Harvest pricing and the 2007 re-consideration of the Farm Bill...

As is known by many, harvest prices and harvest pricing are extremely important in crop insurance and in potential revenue guarantee programs...

How are Harvest Prices achieved? Do they vary by State?

Harvest Pricing for FCIC-reinsured policies are not derived by political methods. They are not targets designed by members of Congress. They are, however, defined and determined by terminal commodities exchange markets. Pre-harvest prices, which are an important component of the revenue guarantee that would be en force under Sen. Durbin’s proposed legislation, really represent market-driven expectations of the value of commodities futures contracts mostly at the end of each calendar year. As such, pre and post-planting harvest prices come from the following terminal markets: the Chicago Board of Trade (CBOT) for winter wheat, corn, soybeans and rice; the Kansas City Board of Trade (KCBOT) for winter wheat; the Minneapolis Grain Exchange (MGE) for spring wheat; and the New York Cotton Exchange (NYCE) for cotton. Therefore, it isn’t so much the case that harvest prices vary significantly from one state or the other—policy availability, however, is State-dependent. The types of commodities planted to harvest by producers dictate which, if any, harvest prices apply, which markets will be used, and which policies are approved by the FCIC to protect revenue for the farmer’s home state.