Comment Text:
Lack of convergence and the implementation of VSR for HRW was one of the hottest topics for the 6 months leading up to the harvest of 2018. Producers were concerned about the abnormally wide basis and how that effected their farms. The lack of convergence dramatically effected the performance of the crop insurance revenue guarantee when the contract settled. These comments were recorded in several of the Farm Bill hearing throughout the HRW belt. The quality of the crop and the implementation of VSR greatly improved conversion and local basis levels narrowed causing the producers to focus on other items like the Trade War.
If soybean cash prices remain where they are today and are not significantly enhanced by the USDA relief program, the topic of lack of soybean convergence and its effect on producers through the Federal Crop Insurance program will be rekindled.
I’m in favor of the hybrid VSR with an annual review period that would allow for the farmer to feel like this complicated system for determining the value of inventory is actually working to more closely reflect the issue effecting their bottom line. I think this method will allow for a reset without creating significant uncertainty for the all users of the market in all parts of the curve.
