What is in this article?:
- Continued Drought, Lower Premium Rates Point to More Corn Belt Crop Insurance in 2013
- 2013 Weather Predictions
Weather specialists are making a case for continued drought conditions into 2013 and possibly beyond with the re-emergence of a La Niña climate trend and a less costly opportunity to manage that potential production risk.
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 (RMA) 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 Cornbelt states for corn and soybeans. 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 (pdf).
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.”