Crop Insurance Payouts on 2011 Crops Total $4.5 Billion So Far

October 25, 2011 01:13 AM
 
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via a special arrangement with Informa Economics, Inc.

Premiums paid in have edged up to $11.8 billion as of Oct. 24


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


Crop insurance losses paid out so far on 2011 crops total $4.5 billion, with the biggest amount paid out on cotton at $1.354 billion against total premiums paid in at $1.193 billion for a loss ratio of 1.14, as of Oct. 24. Corn and wheat are next with around $1.1 billion paid out so far.

Total premiums paid in for 2011 crops continue to move higher, with data as of Oct. 24 at $11.822 billion for all crops.

Expectations have been that losses paid out via the crop insurance program could tally around $11 billion, although officials that have signaled that amount of potential payouts have stressed it is still early in the process.

Crop insurance continues to be a focal point for both those looking at budget cuts for ag spending and for those eyeing a future path for U.S. farm programs as many farmers view the program as one that truly provides them with risk/revenue protection management.

That’s in part evidenced by Revenue Protection premiums accounting for the biggest portion of those paid into the program -- $9.197 billion with payouts so far of $3.679 billion and a .40 loss ratio.

The following table shows payouts under the program for major crops and the total for all crops:

Federal Crop Insurance data for 2011 Crops

Crop

Date

Losses Paid – Million dollars

Premiums Paid – Million dollars

Loss Ratio

Corn

As of Oct. 24

$1,127

$4,745

.24

Cotton

As of Oct. 24

$1,354

$1.193

1.14

Pasture & Rangeland

As of Oct. 24

$111

$109

1.02

Soybeans

As of Oct. 24

$343

$2.582

.13

Wheat

As of Oct. 24

$1,145

$1,788

.64

All Crops

As of Oct. 24

$4,590.4

$11,821.7

.39

Note: More perspective on crop insurance funding: It's important to note when viewing crop insurance data that the total premiums paid include federal subsidies. For 2011 crops, the total subsidy stands at $7.367 billion, so the actual producer-paid premium portion is around $4.454 billion (total premiums paid minus the subsidy level). As one crop insurance observer points out, "With indemnities paid out currently at just over $4.5 billion and if estimates of losses paid out of around $11 billion come to pass, producers will get 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 ACRE)."


Comments: Contacts in the crop insurance industry signaled weeks ago that the premiums paid into the system this year could approach $12 billion, a level they have now nearly reached. The program remains a focal point in the farm bill/budget cut debate in Washington, with many citing the program as a key component of future U.S. farm policy while others will no doubt eye the program for budget reductions. If payouts under the program approach the sizable level that some predict, it will bring more scrutiny of the program and likely boost calls for reductions that are aimed at companies and perhaps a portion of the farmer premium subsidies.



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


 


 

 

 

 

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