Crop Insurance a Popular Tool
The federal crop insurance program remains a popular tool in Nebraska crop producers’ risk management toolbox with more than 90 percent of total acres planted to field crops this year covered under insurance. Table 1 shows data on the usage of crop insurance in Nebraska since 2007. Acres covered have ranged from a low of 14.1 million acres in 2007 to a high of 19.1 million acres in 2013. Clearly the 2012 drought motivated farmers to cover more acres in 2013. Since 2013, acres covered have ranged between 17.4 to 18.1 million acres with the exception of last year when acres dropped to 15.6 million. Total acres covered this year are 17.8 million.
Table 1. Nebraska Crop Insurance Data
Source: Federal Crop Insurance Corporation
Under the 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 totaled nearly $4.1 billion since 2007 and averaged 42 percent of the total premiums paid. Nebraska experienced underwriting gains (premium exceeded indemnity paid) every year except 2012. And, in nine of fifteen years, premiums paid by farmers exceeded the indemnity paid. Through last year, a cumulative underwriting gain of $3.8 billion had been realized.
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 natural disasters like this year’s drought. All of which explain why crop insurance remains popular with Nebraska crop producers and why they want it to remain a tool in their risk management toolbox.