Crop Insurance Indemnities Rise to $16.161 Billion for 2012 Crops

April 9, 2013 03:05 AM
 

via a special arrangement with Informa Economics, Inc.

Corn loss ratio reaches 2.50 with GRIP payment still awaited


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


Indemnities for 2012 crops hit $16.161 billion as of April 8 with the overall loss ratio edging up to 1.46, according to data from the Risk Management Agency (RMA).

Corn remains the dominant payout for 2012 at $10.781 billion, which moved the loss ratio on corn to 2.50 – for each dollar of premiums paid in, $2.50 has been paid out. 2012 is the first year since 2002 with a loss ratio over 1.0 – 1.38 in 2002 – but still falls short of the 3.27 mark registered for 1993 crop.

Movements in most crops were minimal for the week ended April 8.


 

Crop

Week Ended

Net Acres Insured

(million)

Premiums Paid

(Billion dollars)

Subsidy

(Billion dollars)

Indemnities

(Billion dollars)

Loss Ratio

Corn

04/08/13

81.282

$4.320

$2.682

$10.781

2.50

 

04/01/13

81.294

$4.320

$2.683

$10.736

2.48

Cotton

04/08/13

11.411

$0.835

$0.553

$1.079

1.29

 

04/01/13

11.407

$0.835

$0.553

$1.078

1.29

Pasture & Rangeland

04/08/13

48.076

$0.164

$0.089

$0.181

1.10

 

04/01/13

48.108

$0.164

$0.089

$0.181

1.10

Peanuts

04/08/13

1.315

$0.087

$0.052

$0.025

.28

 

04/01/13

1.315

$0.087

$0.052

$0.025

.28

Rice

04/08/13

2.105

$0.055

$0.039

$0.040

.73

 

04/01/13

2.105

$0.055

$0.039

$0.040

.72

Sorghum

04/08/13

4.676

$0.214

$0.138

$0.401

1.87

 

04/01/13

4.677

$0.214

$0.138

$0.401

1.87

Soybeans

04/08/13

65.031

$2.345

$1.469

$2.032

.87

 

04/01/13

65.050

$2.345

$1.469

$2.029

.87

Wheat

04/08/13

46.340

$1.782

$1.110

$0.747

.42

 

04/01/13

46.394

$1.784

$1.111

$0.734

.41

TOTAL

04/08/13

282.153

$11.078

$6.954

$16.161

1.46

 

04/01/13

282.283

$11.083

$6.957

$16.089

1.45


While the 2012 payouts are record-setting so far, this marks the first year since 2002 where the loss ratio for the program as a whole has been above 1.0 – more indemnities paid out than premiums paid in. That pattern also holds for corn as the loss ratio following 2002 when it reached 1.38 hasn’t been higher than .81 in 2008 and was as low as .35 in 2009. While 2011-crop payouts hit a record, the loss ratio for the program in 2011 was at .90.


Comments: The loss ratio and payouts on corn are likely to rise soon as payouts under the Group Risk Income Protection (GRIP) policies are expected to roll out, with indications that corn payouts could be sizable under this insurance option. So far, only $12 million has been paid out under GRIP with no amounts yet registered for corn. 


Crop Insurance Industry Releases 'Crop Insurance: Just the Facts'

Getting ready for farm bill debate

As crop insurers prepare for the Farm Bill and funding deliberations in the future, National Crop Insurance Services (NCIS) has released a detailed question-and-answer resource laying out the facts about crop insurance and dispelling some of the most common arguments against crop insurance put forth by its critics. Link to report.

"Crop insurance is the single most important risk management tool available to farmers today, and the public needs to understand why it is so valuable, how it benefits taxpayers and how it helps maintain a stable agriculture for the benefit of consumers," said Tom Zacharias, president of NCIS.

"Crop Insurance: Just the Facts" is housed in a new tab on the Crop Insurance Keeps America Growing website page "About Crop Insurance" where it will be a continuously updated, convenient and accurate resource for industry, farmers and consumers. "This resource will provide a much-needed explanation on the value and need for crop insurance," said Zacharias. The series covers topics such as how crop insurance benefits the public, economics of the industry, the globalization of risk management, benefits to producers, and many other important issues.

Facts and figures. Zacharias noted that when it comes to the mechanics of crop insurance policies, why farmers spent more than $4.1 billion out of their own pockets last year purchasing it, and why it is the risk management tool of the future, there is a lot of misinformation and misrepresentation about the program. "Crop Insurance: Just the Facts," lays out the details and does provides a balanced and reasoned perspective," he said.


 

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


 


 

 

 

 

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