The bottom line is that 2011 is likely to be a profitable year for farmers. Determining just how profitable involves a complicated equation that includes number of bushels per acre, price per bushel, level of Revenue Protection (RP) and hedging. An issue of University of Illinois Farm Economics Facts and Opinions looked at some of the possible scenarios to help farmers juggle the numbers and the risk.
“Most people are buying Revenue Protection insurance products,” said U of I agricultural economist and farm management specialist Gary Schnitkey. “We wanted to know if you had to hedge grain now, what its impacts would be at several levels of RP and at no insurance just to get a feel for how much risk is mitigated by different amounts hedged.”
Schnitkey compared the RP at 85% coverage level, 75% coverage level and 65% coverage level and no insurance for a central Illinois farm with a 184-bushel average yield.… Continue readingRead More »