John Deere Risk Protection (JDRP) offers the industry's first ethanol policy by providing coverage to corn producers who have delivery contracts for the purpose of ethanol production.
This new policy, available once the multi-peril crop insurance policy is with JDRP, insures yield shortfalls below contracted volumes in the event the price to replace the corn rises above the federal crop insurancecoverage.
With the Renewable Fuels Standard (RFS) requiring 36 billion gallons of renewable fuels to be used annually by 2022, producers will be faced with choosing to dedicate more acres of corn for ethanol production and all of the associated risks that go with it. JDRP notes that current federal crop insurancemay not adequately address this increased risk, which has led to the development of this new policy.
"We are excited to introduce this new ethanol policy, a crop insurance industry first, and will do our best to continue providing solutions to producers who are supporting renewable energy initiatives,” says Don Preusser, president of JDRP.
The new ethanol policy, underwritten through Westfield, provides additional protection for those bushels of corn contracted for the purpose of ethanol production in the event a producer has a harvest shortfall and the price to replace those bushels exceeds the producer's underlying insurance coverage. Once the MPCI policy is with JDRP, this ethanol policy can be purchased up to MPCI acreage reporting date.
Travis Keister, a crop insurance agentwith Minn-Iowa, says, "The new policy is a simple tool that addresses an industry-changing sector of agriculture. With so much focus on renewable fuels and ethanol, it couldn't have come at a better time."
As another benefit to producers, the policy requires that the facility offering the ethanol contract procure replacement bushels, eliminating the need for producers to find the replacement grain themselves. Ron Kibble, a John Deere dealer and farmer says, "This policy is a win-win for growers and ethanol plants alike. JDRP's new Ethanol Policy provides more security for everyone involved."
JDRP, a managing general agent of Westfield Insurance Company, intends to make the Ethanol Policy available in Iowa, Illinois, Indiana, Kansas, Minnesota, Missouri, Nebraska, Ohio, South Dakotaand Wisconsin. All states are subject to approval.
John Deere Risk Management