Crop Insurance Popular in Nebraska
The federal crop insurance program remains a popular tool in crop producers’ risk management portfolio. Table 1 provides data on usage of crop insurance in Nebraska between 2007-2020 obtained from the Federal Crop Insurance Corporation (FCIC). Over the period, net acres covered ranged from 14.1 million acres in 2007 to 19.1 million acres in 2013. Clearly the 2012 drought motivated farmers to purchase more coverage in 2013.
Following 2013, acres covered fell to 17.4 million acres in 2016 and has since ranged between 17.8 and 18.1 million acres. Total acres covered in 2020 were 25 percent higher than those covered in 2007 and accounted for over 90 percent of total acres planted to field crops.
Table 1. Nebraska Producer Use of Crop Insurance
Under the federal crop insurance program, premiums are paid by farmers and subsidized by the federal government. Underwriting gains and losses are shared between the federal government and private companies. Cumulative premiums paid by Nebraska farmers over the period totaled nearly $3.5 billion and averaged 43 percent of the total premiums paid. Nebraska experienced an underwriting gain (premium exceeded indemnity paid) each year except 2012. And, in eight of the fourteen years, premiums paid by farmers exceeded the indemnity paid. For the period, there was a cumulative underwriting gain of over $3.3 billion.
The federal crop insurance program helps farmers mitigate multiple risks. It provides crop producers certainty, income stability, and the means to secure financing. It also helps rural areas weather extreme natural disasters which occasionally occur. All of which explain why it remains popular among Nebraska farmers.