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| Table 1. Strategies for
Alternative Farm Types with 600 Acres of Corn -
Net Return Over Cash Flow Costs. Scenario: (25%
probability in 1997) 88 bu/ac yield; $3.15/bu
harvest yr. cash price |
| |
Owner
|
Crop Share
|
Renter
|
Buyer
|
| |
---------------------------
dollars -------------------------
|
| Without risk management -
Local equiv. Price |
|
34,320
|
-8,640
|
-28,080
|
-33,480
|
| With risk
management |
|
|
|
|
|
| Insurance only, CRC 70% |
|
41,391
|
-5,105
|
-21,009
|
-26,409
|
| Insurance only, MPCI |
|
40,524
|
-5,538
|
-21,876
|
-27,276
|
| Pricing + CRC; Buy puts in
May |
$2.34
|
33,867
|
-8,867
|
-28,533
|
-33,933
|
| Pricing + MPCI; Buy puts in
May |
2.34
|
33,000
|
-9,300
|
-29,400
|
-34,800
|
| Insurance only, RA 70% |
|
30,054
|
-10,773
|
-32,346
|
-37,746
|
| Pricing only, 60% of TY1
; Buy put in May |
2.34
|
26,796
|
-12,402
|
-35,604
|
-41,004
|
| Pricing + RA: Buy put in May |
2.34
|
22,530
|
-14,535
|
-39,870
|
-45,270
|
| Pricing + CRC; Hedge last wk
in June |
2.12
|
-12,669
|
-32,135
|
-75,069
|
-80,469
|
| Pricing + MPCI; Hedge last
wk in June |
2.12
|
-13,536
|
-32,568
|
-75,936
|
-81,336
|
| Pricing only, 60% of TY;
Hedge last wk in June |
2.12
|
-19,740
|
35,670
|
-82,140
|
-87,540
|
| Pricing + RA; Hedge last wk
in June |
2.12
|
-24,006
|
37,803
|
-86,406
|
91,806
|
| 1
TY = Trend Yield |
|