2013 Crop Insurance Rates

Following USDA’s Risk Management Agency’s announcement last week that it will be setting new crop insurance premium rates growers have been worried that premiums could go through the roof for 2013. RMA Administrator Bill Murphy wants to assure producers that the USDA is doing all it can to assure fair and appropriate costs to growers. In fact, crop insurance premiums for producers in several states will show little change, or actually decline.

MURPHY: Our concern was, look we don’t want to reduce people’s rates and then turn around and increase their rates as we get 2012 data into the system that we can use. This year we are going to go ahead with the corn and the soybeans and we’re also going to do the revised methodology with the wheat, cotton, rice, grain sorghum, and canola. Nationwide for the spring wheat probably a bit of a bump up in premium, maybe one percentage point. Grain sorghum, probably very little nationwide change in premium collected.

Washington is showing an estimated nine percent reduction in corn rates, but Murphy also points out that rates and premiums play out differently at the county level.

MURPHY: What we do is we rate by county. A state might show a six percent reduction in premium, but you’re going to have some of those counties with a much higher reduction in premium and some with a little bit lower - it will average out to about a six percent reduction in premium. What we do is that we set reference yields in each county, and that’s about the average yields. Farmers whose yields are above that, well, they pay a little less rate per unit of coverage. Those whose historic production is below that, they pay a little bit more. So even at the individual grower level there’s going to be differences.

I’m Lacy Gray and that’s Washington Ag Today on the Ag Information Network.