October - December 2002
Ron Hook , farm management field specialist
Revenue insurance for livestock producers was first authorized in the Risk Protection Act of 2002. Two pilot insurance products were developed and offered to Iowa producers for the first time in July 2002. Information about how these two products worked was essential for pork producers to make a decision on how these products might fit into the risk management plans for their operation.
In an attempt to meet the need for swine revenue insurance education, a series of informational meetings were held in the Northwest area. These meetings were designed to provide basic information to producers and give them some examples as to how the insurance products would work. The classes utilized materials provided by Ed Kordick, Iowa Farm Bureau marketing division, which were supplemented with appropriate current information. Swine revenue insurance classes were held in Sioux, Plymouth , Cherokee, and Palo Alto Counties during June and early July 2002. A PowerPoint presentation provided the basis for the session along with handouts.
One hundred fifty clients attended these sessions. Attendance ranged from 13 to over 50 people. Evaluation instruments were returned by 44 of those attending the Sheldon site. On a 1 to 5 scale with 5 being very valuable, the overall meeting received a rating of 3.95. The review of hog market risk received a rating of 3.57, the live presentation on LGM and LRP received a rating of 3.86, and the videotape presentation by Dr. Bruce Babcock received a rating of 3.66. Eighty percent indicated that they would consider the livestock revenue insurance products in their operation.
Reasons given for consideration were:
Price protection, because of risk, protection, protect price disaster, small portion of marketings to see how it works, to manage risk, it will give producers some risk coverage to the down side and another tool to stay in business.
Reasons for not considering were:
Can do the same thing cheaper with options and still open to basis risk.
The most important fact learned about the pilot insurance products were:
Cost, how they work, each individual has an opportunity if it fits your needs, how coverage is determined and an idea of the cost, risk is manageable and premium levels and the coverages.
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July 10, 2006
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