Dear SMS Clients, If you have taken out a “revenue” insurance plan there are four factors that will determine a possible indemnity payment for 2008: Spring Price, Proven Yield (either APH or Expected County Yield), Harvest Price and Harvested Yield (personal yield or Final County Yield). That harvest price for much of the country is being determined during the month of October for corn and soybeans. After this Harvest Price is established, we will know three of the four factors that determine a crop insurance payment under these revenue plans of insurance, only leaving the final harvested yield for you and/or the county as the last piece of the puzzle. Through our partnership with Silveus Insurance Group we would like to offer a unique service. If you would like to have an idea of what GRIP/GRIP HRO/RA/CRC might be paying in your particular area you can send Dale Miller a fax at 574-2682442. Please allow up to 48 hours for us to get back to you with this information. If you have additional crop insurance questions you can call Dale at 574-453-6135. If you are insured with GRIP, please specify the coverage level you purchased, the State and County along with your anticipated final yield for corn and soybeans, as well as what you think your county yield could come in at based on your interaction with producers in your county. Dale will then send you a payment grid based on a range of price and yields for the county that will highlight what the possible payments for GRIP would be. If you are insured with an individual coverage like APH/CRC/RA, you may also send us your proven yield (APH), and what your average yield is anticipated to come in at, and we can send estimated payments based on a range of prices. Sincerely, Jerry Gulke Crop Insurance Pricing Update from our Crop Insurance Partners Silveus Insurance Group We are currently 17 trading days into the harvest price calculation for CRC and GRIP for corn, and CRC, RA and GRIP on Soybeans. There are six trading sessions left in October to complete this final average harvest price. As of yesterday’s close the average price for each commodity is: Corn: 4.18 (CRC/GRIP) RA is not calculated until November Beans: 9.28 (RA) 10.36 (GRIP/CRC) With the market continuing to slide south, the question is… “At what price does RA outperform GRIP, since GRIP has a price drop capped at $3.90 on corn and $10.36 on soybeans”. First, it is important to understand the dynamic of the Average Harvest Price. With 17 sessions already calculated, the last six sessions will not have as strong of an impact on the average. If the price of corn drops 20 cents per day for the last six trading sessions, which would mean on October 31 the price of corn on the December 2008 contract closes at $2.70, the average price for crop insurance would still be $3.92. The maximum price drop for corn under a GRIP and CRC policy is $1.50 from the Spring $5.40 price. That would make the maximum move $3.90 ($5.40-$1.50). So under a worst case scenario for the last six trading sessions we would still not reach the limits of movement for corn under CRC and GRIP. The only thing outstanding at this point will be what the RA price comes in at during November. At that point we can run some comparisons. Now, let’s look at soybeans. Under CRC and GRIP we have already reached our maximum price drop at $10.36 ($3 under our Spring Guarantee of $13.36). While RA is currently at an average harvest price of $9.28. We ran a scenario in Winnebago County, IL with the following assumptions: Producer APH: 42 bu.; County Expected Yield: 42 bu. Spring Price $10.36; GRIP Harvest Price $10.36; RA Harvest Price $9.28; Final county yield 42 bu; Final producer yield 42 bu. Under those assumptions above, if the producer bought an 85% RA policy the gross payment would be approximately $87. However, had the producer purchased GRIP the payment per acre would be approximately $119. RA coverage (depending on the options you purchase with the coverage is around $7/acre more expensive). Now, let’s do a soybean “scenario” going into the end of the month where today we print a 70 cent drop and then have five more sessions dropping 30 cents each session. That would take us to an October 31 closing price on the November 2008 contract of $6.65. However, for the average price for crop insurance for RA, that would come in at $8.79. With the above assumptions and an $8.79 harvest price for the Winnebago County producer, they would end up with an RA payment per acre of $108, still not reaching the GRIP payment level, even with a GRIP price drop cut off at $10.36. If you would like Silveus Insurance Group to give you an update of what GRIP/GRIP HRO/RA/CRC might be paying in your particular area you can download the form and fax to Dale Miller. Be sure to speak with Silveus about insurance changes for 2009. CROP INSURANCE PAYMENT ESTIMATE GRID REQUEST FAX TO: 574-268-2442 (ATTN: DALE MILLER) Name _________________________________ E-Mail Address _________________________________ CORN State / County __________/______________________ Coverage Type: _________________________________ Coverage Level: _________________________________ Proven Yield: _________________________________ Harvest Yield Estimate Range: _________________________________ SOYBEANS State / County __________/______________________ Coverage Type: _________________________________ Coverage Level: _________________________________ Proven Yield: _________________________________ Harvest Yield Estimate Range: _________________________________