Indemnities paid to farmers for 2011 crops have now passed $9 billion,
setting a record for the program, according to National Crop Insurance Services (NCIS). The prior record was $8.67 billion in 2008, and payouts for the program for 2011 crops actually became record for the week ended Jan. 16, 2012.
NCIS said several factors prompted the situation, including historic droughts in the Plains, flooding along the Mississippi River and deep freezes in the South.
As remaining claims are settled, NCIS said the indemnity total could surpass $10 billion. USDA's Risk Management Agency (RMA) in 2011 was already predicting payouts would come in around $11 billion for 2011 crops.
"Thanks to the foresight of Congress, crop insurance has been in place to weather enormous natural disasters and help ensure that farmers survive to plant yet another year," said Tom Zacharias, president of NCIS. "Those billions in damages would have landed on the plates of input suppliers, lenders, marketers and farm families if crop insurance wasn't in place," he said.
Since 2008, more than $27 billion private sector dollars from crop insurance companies have gone back into the hands of farmers across the country for policies they purchased. Zacharias noted that during that same period, crop insurance has shouldered more than $12 billion in cuts in Federal investment even while exposure to risk has continued to rise.
"Two out of the last four years have seen the largest indemnity payments in history, all while the crop insurance industry was asked to do more with less," said Zacharias. "The industry has become leaner and more efficient as it continues to serve the risk management needs of US farmers."
Further, Zacharias said it was "imperative that Congress not weaken the crop insurance infrastructure further as it writes the 2012 Farm Bill."
With total premiums paid in at $11.9 billion and a premium subsidy level of $7.4 billion, growers have paid in about $4.5 billion to insure 2011 crops.
Following is a recap of the data for the week ended Jan. 23 compared to the week ended Jan. 16: