U.S. Crop Insurance Indemnities Reach $17.346 Billion for 2012 Crops

June 12, 2013 01:26 AM
 

via a special arrangement with Informa Economics, Inc.

Corn, cotton, soybeans and wheat all see slight upticks in payouts under the program as of June 9


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


Indemnities paid out on 2012 crops reached $17.346 billion as of June 9 with the loss ratio remaining at 1.56 as of June 9, according to Risk Management Agency (RMA) data.

Corn built on its already large payouts, rising to $11.788 billion, now nearly $1 billion more than the entire 2011 payouts for all crops.

The pace of the increase continues to slow, rising only $153 million over the past month.

Crop

Week Ended

Net Acres Insured
(million)

Premiums Paid
(Billion dollars)

Subsidy
(Billion dollars)

Indemnities
(Billion dollars)

Loss Ratio

Corn

06/10/13

81.406

$4.327

$2.687

$11.788

2.72

06/03/13

81.357

$4.324

$2.685

$11.774

2.72

Cotton

06/10/13

11.410

$0.835

$0.553

$1.092

1.31

06/03/13

11.408

$0.835

$0.553

$1.091

1.31

Pasture & Rangeland

06/10/13

48.143

$0.164

$0.089

$0.182

1.11

06/03/13

48.129

$0.164

$0.089

$0.182

1.11

Peanuts

06/10/13

1.319

$0.088

$0.052

$0.026

.29

06/03/13

1.317

$0.087

$0.052

$0.025

.28

Rice

06/10/13

2.106

$0.055

$0.039

$0.041

.74

06/03/13

2.106

$0.055

$0.039

$0.041

.74

Sorghum

06/10/13

4.677

$0.214

$0.138

$0.402

1.88

06/03/13

4.676

$0.214

$0.138

$0.402

1.88

Soybeans

06/10/13

65.144

$2.349

$1.472

$2.126

.91

06/03/13

65.102

$2.347

$1.471

$2.123

.90

Burley Tobacco

06/10/13

0.082

$0.026

$0.015

$0.035

1.33

06/03/13

0.080

$0.025

$0.014

$0.034

1.34

Flue-Cured Tobacco

06/10/13

0.201

$0.039

$0.022

$0.041

1.06

06/03/13

0.184

$0.036

$0.020

$0.038

1.08

Wheat

06/10/13

46.471

$1.786

$1.113

$0.758

.42

06/03/13

46.432

$1.785

$1.112

$0.756

.42

TOTAL

06/10/13

282.698

$11.100

$6.968

$17.346

1.56

06/03/13

282.503

$11.087

$6.960

$17.316

1.56

One of the items in focus during the current farm bill debate has been on the subsidy level provided for the program, currently at 62.8 percent for all crops and policy types. Corn and soybeans remain the largest crops in the program in terms of net acres insured and in the case of 2012, the biggest payouts -- $11.778 for corn and $2.126 billion for soybeans. Of the major US program crops, cotton is the only other to have payouts of more than $1 billion at $1.092 billion.

The main tool farmers use has been the risk protection (RP) policy, accounting for nearly 94 percent of net acres insured.

Here’s a look at the coverage percentages and the percent of premium subsidy for corn and soybeans:

2012-Crop Premium Subsidy Percentages by Coverage Level

Corn Coverage

Total

RP

Soybean Coverage

Total

RP

70%

64.7%

64.7%

70%

64.3%

64.5%

75%

66.7

66.8

75%

66.4

66.7

80%

61.8

61.8

80%

61.2

61.4

85%

48.9

48.9

85%

46.5

48.5

           

As for 2013 crops, USDA reported that 92.946 million net acres are insured, which continues to lag the year-ago pace for 2012 crops which stood at 97.850 million net acres on this date one year ago.


Comments: While the program’s loss ratio stands at 1.56 this year, this is the first year since 2002 that has been above 1.0. Keep in mind, a loss ratio of greater than 1.0 means that more indemnities have been paid out than premiums paid in and that doesn’t necessarily translate into net costs for the program as that is determined on a state-by-state basis.


 

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


 


 

 

 

 

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