The introduction of the new Combo Policy in 2010 consolidated several old insurance products into one policy, which simplified and standardized aspects of the old policies. These changes also provide an opportunity to help producers understand the new Combo Policy Plans and risk protection each offers to cover yield, price and revenue for insurable crops.
The Combo Policy Plans use the Futures and Options markets when establishing price protection levels defined by the RMA Projected Harvest Price and the RMA Harvest Price for the Combo Plans. These two price levels, and a yield coverage level selected by the producer, are used to establish revenue guarantees under the Yield Protection Plan, the Revenue Protection with Harvest Price Exclusion Plan and the Revenue Protection plan. Each plan offers a different risk mitigation strategy and producers must select one appropriate for their needs.
Software was developed which allows producers to compare multiple levels of yield, price and revenue protection offered by futures and options contracts as standalone risk management tools or in combination with the new Combo Policy Plans offered by RMA. For comparative analysis, this software adjusts for the lumpiness of futures and options contracts which create over or under hedged positions and Combo Policy Plans which can be targeted more to actual production levels on an operation. Net income per acre using harvested bushels for a given marketing tool or insurance plan or a combination of tools is used to compare selected risk management strategies.
|Conference||2011 Extension Risk Management Education National Conference|
|Presentation Type||60-Minute Concurrent|