just what I see with crop insurance at the present time.  Bankers wouldn`t be as generous giving out money to swing for the bleachers on yield without that minimum revenue guarantee. Alot of "fringe acres" would be too risky to plant and that would take a chunk off of "total planted acres" Like many of us that have been to Wall Drug, you look to the east and see corn, you look to the west and see the Badlands. 20 years ago, that wasn`t the case. 

 

I`m gonna sound like a oldtimer, but when I started farming rent was $100, seed $45/bag, potash $130, 28% $90, diesel 60¢.  Interest rates were 12% but I was "my own banker"..    There wasn`t the big money to stick in a crop that you do nowadays.  I was a bachelor back then and if I prepaid my expenses by Thanksgiving and had $3,000 leftover I knew I`d have "women chasing money" `til spring when I had a batch of market hogs to sell.  Those were the best of times and the worst of times.   Smiley Happy   Overall the 80`s are my favorite decade.

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Senior Advisor

Re: Crop Production vs Crop Insurance ?

Here I will make you feel better BA - lmao - I brought a brand new - 966 in 1974 - the first diesel fuel I got was ?????????????????????????????????????????????? 17.5 cents -- Yes my friends - 17.5 cents a gallon - But I'm pretty sure that Hobby and sw remember when they gave it away - lmao - just kidding , just kidding  LOL   Boy that was great tractor - wish I had never traded it !

 

BTW I bought a 5 bottom plow with it - it was used and gave 13,500 for tractor and plow - boy mom about had the big one over that deal  - I was in the clear at first - she was giving dad forty ways of heck when that semi pulled into the barn lot - well that was short lived - lol

 

Double btw - I was 17 .

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Veteran Advisor

Re: Crop Production vs Crop Insurance ?

Ecin....sorry I didn't know you were a bit under the
Wx, hope things get better soon !!!!

Out here in the high plains don't hear alot about prevented planting. But, if not for crop insurance
Things would be alot different in the area.

Hmmm I've been toying with doing a "wipper" service,
For rye in wheat and other problems in other crops,
But I might make more charging for admission for a comedy for a fat man on a little wipper unit than the charge per acre.
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