Tuesday, September 20, 2011

How the Cost of Crop Insurance Grows

Farmdocdaily has a post on the 2012 wheat insurance.  The main paragraph:
The 2012 projected price of $8.20 is $1.01 higher than the 2011 price of $7.19. As a result, guarantees will be higher for the same coverage level in 2012 as compared for 2011. Take, for example, a 75 percent Revenue Protection (RP) policy for a unit having an Actual Production History (APH) yield of 55 bushels. In 2012, the minimum coverage level is $338 per acre (75% coverage level x 55 bushel APH x $8.20 projected price). The 2012 minimum guarantee is $41 per acre higher than the 2011 minimum guarantee of $297 per acre (75% coverage level x 55 bushel APH x $7.19 projected price). For the same APH yield and coverage level, 2012 minimum guarantees will be 14 percent higher than in 2011.
And since the government's exposure and subsidization of cots changes as the guarantees change, the possible cost to the taxpayers of wheat crop insurance is rising.

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