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| I'll weigh in and "beat" this dead horse a little more. Buying RA S(or GRIP) without HO is risky business (how's that one?). Revenue coverage works due to guaranteeing more bushels when the price is lower in the fall (largest percent of time) to return us to our revenue guarantee per acre, and when the price is higher, because we are still guaranteed our initial production guarantee, at the higher fall price. Without HO, if the price is 20% higher, I only have a revenue guarantee, and it now takes less bushels (therefore guarantees less bushels) to reach the revenue guarantee.
Many of us have benefited when our revenue "unexpectedly" pays us, due to low fall price, even though we had good (or great, as in 2004) yields. However, when the price is higher in the fall, it usually means (excluding the last two years markets) some location/region has had a yield issue (drought, aphids in 2003, etc). If you happen to be the producer in the area that causes the yield problem, revenue without HO will really hurt. Especially if you have sold guaranteed bushels, only to find the market is higher, you don't have the bushels, and your guaranteed bushel number has declined.
I like this comparison from U of IL farmdoc (attachment). If you look at the attachment, look at years 83, 88, and 95. Also, look at the estimate of payments over the entire period (if 2006 were included, and was a low yield year, the same lost indemnities would have occurred without HO, due to higher prices in the fall.
Just my opinions, Rob
Attachments
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 farmdoc Adams IL CRN.pdf (125KB - 116 downloads)
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