Crop Insurance Indemnities Over $13.5 Billion on 2012 Crops

February 4, 2013 10:30 PM
 

via a special arrangement with Informa Economics, Inc.

Corn loss ratio moves over 2.0


NOTE: This column is copyrighted material, therefore reproduction or retransmission is prohibited under U.S. copyright laws.


Indemnities for 2012 crops have now reached $13.683 billion as of Feb. 4 with the loss ratio also climbing to 1.24, according to Risk Management Agency (RMA) data.

Corn continues to be the biggest payout on a by-crop basis, with the $8.855 billion level accounting for just under 65 percent of all indemnities issued so far, pushing the loss ratio for corn to 2.05 – for every $1 in premiums paid in, $2.05 has been paid out. And of the $8.855 billion in indemnities, 94 percent have been issued for a revenue-based policy.

Cotton is the only other major crop with a loss ratio over 1.0, with the $991 million in indemnities pushing the loss ratio there up to 1.19 as of Feb. 4.

Soybean indemnities also rose to $1.794 billion, but the loss ratio is at .77, while wheat payouts at $723 million have moved the loss ratio for that crop to .41.

For all crops, Illinois has received the most indemnities at $2.194 billion, followed by Iowa at $1.659 billion, Nebraska at $1.362 billion, Kansas at $1.302 billion, Texas at $1.288 billion and South Dakota at $1.059 billion.

Corn has made up the largest share of payments in most of those states, with Illinois at $1.991 billion (90 percent), Iowa at $1.422 billion (86 percent), Nebraska at $1.042 billion ($77 billion) and South Dakota at $738 million (70 percent). By contrast, corn accounted for $686 million (53 percent) of payouts in Kansas and only $40 million (3 percent) of payouts in Texas.

Crop

Week Ended

Net Acres Insured
(million)

Premiums Paid
(Billion dollars)

Subsidy
(Billion dollars)

Indemnities
(Billion dollars)

Loss Ratio

Corn

02/04/13

81.146

$4.312

$2.677

$8.855

2.05

01/28/13

81.109

$4.309

$2.675

$8.349

1.94

Cotton

02/04/13

11.390

$0.834

$0.552

$0.991

1.19

01/28/13

11.392

$0.833

$0.552

$0.961

1.15

Pasture & Rangeland

02/04/13

48.120

$0.163

$0.088

$0.126

.77

01/28/13

48.118

$0.163

$0.088

$0.118

.72

Peanuts

02/04/13

1.306

$0.086

$0.051

$0.020

.24

01/28/13

1.305

$0.086

$0.051

$0.019

.22

Rice

02/04/13

2.105

$0.055

$0.039

$0.039

.71

01/28/13

2.106

$0.055

$0.039

$0.039

.71

Soybeans

02/04/13

65.022

$2.344

$1.469

$1.794

.77

01/28/13

65.006

$2.343

$1.468

$1.709

.73

Wheat

02/04/13

46.329

$1.780

$1.109

$0.723

.41

01/28/13

46.333

$1.781

$1.109

$0.724

.41

TOTAL

02/04/13

281.903

$11.061

$6.943

$13.683

1.24

01/28/13

281.829

$11.057

$6.941

$13.024

1.18


Comments: The climbing loss ratio along with the hefty premium subsidy are two factors that will keep the crop insurance program a focal point in Washington as the process of developing a new farm bill at the same time as budget/debt reduction efforts. But the hefty payouts are also why producers and commodity organizations have sought to keep the program robust. But the lack of viable crop insurance products for crops like rice and peanuts are why lawmakers that have a strong presence of production for those in their states are wanting to keep some kind of price-related protection in place. 


 

NOTE: This column is copyrighted material, therefore reproduction or retransmission is prohibited under U.S. copyright laws.


 

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