John Deere Risk Protection has introduced the industry’s first-ever Ethanol Policy by providing coverage to corn producers who have delivery contracts for the purpose of ethanol production.
The policy was officially introduced at the end of January and Deere has been talking with growers at events during the last month, including the Farm Machinery Show and last week’s Commodity Classic.
Deere held a press conference at Classic where Dennis Daggett, Director of Marketing for John Deere Risk Protection, explained the policy to the ag media.
Very simply, the policy insures yield shortfalls below contracted volumes in the event the price to replace the corn rises above the federal crop insurance coverage. The policy is being offered in Iowa, Illinois, Indiana, Kansas, Minnesota, Missouri, Nebraska, Ohio, South Dakota, and Wisconsin. “We offered it where the majority of the active ethanol plants are in existence today,” Daggett says.
Since they introduced the policy, Daggett says there has been a lot of buzz in the industry. “We have fairly modest expectations on the product itself because we know that there is a very specific type of farmer who would be interested in this product, a farmer who actually contracts more than 50 percent.”
Daggett says the policy is beneficial for the ethanol plants because it allows them to actually work with the farmer in case there is a shortfall on their delivery contract. “We think this is a win for the ethanol plants because it stabilizes their input of grain and stabilizes their relationship with the farmer.”
Listen to an interview with Dennis about the ethanol policy here: