The Marketing and Crop Insurance Risk Model: Show Them the Data

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The Marketing and Crop Insurance Risk Model: Show Them the Data. Gary Schnitkey University of Illinois. Partners. Illinois Farm Risk Management Bureau Agency. Approach. Teach crop insurance and marketing

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### The Marketing and Crop Insurance Risk Model: Show Them the Data

Gary Schnitkey

University of Illinois

Partners

Illinois Farm Risk Management

Bureau Agency

Approach
• Teach crop insurance and marketing
• Use a history of crop insurance and marketing payments (1972 – 2004)
• Adjust yields and prices to current conditions
Logan County, Illinois, Farm Yields

Trendline increase = 1.7 bu.

Update Yields = Actual + Trendline Adjustment

2001 163 + 4 x 1.7 = 169.8

2002 160 + 3 x 1.7 = 165.1

2003 189 + 2 x 1.7 = 192.4

• 188 + 1 x 1.7 = 189.7

* Equals years in the past x trendline increase

• Take price changes from year
• Harvest price – base price
• Add current base price plus price change to arrive at used price
Used Price (2004 Base Price = \$2.32)

Base Harvest Price Used

Year Price Price Change Price *

2001 \$2.46 \$2.05 -\$.41 \$1.67

2002 2.32 2.52 .20 2.28

2003 2.42 2.26 -.16 1.92

• 2.83 1.99 -.84 1.24

* Equals price change + base price (\$2.32)

Meetings
• Discuss crop insurance and marketing
• 2 ½ hour meeting
• Agenda
• Introduction, description of products
• Marketing/crop insurance products
• Recommendations
Marketing/Crop Insurance Models