Crop Insurance Payments Mount
2011 was a tough year, as losses paid to farmers show - they're nearing $11 billion.
Published: May 21, 2012
Crop insurance companies have been as busy as ever after the dramatic 2011 crop year. National Crop Insurance Services says that payments now exceed $10.7 billion and are edging closer to the $11 billion mark. Using data from USDA's Risk Management Association, the organization says payouts for the 2011 crop year have blown through the previous 2008 record of $8.76 billion by almost 25%.
Essentially, 2011 was one of the worst weather years in history, and NCIS says farmers and ranchers faced a pile of tough challenges. The numbers paint an ugly picture of what farmers faced during the season. Top crops damaged by dollar value were corn, cotton, wheat, soybeans, grain sorghum, pastureland, rangeland and tobacco. The agency notes that while the average loss ratio across the country is at .90 - which means for every dollar of insurance purchased 90 cents was paid out in indemnities - there were some standout places where payouts were much higher.
In the release, NCIS points to Vermont, which was hit hard by Hurricane Irene and had a loss ratio of 2.59; Texas and Oklahoma weren't far behind, with the prolonged drought creating a loss ratio of 2.39, and 2.15 respectively.
This loss news comes as Congress debates the 2012 Farm Bill, which NCIS points out includes deliberation of the value of crop insurance. In a new video, Texas banker Rick Boyd notes that the drought could have been catastrophic for many Texas farmers if they had not purchased crop insurance. "2011 was such that, with the insurance, we did not have any farmers that actually went out of business, and over 90% of our customers had to draw on their insurance claims," Boyd says. He is with First United Bank in Lubbock, Texas.
BIG PAYOUT: The drought in Texas was just one key reason crop insurance payouts have blown through the previous record nearing $11 billion for the 2011 crop year.Adds Tom Zacharias: "Crop insurance has been in place to weather enormous natural disasters and help ensure that farmers survive to plant yet another year. 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."
That video, featuring Boyd, is the second in a series NCIS has launched to explain crop insurance and its importance to agriculture. In this new video, Boyd offers a case history of how crop insurance worked for his bank and what the tool means to farmers.
You can watch the video by clicking on the play button in the video window on this page.
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Tagged: crop insurance, Drought, usda, farm bill, 2012 Farm Bill