May 21, 2024

Crop insurance conspiracy?

Market at work, says Iowa State consultant

Steve Johnson

ROCK FALLS, Ill. — Is there a government conspiracy afoot to deprive farmers of receiving their full benefits from crop insurance?

Not at all, according to an economist.

“I don’t believe it. I don’t believe that is the market being manipulated,” said Steve Johnson.

Johnson is retired from Iowa State University Extension and now works as a consultant. He was the keynote speaker at a crop marketing outlook meeting hosted by the Whiteside County Farm Bureau.

Johnson was responding to a question from an audience member about the prices that farmers receive through Revenue Protection, a multi-peril crop insurance product, being artificially manipulated lower.

“If we put on our tinfoil hats, October is where they justify our insurance payment — and then we got a big bounce there?” the audience member asked.

Johnson said no.

“If you want to look at a month, look at the month of February every year for the last 24 years. That is when your projected price is being determined and spring tends to be higher than the fall price,” he said.

If there are months to watch for uncertainty, Johnson pointed to the planting and early growing months.

“The uncertainty isn’t in October. The uncertainty is sitting out here in February, March, April, May and June,” he said.

Johnson also sought to dispel the conspiracy theory mindset.

“The problem isn’t October. The problem is somewhere between your left ear and your right ear, because you are thinking somebody is doing this to you. ‘I’m a victim. This market gave us 60 cents and then it took $1.20 away and I’m a victim,’” he said.

Johnson reminded farmers at the late winter meeting that the swings in the market are normal.

“It’s called capitalism. This market gives and the market takes away. What I have been saying is — get used to it,” he said.

“Corn markets tend to peak in the spring months of April, May, June, then you wake up in October and go, ‘What the hell happened?’”

Jeannine Otto

Jeannine Otto

Field Editor