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| GRIP (and RA/CRC) are only a piece of the risk management puzzle. It is always better to sell bushels ahead, IF THE PRICE IS LOWER in the fall (80% of the time, when starting with a $2.50 or higher spring price). However, if the price is lower in the fall than spring, revenue coverage guarantees more and more bushels, essentially preserving income per acre (either you and the county produce more bushels per acre, or revenue coverage pays).
If you don't forward contract with revenue coverage, one of three things will happen, the price will be equal to, higher, or lower than the spring price. If the price is lower, you will receive less per bushel, but your guaranteed bushels per acre will "prop up" your income per acre. If the price is equal to or higher (than the spring), you either produce your guaranteed bushels per acre, or receive the higher futures price for any bushels below your original guaranteed per acre.
Marketing is not a substitute for production, and crop insurance is not a total substitute for marketing. However, if I have one or the other, I better have production (or crop insurance), or else the greatest marketing in the world will not do me any good. | |
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GRIP Insurance
