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Issued at 0:56 AM CDT
Tuesday...Temperatures will range from a high of 49 to a low of 47 degrees with mostly cloudy skies. Winds will range between 17 and 21 miles per hour from the westnorthwest. No precipitation is expected.
Overnight ...Temperatures will range from 49 to 47 degrees with mostly cloudy skies. Winds will range between 17 and 21 miles per hour from the northwest. No precipitation is expected.
Tuesday...Temperatures will range from a high of 56 to a low of 37 degrees with partly cloudy skies. Winds will range between 5 and 18 miles per hour from the westnorthwest. No precipitation is expected.

Crop insurance numbers react to losses, subsidies

Jan. 24, 2013 | 0 comments

During the past 25 years, there have been a few huge year-to-year changes in the data on crop insurance in Wisconsin and the United States. For most years, however, the annual changes in the numbers have been relatively small.

One glaring example, especially in Wisconsin, was the jump in the number of crop insurance policies that corn growers obtained following the drought in 1988.

The number jumped from 1,400 in 1998 to 19,700 in 1989 and the number of insured corn acres vaulted from 158,000 to 1.498 million. From 1988-89, the percent of corn acres insured in Wisconsin jumped from 8.1 to 53.5 percent.

Following 1989, however, those numbers fell back by approximately 50 percent in 1990 and by even more in the following two years in Wisconsin.

At the time, the portion of the total premiums paid by farmers ranged from 70.7 to 72.9 percent with a federal subsidy covering the balance.

In 1994, Congress passed the Federal Crop Insurance Reform Act, which mandated that farmers have crop insurance in order to be eligible for price support deficiency payments, some crop loans, and other benefits. (The mandatory provision was removed in 1996 but crop insurance is still required to maintain eligibility for disaster relief programs.)

Following the 1994 changes, the number of policies and insured acres jumped to record highs in 1995 as the farmers' share of the premium plunged to 37.4 percent. Wisconsin growers had 24,300 contracts on 2.496 million insured corn acres in 1995.

In 1995, Wisconsin corn growers insured 81.8 percent of their acres compared to 47.8 percent in 1994.

Since 1995, the number of insured corn acres in Wisconsin has not dropped below 1.719 million but there was a gradual rise in the past six years, peaking at 2.858 million acres in 2011 and then at 2.97 million in 2012.

The state's portion of insured corn acres topped 80 percent in 2004 and has been at 84 to 87 percent in every year since 2008.

The same trend applied across the United States for the past 25 years. Those numbers include the data for all insured crops.

Triggered by the 1988 drought, the number of national crop insurance policies jumped from 333,000 in 1988 to 949,000 in 1989. The numbers then dropped gradually until a 250-percent jump from 1994 to 1995, when the federal crop insurance program was revised.

From 1988-94, the loss ratio every year ranged from $2.70 to $1.16 on every $1 of crop insurance, nearly three-fourths of which was paid by farmers. In 1995, the farmer portion of the premiums plunged to 42.4 percent as the federal subsidy was boosted.

Gradual rises in the farmer share of the premiums followed, topping at 62.6 percent in 2000.

Since then, the farmers' share has stood at very close to 40 percent, falling to a low of 37.2 percent in 2012 as the premiums totaled $10.354 billion, of which nearly $6.5 billion was the federal subsidy.

The number of crop acres across the nation covered by crop insurance vaulted to 220 million in 1995, then fell back to below 200 million until topping 200 million again in 2000 and ever since.

The highest number of insured acres was 272.26 million in 2008. The total in 2012 was 263.9 million acres.

Following 10 consecutive years in which the payments for crop losses ranged from 54-95 cents for every $1 collected in farmer premiums and the federal subsidy, the 2012 crop year shattered that trend with the anticipated payout of up to $2.35 for every $1 collected.

As of Jan. 21, the U.S. Department of Agriculture's Risk Management Agency indicated that 12 states had already a 1.1 ratio of indemnity payments arising from the 2012 crop year.

With the payment period not yet anywhere near completion, Illinois growers had already received an average of $2.36 for every $1 in premiums and federal subsidies.

Other states with a high ratio were Missouri at 2.24, Kentucky at 2.16, Nebraska at 1.83, and Iowa at 1.66.

In the northeast, the late spring freeze in 2012 that damaged fruit crops pushed the loss ratios to 1.24 in New Hampshire and 1.1 in Massachusetts, according to the update report this week by the National Crop Insurance Services trade group.

Of the crop losses on which indemnities have been paid, corn accounted for 59 percent and soybeans for 12 percent. Following in the statistics compiled so far for the crop losses covered by insurance were cotton, wheat, and grain sorghum.

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