Gaps in Insurance Coverage

See DTN for informative webinar rebroadcast:

http://about.dtnpf.com/ag/news_events/events/webinars/

ACRE Payments

Curious how ACRE payments are looking for 2009/10?

http://www.agmanager.info/crops/insurance/risk_mgt/rm_pdf09/AB_ACRE_pymts.pdf

USDA Harvest Report

Nebraska is 88% complete. Nationally, harvest is 88% complete as well.

http://www.dtnprogressivefarmer.com/dtnag/common/link.do?symbolicName=/free/news/template1&product=/ag/news/topstories&vendorReference=b88006fa-b53c-4980-88e5-e3a4e3a4d33e&paneContentId=3030&paneParentId=0

Dr. David Kohl

These notes are taken from the High Plains Journal.

State of Agriculture
-Watch Asia and especially China. Strong growth (10%+) can drive commodities while slower growth (3%) will negatively impact oil/commodity prices.
-87% of farm debt is real estate. Watch your liquidity closely.
-Real estate growth has hidden a lot of sins.
-Real estate has appreciated 80 of the last 100 years.
-Target a :50/:50 debt to asset ratio.

Nebraska Farm Real Estate Trend

http://www.agecon.unl.edu/Cornhuskereconomics/2009cornhusker/3-25-09.pdf

Mold's Crop Insurance Implications

http://www.extension.iastate.edu/CropNews/2009/0929hurburghrobertson.htm

Implications of mold on corn storage

http://cropwatch.unl.edu/web/cropwatch/archive?articleID=2145279

Sustainable Ag Conference in Ogallala

http://ianrnews.unl.edu/static/0911130.shtml

Dec 11 & 12

Ear Rot

http://cropwatch.unl.edu/web/cropwatch/archive?articleID=1904835

Corn Drying

http://cropwatch.unl.edu/web/cropwatch/archive?articleID=1990301

Grain Quality Losses

Good article touches on some of the quality problems the crop is facing this year.

http://www.dtnprogressivefarmer.com/dtnag/common/link.do?symbolicName=/ag/blogs/template1&blogHandle=business&blogEntryId=8a82c0bc23f3b116012417135de601cb

Crop Damage

Interesting article discussing degree of damage to corn necessary for a federal crop payment.

http://www.dtnprogressivefarmer.com/dtnag/common/link.do?symbolicName=/ag/blogs/template1&blogHandle=business&blogEntryId=8a82c0bc23f3b11601243ae44f4a0388

ACRE's Problem

Summary: Too many moving parts for producers to trust the information.

http://www.dtnprogressivefarmer.com/dtnag/common/link.do?symbolicName=/ag/blogs/template1&blogHandle=business&blogEntryId=8a82c0bc23f3b11601245f0faa47055c&showCommentsOverride=false

Economy

Listening to Bloomberg this afternoon, an economist was speaking about his outlook on the economic recovery. His verdict?

We're in trouble.

Our national deficit has increased 25% in the last 9 months and yet our economic recovery has not outpaced that of nations who elected to go forward with a much smaller stimulus package (i.e. Germany).

This housing mess is a LONG way from over as well. Very few of the mortages that need to be modified have seen any type of real aid.

ACRE Guarantees

Nebraska Irrigated corn revenue - $689.31
Nebraska Irrigated corn yield - 185 bu/ac
Nebraska Dryland corn revenue - $450.85
Nebraska Dryland corn yield - 121 bu/ac

Weather

It's looking like the weather scare has basically disappeared. Looking back, we enjoyed a big one day rally followed by the same type of bearish movement we are getting tired of seeing. Ugh.

Lending Has Changed? (Warning - sales pitch included)

DTN article discussing lending:
http://www.dtnprogressivefarmer.com/dtnag/common/link.do?symbolicName=/free/farmbusiness/news/template1&product=/ag/news/farmbusiness/features&vendorReference=0702DA77&paneContentId=70118&paneParentId=70104

One of the big features we are talking a lot about within crop insurance is the synergy that exists and we believe will grow exponentially in the near future between AMS and crop insurance. We also believe this information will be important to 'prove innocence' when dealing with government programs, BE endorsements, etc... We also think this data is useful beyond seed decisions and even beyond production decisions. I think this data will be useful for profitability analysis within the finance world and beyond.

Market Volatility

We may be looking at some more opportunities to sell commodities on some rallies driven by weather concerns over the next week or two.

