Crop Insurance Indemnity Record Over $16 Bil. for 2012 Crops

March 26, 2013 07:00 AM
 

via a special arrangement with Informa Economics, Inc.

Rate of increase in payouts slowing, at least temporarily


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


Indemnities for 2012 crops reached $16.004 billion as of March 25, pushing the record level of payouts still higher, according to Risk Management Agency (RMA) data.

Corn indemnities are at $10.665 billion with soybeans at $2.024 billion and cotton at $1.076 billion, all slightly higher than week-ago levels.

Corn loss ratio approaching 2.5 mark. Despite the rise in payouts above the $16 billion, the loss ratio for the program has remained at 1.44 while corn is approaching the 2.5 mark, standing at 2.47.


 

Crop

Week Ended

Net Acres Insured
(million)

Premiums Paid
(Billion dollars)

Subsidy
(Billion dollars)

Indemnities
(Billion dollars)

Loss Ratio

Corn

03/25/13

81.289

$4.320

$2.683

$10.665

2.47

03/18/13

81.294

$4.320

$2.683

$10.596

2.45

Cotton

03/25/13

11.405

$0.835

$0.553

$1.076

1.29

03/18/13

11.404

$0.835

$0.553

$1.075

1.29

Pasture & Rangeland

03/25/13

48.106

$0.164

$0.089

$0.180

1.10

03/18/13

48.114

$0.164

$0.089

$0.180

1.10

Peanuts

03/25/13

1.315

$0.087

$0.052

$0.025

.28

03/18/13

1.314

$0.087

$0.052

$0.024

.28

Rice

03/25/13

2.105

$0.055

$0.039

$0.040

.72

03/18/13

2.105

$0.055

$0.039

$0.040

.72

Soybeans

03/25/13

65.040

$2.345

$1.469

$2.024

.86

03/18/13

65.028

$2.344

$1.469

$2.018

.86

Wheat

03/25/13

46.391

$1.784

$1.111

$0.733

.41

03/18/13

46.385

$1.783

$1.110

$0.732

.41

TOTAL

03/25/13

282.251

$11.081

$6.956

$16.003

1.44

03/18/13

282.224

$11.079

$6.955

$15.915

1.44


Comments: Group Risk Income Protection (GRIP) payouts are now awaited, and have yet to be made. Indications are these indemnities could be substantial for corn in Illinois where many of the GRIP policies for 2012 were sold. A total of 11,827 GRIP policies with the Harvest Revenue Option (GRIPH) were sold with 4,426 of those sold in Illinois (37 percent of total) and 3,203 in Indiana (27 percent of total) – nearly two-thirds of the GRIPH policies were sold in the two states combined. By contrast, only 672 GRIPH policies were sold in Iowa for 2012 crops.

Background:  GRIP is billed as a risk management tool to insure against widespread loss of revenue from the insured crop in a county. It is primarily intended for use by those producers whose yields are highly correlated with those of the other producers in the county and who wish to insure that the combination of yield and price result in a particular level of revenue. Unlike the Group Risk Plan (GRP), it is not necessary to have a decline in yield to be indemnified, as long as the combination of price and yield results in a county revenue that is less than the trigger revenue. It is possible for you to receive reduced revenue from the acreage that you insure and still not receive a payment under this plan.

GRIP coverage can be enhanced if the producer selects the Harvest Revenue Option (HRO – or also identified as GRIPH), which provides upside harvest price protection when the final county yield is less than the expected county yield and the harvest price is greater than the expected price. The GRIPH is the predominant type of GRIP policy sold. 


 

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


 


 

 

 

 

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