Disclaimer: This web page is designed to aid farmers with their marketing and risk management decisions. The risk of loss in trading futures, options, forward contracts, and hedge-to-arrive can be substantial and no warranty is given or implied by the author or any other party. Each farmer must consider whether such marketing strategies are appropriate for his or her situation. This web page does not represent the views of Kansas State University. 
Disclosure:  Dr. Barnaby’s research was the basis for the privately developed Crop Revenue Coverage.

Under Some Conditions CRC on Soybeans is Less Expensive than RA-HPO[1]

Below are three example set of soybean rates.  As expected, under irrigation RA-HPO was less expensive than CRC.  However, in Ohio and Northeast Kansas dryland soybeans, CRC was less expensive at some coverage levels (Tables 1, 2 and 3).

Some soybean growers will need to look at rates for both contracts before making a decision.  A grower with both dryland and irrigated acres may prefer RA-HPO on the irrigated acres and CRC on the dryland acres.  However, this is not an alternative available to growers.

My thanks to the reader that sent in the soybean example.  For corn, it looks like CRC is always more expensive than RA-HPO.  The only exception is under the enterprise unit because CRC, RA and IP do not use the same definition of an enterprise unit.

Has this changed my mind about keeping both CRC and RA on the market?  No, the duplication of revenue products allow growers to adversely select based on premium cost.  Duplication of products adds to the administrative cost of the program.  And in the case of corn, CRC has been priced out of the market.

Before CRC is removed from the market, RMA needs to make RA available on milo and in states that do not have the RA offer, for example Nebraska .

I have continued to receive comments on my last WEB page update.  (That is a real understatement)  I will get to all of them but it will take time.  I will use some of the comments on future WEB papers but I will not reveal who or where the comment was sent from.  Some of you clearly do not agree with me but I do appreciate the feed back.