Robert had been a Global Ag Risk Solutions customer for years and saw the value of the product as part of his risk management plan.
He didn’t see the need for the more expensive full-coverage option on his farm, and usually opted for the lower coverage options to save on premiums at the expense of some protection.
In 2022, Robert’s advisor – a farmer and a Global Ag Risk Solutions customer himself – started to chat with Robert about the potential to use Production Cost Insurance to its full potential – not just as risk mitigation, but as a profitability tool to support his marketing strategy.
Robert hadn’t really considered how an insurance product could change how he approached selling his crop before. Could full coverage really be worth the additional premium for his operation?
Historically, Robert forward-marketed 10 to 15% of his yield projections before making in-crop spraying decisions.
However, because of market conditions in 2022, especially in canola and durum, Robert saw the potential to do a lot more pre-selling and potentially make a lot more money.
The only thing holding him back was his concern about penalties for contract shortfalls. This represented a daunting risk for Robert.
But then, his Global Ag Risk Solutions advisor – who had experienced his own claim in 2021 as a customer – explained how full-coverage Production Cost Insurance could not only insure the cost of inputs and expected gross margin – it could also cover shortfall penalties on futures contracts.
Armed with this information, Robert decided the increase in his premiums was worth the opportunity and he upgraded to the full-service package from Global Ag Risk Solutions.
Pre-sell up to 15% of 45 bu/acre target, remaining sold off the combine.
Pre-sell 75% of 45 bu/acre target hedging as market prices increased, remaining sold off the combine.
Pre-sell up to 15% of 45 bu/acre target, remaining sold off the combine.
Pre-sell 75% of 45 bu/acre, remaining sold off the combine.
| Crop | Actual (bu/acre) | Pre-Sold (bu/acre) | Off-Combine (bu/acre) | Revenue (per acre) |
|---|---|---|---|---|
| Crop Durum | Actual (bu/acre) 35 | Pre-Sold (bu/acre) 7 x $16 | Off-Combine (bu/acre) 28 x $12 | Revenue (per acre) $448 |
| Crop Canola | Actual (bu/acre) 38 | Pre-Sold (bu/acre) 7 x $24 | Off-Combine (bu/acre) 31 x $18 | Revenue (per acre) $726 |
| Crop | Actual (bu/acre) | Pre-Sold (bu/acre) | Off-Combine (bu/acre) | Revenue (per acre) |
|---|---|---|---|---|
| Crop Durum | Actual (bu/acre) 35 | Pre-Sold (bu/acre) 35 x $16 | Off-Combine (bu/acre) - - | Revenue (per acre) $560 |
| Crop Canola | Actual (bu/acre) 38 | Pre-Sold (bu/acre) 35 x $24 | Off-Combine (bu/acre) 3 x $18 | Revenue (per acre) $894 |
| Crop | Before | After | The Difference |
|---|---|---|---|
| Crop Durum | Before $448/acre | After $560/acre | $112/acre The Difference$112/acre324,000 |
| Crop Canola | Before $726/acre | After $894/acre | $168/acreThe Difference$112/acre324,000 |
| Crop | Before | After | The Difference$720,000 |
| Crop | Durum |
| Actual (bu/acre) | 35 |
| Pre-Sold (bu/acre) | 7 x $16 |
| Off-Combine (bu/acre) | 28 x $12 |
| Revenue (per acre) | $448 |
| Crop | Canola |
| Actual (bu/acre) | 38 |
| Pre-Sold (bu/acre) | 7 x $24 |
| Off-Combine (bu/acre) | 31 x $18 |
| Revenue (per acre) | $726 |
| Crop | Durum |
| Actual (bu/acre) | 35 |
| Pre-Sold (bu/acre) | 35x$16 |
| Off-Combine (bu/acre) | -- |
| Revenue (per acre) | $560 |
| Crop | Canola |
| Actual (bu/acre) | 38 |
| Pre-Sold (bu/acre) | 35x$24 |
| Off-Combine (bu/acre) | 3x$18 |
| Revenue (per acre) | $894 |
| Crop | Durum |
| Before | $448/acre |
| After | $560/acre |
| The Difference | $112/acre |
| $324,000 |
| Crop | Canola |
| Before | $726/acre |
| After | $894/acre |
| The Difference | $168/acre |
| $396,000 |
| Total increase: | $720,000 |
Covers your input costs and a gross margin you select over and above those costs.
Learn More
Global Ag Risk Solutions is now
a part of HUB International