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Published January 25, 2011, 01:40 PM

Crop insurance fits well with marketing, adviser says

FARGO, N.D. — Bret Oelke, a self-described “evangelist for market planning,” acknowledges that using crop insurance to enhance marketing can be risky.

By: Jonathan Knutson, Agweek

FARGO, N.D. — Bret Oelke, a self-described “evangelist for market planning,” acknowledges that using crop insurance to enhance marketing can be risky.

People who make the effort can “find numerous ways to screw things up,” he says.

But crop insurance, used properly, is a tremendous marketing tool, he says.

Oelke, an educator in agricultural business management for the University of Minnesota Extension Service in Fergus Falls, spoke at the recent annual crop insurance conference in Fargo, N.D.

The event, hosted by the North Dakota State University Extension Service, drew about 200 people, most of them insurance agents from North Dakota and Minnesota.

Producers benefit in several ways by planning their marketing, Oelke says.

Doing so removes some of the emotion from marketing and also can make it easier to borrow money, among other benefits, he says.

Pre-harvest marketing and crop insurance, relatively popular on the Northern Plains because of the region’s volatile weather and yields, can and should work together, Oelke says.

However, “It’s difficult to get producers to actually do it,” he says. “It usually takes three years of what I can badgering to get that done.”

A number of things can go wrong with the combination of crop insurance and marketing, he says.

For instance, producers can fail to get things in writing or fail to read the contract, he says.

Not buying back a grain contract at the right time is another potential pitfall, he says.

In 2007, for example, some wheat farmers failed to buy back contracts at the right time because they expected high wheat prices to fall. Instead, prices went higher, resulting in huge losses for some producers, Oelke says.

Crop insurance agents may not recognize the value of combining crop insurance and marketing, he says.

But working to become proficient will “increase your value to your customers,” he tells agents. “Because you all sell the same product at the same price, you have to differentiate yourself from your competitors.”

People involved in agriculture generally will fight to keep the current subsidized federal crop insurance program, even if that means sacrificing other federal ag spending, he says.

“A lot of folks will be willing to give up direct payments, maybe some other things. But the one thing they don’t want to give up, particularly in our part of the world, is the subsidy and ability to utilize these revenue-based crop insurance policies,” he says.

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