Volatility Will Reign as U.S. Corn Crop Races to Maturity
The U.S. corn crop has endured a lot this growing season. In the spring, the crop experienced excessive moisture, primarily in the Northern and Eastern Corn Belts. During the summer, the crop was challenged by below normal temperatures generally across the belt. In addition, spotty hail and wind damage was experienced in many locations. The crop is finally approaching one of the last hurdles to a record crop and that is the ability to reach maturity before a freeze has a large detrimental effect on the national yield. If this week is any indication the market action over the next two weeks will be wrought with volatility as we await the results of any cold weather impact on the U.S. Corn crop.

(Exerpt from FuturesFiles Commentary)

Nebraska: Record Crop / Good Weather

Couple of articles from UNL

• http://cropwatch.unl.edu/web/cropwatch/archive?articleId=1319362
• http://cropwatch.unl.edu/web/cropwatch/archive?articleID=1315091

Market Movement

We're saw some welcome bullish movement in the market yesterday only to lose half of that upswing so far today. It's going to be interesting to see if speculators look to jump into this market on hopes that a freeze will provide a sharp rally or if this was a one day anomaly.

National vs International Energy Policy

Many places in the world are crippled by the lack of consistent, accessible energy. In the US, we have access to energy so we're going to hamstring ourselves with cap and trade in order to make ourselves as uncompetitive as possible in the global market?

http://www.jdgain.com/newsArticle.jsf?documentId=2c9e4f6923983daf01239cfa4b310a4e

Interesting Editorials

Healthcare, leadership and W

http://www.jdgain.com/newsArticle.jsf?documentId=2c9e4f6923983daf0123987ba899003b

Cap & Trade

Get ready for the ad blitz...

http://www.jdgain.com/newsArticle.jsf?documentId=2c9e4f6923983daf01239ba97f4907cf

DJIA vs Markets

Relationship between DJIA and commodity markets.

http://www.dtnprogressivefarmer.com/dtnag/common/link.do?symbolicName=/free/news/template1&paneContentId=5&paneParentId=70104&product=/ag/news/topstories&vendorReference=eddd1310-50bf-4ee7-adbd-597512891e22

Interesting...

ACRE

I'm anxious to see how many sign ups we've had for the ACRE program. We had good turn outs for our meetings in Imperial and Ogallala this past week and I've really enjoyed getting feedback from producers.

You should consider signing up if:
-Your revenue trends match the state's revenue trends
-You don't rely on government payments and/or loans

That being said, those who have signed up still feel there are some grey areas:
-Productivity ratios?
-Producers in the future will sign up without knowing the national market price for that year
-Payments are a year out. Unless you are a cash operator, that's money that you are paying interest on. i.e. 5 - 7% reduction in payment.

We have some resources for those interested in learning more.

Blood to a Boil?

If this doesn't bring your blood to a boil, I'm not sure what will... **Note: We're not talking about your local banks here. We're talking about the big boys.

http://finance.yahoo.com/expert/article/yourlife/181560

Big Numbers

Nebraska is leading all states in ACRE signups with (drumroll please) 372!

As far as I know Chase and Hayes counties haven't had any. We're only 3 weeks from the signup deadline.

Audible Groan

DTN provided this comforting commentary this morning. I actually groaned aloud when I read it.

"Corn: The market continues to be weighed down by bearish underlying fundamentals limiting the scope of any rally. If weather remains on its non-threatening course, yields could reach 2004 levels near 160 bpa, well above USDA's last estimate for 153.4 bpa and making the situation even more bearish."

Familiar with ACRE

DTN is basically posting a new article every day. In my mind, this continues to solidify the confusion and reason that most producers are going proceed with a 'wait and see' attitude.

http://www.dtnprogressivefarmer.com/dtnag/common/link.do?symbolicName=/free/news/template1&paneContentId=5&paneParentId=70104&product=/ag/news/topstories&vendorReference=0353b2fa-34a2-481b-912d-1cb46058ad3a

How confident are you in guessing commodity prices 12 months from today?

More ACRE...

Another joking ACRE article. Think there may be some confusion?

One producer within this article is not going to sign up for the for one basic reason.
-Assumptions
He feels that so many assumptions have been made (price, yield, state, national) that the resulting data is practically useless.

Other producers think its a no brainer.

http://www.dtnprogressivefarmer.com/dtnag/

Marketing Article - Farm Futures

I find marketing fascinating. It poses an impossible challenge. Hindsight is 20/20 yet the path directly in front of you is dark as night. In reading market commentaries, I begin to get the distinct impression that nobody has much more than the slightest clue what the future holds.

Marketing is the greatest challenge a producer must face.

