CRC indemnities for wheat and future premiums
Farm and Ranch December 3, 2009 Over 300 million dollars in indemnities have been paid out to Pacific Northwest wheat growers who had Crop Revenue Coverage insurance on their 2009 wheat crop, primarily because of a decline in wheat prices. Given that’s three times past payouts, what will that mean for crop insurance premiums down the road? It’s a question I put to Dave Paul, director of the regional office of the USDA’s Risk Management Agency. Paul: “Well that is a great question. Obviously premium rates are based on insurance experience in those counties. This past year, in 09, we didn‘t have a lot of counties with yield losses. And there are two components on the rating side. One is yield and one is price. The price rating function is based on an historical average of the movement in prices on the futures. So that typically is rated into the function and so I don‘t anticipate the rate impact to be nearly as much, even though we have these large claim payments, because that rate function is an historical rate function. So I don‘t think it is going to affect the premium rates much at all.” Paul says counties which saw yield losses will probably see premium adjustments down the road. He says no changes were made to 2010 crop wheat premiums because of this year’s claims but changes could be made in 2011 and 2012. I’m Bob Hoff and that’s the Northwest Farm and Ranch Report on the Northwest Ag Information Network. ?
