Reuters reports that federal crop insurance payments to U.S. producers for 2012 have hit a new record. According to the article, payments for 2012 total $11.6 billion and could grow even higher. The high amount in crop insurance payments are due in large measure to the drought conditions that existed throughout much of the U.S., including in the crop insurance-heavy Midwestern states. Regardless of the final tally, the $11.6 billion surpasses the previous payment record of $10.8 billion established in 2011. According to the article:
Crop insurers have paid a record $11.6 billion to U.S. growers in compensation for losses due largely to widespread drought in 2012, the first money-losing year for the industry in a decade, the government said on Tuesday.
In addition, the article indicates that “some analysts expect indemnities to reach $20 billion this year, nearly double the old record of $10.84 billion that was paid last year for the 2011 crop.”
While crop insurance has been available and widely used for decades, it has emerged as a key risk management tool for many producers and many policymakers believe it should play a larger role in managing risk in the future. Federal crop insurance featured prominently in the farm bill debate and proposals throughout 2012 and will continue to be a focus in ongoing farm bill debate in both chambers of Congress.
For more information regarding federal crop insurance, visit the National Agricultural Law Center Crop Insurance Reading Room, here, as well as the Center’s collection of Congressional Research Service Reports here. In addition, Center Research Consultant Grant Ballard has published articles on federal crop insurance, including Crop Insurance Arbitration: What is Arbitration, When is it Required, and How Does it Work?; The Federal Crop Insurance Program: Administration, Structure, and Operation; and Filing a Crop Insurance Claim: An Overview for Producers.