I'm not a marketing expert, nor do I pretend to be. I recognize the importance of an effective marketing plan and understand the integral role that crop insurance plays in a marketing plan and risk management. In other words, don't be surprised if a lot of the content posted on this blog concerns marketing.)

The following commentary is on an article from the July/August 2009 issue of 'Farm Futures' written by Bryce Knorr entitled 'Selective Service' discussing the most profitable producers. Here is the overview.

• Have a written marketing plan
• Selective hedging - Willing to get in and out of trades as market warrants. (Oh by the way, this may be an impossible strategy and blurs the line between hedging and speculating.)
• Basic Strategy #1: Seasonal Rallies - Backbone of many marketing plans
• Basic Strategy #2: Be Trendy - Trend lines are simple, timing is difficult.
• Basic Strategy #3: Fundamentals - #3 can throw #1 and #2 out the window.

Conclusion: Active trading is for talented, committed producers with capital.

(By the way, these three strategies along with a talented, capitalized, committed producer do not ensure success. Good luck.)

ACRE

I was in the FSA office a couple of days ago pulling some maps for a customer and there was a line of producers waiting to speak with the 'FSA expert' about the ACRE program. The August 14 deadline is quickly approaching. Here are some bullet points:

• Direct payments reduced 20% & marketing assistance loans reduced 30%.
• Once a farm (defined by FSA farm #) is signed up, it's married to ACRE until 2012
• ACRE Guarantee is 90% of the 5 year state benchmark yield times the 2 year average guarantee price
• Benchmark yield - Average compiled by National Agricultural Statistical Service for each state
• Triggers (Both must be met) 1. State revenue drops below ACRE guarantee. 2. Actual revenue drops below ACRE guarantee

Acres Found

Looks like we found some more acres and corn prices have responded accordingly.

http://www.dtnprogressivefarmer.com/dtnag/common/link.do?symbolicName=/free/news/template1&paneContentId=5&paneParentId=70104&product=/ag/news/topstories&vendorReference=0cf7aea6-4215-4d9a-a056-582066285d77

High Plains Journal

There looks to be a plethora of changes on the horizon within the world of risk management and specifically, crop insurance. Here is an overview of ar article written by Sara Wyatt, president of Agri-Pulse Communications, Inc.

• Lawmakers have encouraged companies to sell more policies at higher coverage levels. (2000, $36 billion in coverage on 211 million acres. 2008, $90 billion in coverage for 272 million acres.)
• Three things occured as a result of this effort. 1) Companies/Agents agressively pursued more business. 2) More farmers buy more coverage. 3) Revenue-based policies that were not existent 10 years ago are increasingly popular.
• Due to the fact that agents are paid a percentage of the premium and the fact that premiums have a direct relationship with crop prices, the level of comissions paid in recent years has grown exponentially.
• Concerns about comissions paid has largely been eradicated due to lower commodity prices. (Base prices for corn are down 25%, soybeans are down 34% and wheat is down 44%)
• There are concerns that the Obama administration will be revisiting insurance and requiring the federal government to play an even larger role in risk management.
• This issue won't be going away soon and more efficient methods of delivering crop insurance will be evaluated. With the types of rules and regulations already imposed by the federal government, the type of economics involved and the challenge of generating a consensus within insurance providers, the task is daunting.

Value

I recently saw a sign in a business. It said:

1) Price
2) Service
3) Quality
(Please pick 2.)

The primary focuses as we build our insurance business will be service and building a business around the needs of our customers. Right now, we're putting together an advisory board of producers to better understand how we should build our business.

ACRE

Lot's of questions concerning the new ACRE program. See links below for additional information and scenario calculators.

Overview
http://cropwatch.unl.edu/archives/2009/crop4/ce_acre.htm

Calculator
http://www.agecon.unl.edu/farmbill/tools.html

DTN Webinars

http://about.dtnpf.com/ag/about/

Topics include weather, risk management, marketing, and more. I think some of these are very worthwhile.

Phew

Passed my crop insurance test yesterday.

After I'd answered all of the questions, a prompt popped up on my screen and asked me if I'd like to reveiw my answers. I declined. I figure that my first guess is just as good as my second guess would be.

I guessed my score would land anywhere between a 45 and an 80. 70 is passing.

81.

Welcome to Crop Insurance!

I just walked away from a good job with great security, solid benefits and a pretty decent salary.

It took a couple of days for the numbness to wear off. I wasn't sure what I'd done.

My excitement has been growing since then. I remember why I became so excited about this opportunity, this industry and this company.

I think a blog will be a good way to allow others to tag along the training process. This site is going to be targeted towards growers, but anyone who has an interest in crop insurance or stalking me at work is welcome to read along.