John Deere Insurance

Company

Erick Schminke

Manager, Crop Insurance Development

9 Dec 2010

| DTN Ag Summit | 8 Dec 2010 2

Yesterday’s Closing Prices

•! December Corn

•! November Soybeans

•! December Cotton

| DTN Ag Summit | 8 Dec 2010 3

Insuring a Profit

•! With adequate yield histories and the correct level of coverage, we are back in a period of time difference between insured value and cost of inputs.

•! Higher levels of coverage provide enough liability where the insurance is above the cost of production, minus any basis risk.

| DTN Ag Summit | 8 Dec 2010 4

403

356

441

390

270

263

208

208

198

194

171

155

69

63

60

52

43

48

595

475

524

643

483

308

0 200 400 600 800

Dollars Per Acre

Year

Expenses vs. Insurance Coverage (Corn)

Varible Inputs

Fixed Inputs

Equipment Replacement

Crop Insurance Guarantee assuming 170 bushel approved yield with 70% level of coverage with a Revenue Product

2006

2007

2008

2009

2010

2011

* Estimation

*

| DTN Ag Summit | 8 Dec 2010 5

205

195

241

195

127

135

208

208

198

194

171

155

69

63

60

50

43

48

420

323

308

468

308

216

0 100 200 300 400 500 600

Dollars Per Acre

Year

Expenses vs. Insurance Coverage (Soybeans)

Varible Inputs

Fixed Inputs

Equipment Cost

Crop Insurance Guarantee assuming 50 bu approved yield at 70% coverage level with a Revenue Product

2006

2007

2008

2009

2010

2011

* Estimation

*

| DTN Ag Summit | 8 Dec 2010 6

Protect Your Working Capital With Adequate Insurance Coverage

End of 2010 2011 (Using 75% Level of Coverage)

Owner’s Equity $2,000,000 $2,000,000

Working Capital $400,000 $400,000

| DTN Ag Summit | 8 Dec 2010 7

Working Capital At Risk Without Adequate Insurance Coverage

End of 2010 2011 (Using 65% level of Coverage)

Owner’s Equity $2,000,000 $1,915,000 (95.8%)

Working Capital $400,000 $315,000 (78.8%)

$85,000 Difference

Recalibrate Your Crop Insurance to Your Marketing Plan

•! Think about what sales you have in place

•! Think about what sales you still plan to make

•! Consider the plan of insurance you are using

•! Does it mesh with your marketing plan?

| DTN Ag Summit | 8 Dec 2010 9

Know the New Terms

New plans of insurance on the top ten commodities:

2010 Policy Converted for 2011 Crop Year

Crop Revenue Coverage Revenue Protection Plan

Revenue Assurance with Fall Harvest Price Option

Revenue Protection Plan

Revenue Assurance without Fall Harvest Price Option

Revenue Protection Plan with Harvest Price Exclusion

Actual Production History Yield Protection

| DTN Ag Summit | 8 Dec 2010 10

Commodity Exchange Price Provisions

•! New to the policy

•! Vary by state instead of by product

•! Road map of how your crop insurance prices are set

| DTN Ag Summit | 8 Dec 2010 11

Know the Changes that Could Affect Your Operation

•! Prevented planting will now only be paid of the projected price •! This could create a gap in a

forward contracting plan

•! Enterprise Units on Yield Plan

•! This option could increase

your SURE guarantee

| DTN Ag Summit | 8 Dec 2010 12

Importance of Accuracy

•! With the tie-in to other programs, accuracy of crop reporting has become even more important

•! Ability to not lose unit structure

•! Any claim on a crop county basis that exceeds $100,000 requires a review •! This could be as simple as

1 year or as complex as 3 years

•! A discrepancy can hold up or even stop a payment

| DTN Ag Summit | 8 Dec 2010 13

Take Advantage of the Technology

•! Do your research •! There is a lot of

information available online

•! Use the technology of your equipment to its fullest

•! Use cost estimators or premium calculators

| DTN Ag Summit | 8 Dec 2010 14

•! What can you do to be a more informed producer?

Conclusion

•! How will you put together the best risk management plan for your operation this year?

•! Can you take advantage of the technology?

•! What is your marketing plan?

•! What are you doing to protect your working capital?

| DTN Ag Summit | 8 Dec 2010 15

•! “Combines and Grain Harvesting Equipment.” 23 October 2007. Purdue University. https://engineering.purdue.edu/~asm222/Harvesters/ASM222_Combines.html.

•! Dobbins, Craig et al. “2007 Purdue Crop Cost & Return Guide.” Purdue Extension. Purdue University.

•! Dobbins, Craig et al. “2008 Purdue Crop Cost & Return Guide.” Purdue Extension. November 2007. Purdue University.

•! Dobbins, Craig et al. “2009 Purdue Crop Cost & Return Guide.” Purdue Extension. October 2008. Purdue University.

•! Dobbins, Craig et al. “2010 Purdue Crop Cost & Return Guide.” Purdue Extension. September 2009. Purdue University.

•! Dobbins, Craig et al. “2011 Purdue Crop Cost & Return Guide.” Purdue Extension. 1 November 2010. Purdue University.

Works Cited