Crop insurance, especially policies with the Harvest Price (HP) component, can do more than protect against loss. When used strategically, it becomes a powerful tool to enhance your forward marketing opportunities, improve financial stability, and unlock credit opportunities.
Here are five ways crop insurance can support a smarter marketing strategy:
1. Forward Price with Confidence
Crop insurance with the HP option provides revenue protection based on projected prices and yields, giving you the confidence to forward market your grain, even early in the season.
If yields fall short or prices drop, your insurance coverage helps cover the gap, allowing you to commit to sales knowing your income is protected.
2. Take Advantage of Seasonal Market Rallies
Grain markets tend to offer the best prices during the growing season when uncertainty is high.
With crop insurance in place, you’re able to act on in-season rallies without the fear of being overcommitted. It’s a proactive strategy that lets you maximize returns during price spikes.
3. Reduce Marketing Pressure After Harvest
Waiting to price your entire crop until after harvest puts you at the mercy of the market. By making incremental sales throughout the year, you spread out risk and relieve pressure during the post-harvest marketing window.
Even modest early sales above your cost of production can reduce the stress of what you need to get for your unpriced bushels.
Once your crop is harvested and the harvest price is determined, the revenue side of your crop insurance policy is basically done. After the harvest price deadline, you no longer have revenue coverage for changes in price. The only price protection you have is if you have leveraged your crop insurance policy to take advantage of pricing opportunities during the growing season to minimize the downside risk after harvest.
4. Boost Access to Credit
Lenders often view crop insurance guarantees as collateral, especially when the HP option is selected. This can:
- Improve your chances of securing operating loans
- Make your overall financial plan more attractive to lenders
Aligning your insurance and marketing decisions helps create a more stable and creditworthy operation.
5. Build Working Capital
Aligning your crop insurance and marketing strategy allows you to build working capital by:
- Securing higher prices when the market allows
- Reducing exposure to price or yield risk
- Avoiding forced decisions like selling at a loss or buying high-priced feed
With more consistent cash flow, you can plan with confidence.
Crop Insurance: More Than a Safety Net
When used strategically, crop insurance becomes a critical part of your overall risk management and marketing strategy. It empowers you to make better decisions, protect your income, and grow your operation with greater financial confidence.
Ready to Align Your Crop Insurance and Marketing Plans?
Talk to a Farm Credit Services of America insurance officer to find the best coverage for your operation and start to align your insurance with your grain marketing goals.
