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2012 a record crop insurance year
Losses to last year's corn crop on account of the drought account for just shy of 60% of total 2012 crop insurance indemnity payments sent to farmers, with soybeans accounting for about 12%, according to recent data from National Crop Insurance Services (NCIS).
"Twelve states have loss ratios of at least 1.1 — meaning crop losses paid are $1.10 for every dollar received in premiums for the 2012 crop year — according to the January 21 data from the Risk Management Agency," according to a report the group released Wednesday. "The highest loss ratio states are in the heartland, with the top five states including Illinois at 2.36, Missouri at 2.24, Kentucky at 2.16, Nebraska at 1.83 and Iowa at 1.66."
It all adds up to a new record for indemnity payouts; NCIS data show farmers paid $4.1 billion on crop insurance last year, and the industry has so far paid out $12.3 billion. The previous record for industry payout was $10.8 billion in 2011. "Unlike disasters of the past however, the private sector is paying for a significant portion of the bill," according to Wednesday's report.
Looking ahead, since there haven't been any real signs the drought's going to relent heading into this spring, NCIS officials say it's entirely possible next year's total payouts could exceed this year's record, especially considering the depth of the drought pressure today.
"What’s worrying many producers is that there are early indications that 2013 could be even drier than 2012. More than 60% of the continental U.S. – including a good portion of the nation’s breadbasket – remains in some stage of drought, compared to roughly 32% a year ago, according to the January 8 U.S. Drought Monitor," according to an NCIS report. "Every county in the states of Iowa, Minnesota, Missouri, Oklahoma, Kansas, Nebraska, South Dakota, Colorado, Wyoming, New Mexico, Arizona and Utah are either abnormally dry or in some level of drought. USDA has already designated 597 counties in 14 states as primary natural disaster areas due to drought and heat, making all qualifying farm operations eligible for low interest emergency loans."