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David Sparks Ph.d Importance of Insurance
by David Sparks Ph.d, click here for bio

Program: Idaho Ag Today
Date: May 09, 2019

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I regularly update you about the various crop insurance programs that are detailed and provided by a number of agencies under the jurisdiction of the USDA. Designed to protect against a drop in crop revenue or yields due to price declines or crop losses, crop insurance policies are one of the most important risk management tools available to farmers. While these federal crop insurance programs are considered voluntary, for many farmers and ranchers seeking farm operating loans or lines of credit, crop insurance is likely required by most creditors as a condition of the financial risk associated with these lines of credit.

Corn Crop Insurance in 2018

During 2018, crop insurance was purchased on 77.9 million acres of corn across the U.S., representing 87% of all corn acreage based on USDA’s 2018 Acreage survey. This included 70.6 million acres covered under traditional revenue protection policies, 5.7 million acres covered by yield protection and 1.5 million acres covered under an area-based plan or a plan with the harvest price exclusion.

Crop insurance coverage for corn was the highest in Iowa at 12.2 million acres, followed by Illinois at 9.5 million acres. In the top 10 corn-producing states (in terms of the planted area), crop insurance was purchased on 61.4 million of the 65.2 million acres planted, representing crop insurance coverage for 94% of corn acreage. Many states had more than 90% of their corn acreage covered by crop insurance, and 39 out of 48 corn-producing states had more than 50% of their acreage covered by crop insurance, Figure 1. Areas with lower levels of corn covered under crop insurance reflect corn planted for silage purposes. For example, a majority of the corn grown in California in 2018 was grown for silage as opposed to grain and thus had a lower percentage of crop insurance coverage.

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