10254StateCropInsuranceWork.cfm Workshop will explain changes to crop insurance
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Workshop will explain changes to crop insurance

The 12th annual four-state risk management workshop is set for the week of Nov. 2 in Colorado, Nebraska, Kansas and Oklahoma. There has been a major overhaul of the crop insurance program with the new Common Crop Insurance Policy and a new Standard Reinsurance Agreement that effects insurance agent commissions. Understanding the changes made to crop insurance because of CCIP's introduction will be important to farmers, insurance agents, agricultural lenders, and other financial consultants/farm advisors.

The new CCIP effectively uses the Yield Protection contract as the base contract. The YP contract plus the harvest price and revenue endorsements is equal to the Revenue Protection contract. Farmers are allowed to delete the harvest price and create the Revenue Protection with the Harvest Price Exclusion contract. The yield protection under CCIP is the same in all three contracts, YP, RP, and RP-HPE.

Because the yield guarantees are the same in all three contracts, then adding revenue "endorsements" are yield adjusted Asian options. The yield adjusted Asian options have some fundamental differences from the options traded in Chicago, Kansas City, and Minneapolis. For example, one large difference is the Asian "put" in CCIP can take on negative values. One of the objectives in the four-state crop insurance workshop is to compare the cost/benefits of Asian options in RP versus exchange traded options. Under what conditions would it make sense to eliminate the harvest price from the RP and replace it with an exchange traded option? How would these strategies fit with other tools that include forward contracts, hedge to arrive, ACRE, etc?

Understanding the complexities of CCIP is a major focus of this year's workshops in Brush, Colo., Nov. 2; Grand Island, Neb., Nov. 3; Salina, Kan., Nov. 4; and Enid, Okla., Nov. 5. Enrollment is limited and late enrollment carries a higher registration fee. There are many other topics covered in the workshop that will interest a broad audience including insurance agents, farmers, ag lenders, USDA employees, county agents, and others. The link to review the full program and register online is at www.agmanager.info/events/Insurance/2010/Default.asp.

Late registration fee is $100, but for those who register early (five days before the date of the selected workshop) the fee is $85. Continuing Education Credits have been applied for in the following states: Colorado, Kansas, Nebraska, Oklahoma, South Dakota, Texas and Wyoming.

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