# Profit Maximizing: Crop Insurance & Risk Management Decisions Amarillo, Texas

```Profit Maximizing: Crop Insurance
& Risk Management Decisions
Amarillo, Texas
Presented by:
Dr. G.A. (Art) Barnaby, Jr.
Professor of Agricultural Economics at
Kansas State University in Manhattan, KS
ACRE Calculation Worksheet1
1
2
3
4
5
6
7
8
9
10
2007/08 Corn NASS Price
USDA Forecast 2008/09 NASS Price
ACRE Strike Price
State Yield by Year
2004
2005
2006
2007
2008
State Olympic Average Yield
11
12
13
14
15
16
17
18
Coverage X 90%
C
%2
Actual 2009 State Yield
Max (2009/10 MYA Price, 70% X Loan)
Revenue to Count
Gross ACRE Payment
y
25% Payment Cap
Pay the Lesser of ln 15 or ln 16
Payment Factor 0.833 (0.85 in 2012)
Farm's Olympic Yield3
Farm's
Farm
Farm Benchmark
Farm Yield in 2009
Farm Revenue to Count
Eligibility Requires Farm Revenue to
be less than Farm Benchmark
If No, then ACRE payment for the
farm is zero and Stop Calculations
Farm's Olympic Yield Ratio / State
Olympic Yield
Farm Level ACRE Payment
19
20
21
22
23
24
25
26
Note: No Negative Values and Payment Limit is \$73,000
\$6.48
\$6.78
Avg (ln 1 & ln 2
State
34.5
31.9
23.6
27 8
27.8
36.9
[ (Sum (ln
5…ln 9) Max (ln 5…ln
9) - Min (ln
3 X ln 10) X 9
21.1
\$5.05
(ln 12 X ln 13)
((ln 11 - ln 14))
(ln 11 X 25%)
(ln 17 X 0.833)
44
\$12 10
\$12.10
3 X ln 19) + ln
22
(ln 13 X ln 22)
IF ln 21 > ln
23 then
"YES"
otherwise
(ln 19 / ln 10)
(ln 18 X ln 25)
SURE Cacluation Worksheet
Wheat
2
Insurance Plan
Planted acres
______
3
Crop Share
______
1
CRC
4
% crop insurance coverage
______
5
______
6
CRC/RA/APH Price
7
GRIP/GRP Scalar
______
N/A
______
8
115% (120% for 2008 only)
______
9
SURE guarantee
______
10Whole
Farm SURE guarantee
SURE
______
11
______
12
Insurance price guarantee
______
13
Expected Revenue
______
14
90% expected revenue Cap
15
90% Cap on SURE
______
16
Lesser of Cap or Final
SURE guarantee
______
17
Less Direct & ACRE
15% of Direct payment
______
18
ACRE or CC Payments
______
19
83.3% ACRE or CC Pymts
______
20
Less Production
Current Year yield
______
21
2008/09 MYA price
______
22
Value crop produced
______
______
______
______
SURE Cacluation Worksheet
Wheat
23
Insurance Plan
Less Crop Insurance
Planted Ac. (share)
______
24
aph/Expected County Yield
______
25
Coverage Level
26
APH Price
______
N/A
______
27
Harvest Price
28
Max Plant/Harvest Price
______
\$7.88
______
29
Production Guarantee
N/A
______
30
Final Revenue Guarantee
______
31
Current Year Farm yield
32
Trigger Revenue
______
N/A
______
33
County Yield
34
Indemnity Bu.
35
Dollars to Count
1
CRC
SURE
N/A
______
N/A
______
% Pymt of GRIP Coverage
______
N/A
______
Gross Indemnity
______
______
______
38
Net Indemnity
______
39
SURE Payment
______
40
Pay 60% of Payment
______
41
Net Crop Insurance + SURE
______
36
37
______
1/25/2010 20:58
Agriculture and Natural Resources • Family and Consumer Sciences • 4-H and Youth Development • Community Development
___________________________________________________________________________________
Educational programs of the Texas AgriLife Extension Service are open to all people without regard to race, color, sex, disability, religion, age, or national origin.
The Texas A&M University System, U.S. Department of Agriculture, and the County Commissioners Courts of Texas Cooperating.
A member of the Texas A&M University System and its statewide Agriculture Program
```
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