Many farmers are making long-range plans to manage crop production risk in 2013 in the wake of some of the latest weather forecasts for less than favorable crop growing conditions. With lower crop insurance premiums for much of the Corn Belt and lower soil moisture anticipated, your neighborly crop insurance agent may be doing land office business in early March.
USDA’s Risk Management Agency recently released maps showing 2013 premium changes for corn and soybeans, compared to 2012, which were lower than 2011 in states where new ratings were tested. And despite a significant drought across two-thirds of the nation and subsequent high market prices that crop insurance uses to reimburse subscribers, rates for crop insurance premiums will be going down in many Corn Belt states for corn and soybeans.
USDA’s Risk Management Agency, (RMA) which oversees the crop insurance program, says its plans to change the way premiums are calculated will be implemented.
Compared to 2012, corn and soybean premiums will change in many states. Find your state and grain on this series of maps.
Some of the changes proposed by RMA were tested with success in 2012 and more will be implemented in 2013. The rates will be phased in to prevent significant cost changes. That meant in 2012, USDA’s trial premiums took in less money than would have been expected. The changes to the premiums are based on recommendations from industry experts:
- Weather data will be incorporated in a way that rare events (drought) is carefully weighted.
- Prevented planting and replant payments will be based on weather and not state borders.
- More weight will be given to recent years to reflect current agronomic practices.
How does your yield compare to your county yield? Your premium may go up or down, says USDA, “RMA will also update factors that account for differences in risk across individual growers as indicated by their own average yield compared to the county average yield. To the extent that a grower’s average yield is above the midpoint yield (or “reference yield”) for the county, his or her premium rate is reduced and vice-versa. These updates are based upon loss data accumulated over the last several years.”
But will crop insurance really be needed in 2013? Your guess is as good as your neighbor’s guess, but the weather folks are talking up a storm about the potential for dry conditions in the coming year, at the minimum! The drought will likely continue through next year, according to IL state climatologist Jim Angel. He told a Mississippi River conference Friday, "So what that means is that it's going to take a long time to get out of that mess. I don't see tropical storms running through Oklahoma any time soon. It's going to be a long, slow recovery from this particular drought."