Crop Insurance Payouts Near $5 billion for 2011 Crops

November 10, 2011 09:54 PM

via a special arrangement with Informa Economics, Inc.

Payout largest so far on 2011 crops of corn, cotton and wheat

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

Losses paid out under the crop insurance program for 2011-crop losses total $4.830 billion for the week ended November 7, up $400 million from the prior week.

Under the program for 2011, net acres insured stand at 263.331 million acres compared to 256.238 million net acres insured for 2010 crops.

Under the current system, the totals in the table below for total premiums paid reflect the subsidy paid by the government. For 2011 crops, the total premiums paid at $11.848 billion include $7.383 billion in subsidies, meaning producers have paid in $4.465 billion.

Also, the Risk Management Agency (RMA) announced that the next sales period for the Livestock Gross Margin (LGM) insurance will be November 18, 2011. In particular, approximately $7 million in underwriting capacity is allocated to support LGM for Dairy Cattle for the Nov 18 sales period. This will bring the total to approximately $13.2 million for fiscal year 2012. Sales will begin no earlier than 4:30p.m. CST. Sales will begin on the half hour if information to determine the Expected Gross Margins is not available by 4:30p.m. CST. For instance, if the expected gross margins have not been released by 4:30p.m. CST, sales will begin at 5:00pm CST and so on.

The last sales period for LGM was marred by a computer glitch that limited participation.

Given the expectations that losses for the 2011 crop year could approach $11 billion, the combination of payouts under the program via indemnities and the premium subsidy mean that growers will collect more in net indemnities (indemnities minus producer paid premiums) this year than the total amount of money transferred by traditional farm programs (direct and countercyclical payments, marketing loans and the Average Crop Revenue Election - ACRE).

The following table shows data for the crop insurance program for major crops and the total for all crops:

Federal Crop Insurance data for 2011 Crops


Data as of

Losses Paid – Million dollars

Premiums Paid – Million dollars

Loss Ratio


Oct. 31




Nov. 7





Oct. 31




Nov. 7




Pasture & Rangeland

Oct. 31




Nov. 7





Oct. 31




Nov. 7





Oct. 31




Nov. 7




All Crops

Oct. 31




Nov. 7













How does 2011 compare to other years:

Crop Insurance Combined Business Data








Net Acres Insured (mil. acres)







Total Premiums (Mil. dlrs)







Subsidy (Mil. dlrs)







Indemnity (Mil. dlrs)







Loss Ratio







Data as of Nov. 7, 2011


Other historical highlights of the program:

  • Net acres insured have been above 200 million since the 2000 crop year

  • In 2002, the loss ratio was 1.39, the last time it was over 1.0 (indemnities exceeding total premiums)

  • Net acres insured under catastrophic loss policies have declined steadily, dipping under 20 million acres in 2011.

  • The first crop year of catastrophic coverage -- 1995 -- was the only year when the number of acres covered by that type of policy eclipsed other forms of crop insurance at 115 million for "cat" coverage vs. 105 million for other types.

Looking ahead, so far for 2012 crops, a total of 13.365 million acres have been insured, with total premiums (including the subsidy) at $290 million (subsidy amount is $190 million). So far, $13,000 in losses have been paid out.

Links to reports. As the focus on crop insurance is intense during the current farm bill process, here are a couple of reports that assess the program:

Carl Zulauf, Ohio State University (Oct. 2011) - Link

Bruce Babcock, Iowa State University (Oct. 2011) – Link

Comments: The crop insurance program remains a focal point in the farm bill process, especially with the focus on what is labeled a "shallow loss" program – one that would pay producers for losses not covered by crop insurance. But there are potential pitfalls with such a program, depending on how details of the effort would be structured. However, the programs being discussed would not replace but would compliment the current crop insurance program which as evidenced by the data, enjoys strong participation among farmers.


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






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