Crop Insurance Today Second Quarter 2019 - 17

Top 10 Premiums &
Indemnities by State
Table 6 and Crop, 20181
PREMIUMS BY STATE
STATE

PREMIUMS (MIL.$)

TX
ND
IL
IA
KS
SD
MN
NE
CA
MO
Total
U.S. Share

1,153.8
878.7
646.5
625.9
605.5
598.8
577.4
519.2
414.7
383.9
6,404.4
65%

INDEMNITIES BY STATE
STATE

INDEMNITIES (MIL.$)

TX
MN
NC
FL
KS
ND
IA
GA
CA
SD
Total
U.S. Share

1,518.2
359.6
341.7
339.1
334.8
325.5
315.8
304.9
273.2
270.2
4,383.0
65%

PREMIUMS BY CROP
CROP

PREMIUMS
(MIL.$)

Corn
Soybeans
Cotton
Wheat
PRF
Grain Sorghum
Whole Farm Revenue
Apples
Rice
Potatoes
Total
U.S. Share

3,160.8
2,243.5
1,1,36.3
997.3
520.0
151.8
139.1
123.1
87.5
85.2
8,644.7
87%

INDEMNITIES BY CROP
CROP

INDEMNITIES
(MIL.$)

Cotton
Corn
Soybeans
Wheat
PRF
Flue Cured Tobacco
Nursery
Grain Sorghum
Dry Peas
Oranges
Total
U.S. Share

1,415.6
1,339.3
1,239.9
562.1
500.0
216.9
97.1
85.5
77.0
76.5
5,609.9
84%

Data as of April 16, 2019
Source: RMA Summary of Business

1

Table 5 Insured Acres by Major Crop1
CROP
2016 2017 2018

Wheat
42,603 37,055 38,537
Corn
81,790 78,485 77,712
Sorghum
5,356
4,180
4,131
Soybeans
72,927 79,454 78,379
Upland Cotton
9,360
11,619 13,036
Pasture, Range & Forage
51,962 75,415 98,976
Total above Crops
263,998 286,159 310,819
Total all Crops
290,313 311,729 335,105
NASS Planted Acres (Field Crops) 318,977 318,340 319,578

CHANGE

% CHANGE

1,482
-773
48
-1,075
1,417
23,561
24,661
23,376
1,238

4.0
-1.0
1.2
-1.4
12.2
31.2
8.6
7.5
0.4

Data as of April 16, 2019 In (000) acres.
Source: RMA Summary of Business, NASS Quick Stats

1

both 2018 and 2019 and are now at or below
their 2016 levels. Corn prices traded within
narrow bands throughout both 2017 and 2018,
in line with the expected price stability predicted by the IV factors.
The 2019 IV factors for both winter and
spring wheat increased, while that for rice decreased to near the lowest level seen since 2012.
Given the ongoing trade tensions with China,
will Soybean prices over the coming year be relatively more stable compared to 2018, as the lower
IV factors imply?
Figure 11 shows the change between the base
prices established early in 2018 to the harvest
prices established close to the end of the growing
season. The harvest prices shown are the average
daily prices in the harvest month for the same futures contract used to establish the base price earlier in the year. Harvest prices are important in
that they are used to calculate the farmer's actual
revenue, which is used to establish the amount of
indemnity for Revenue Protection (RP) policies.
The harvest price for soybeans declined to
$8.60 from a base price of $10.16 at the start of
the year, a drop of more than 15 percent. Rice,
corn, and spring wheat also experienced declines
of 13 percent, seven percent, and six percent, respectively, during the year.
[Information sources for this section includes:
USDA, Foreign Agricultural Service, P, S & D database; Office of the Chief Economist; World Agricultural Supply and Demand Estimates Report
(WASDE), various issues; NASS Quick Stats; RMA
Manager's Bulletins, Price Discovery Application,
and Actuarial Information Browser.]

Federal Crop Insurance
Program Experience

The Federal Crop Insurance Program continued to perform well in 2018 thanks to an-

other year of excellent growing conditions and
stable crop prices. After experiencing two years
of gross underwriting losses (defined as gross
indemnities exceeding gross premiums) in 2012
and 2013, the program saw a modest recovery
in 2014, followed by four years with solid gains
(Table 4). The amount of liability insured increased just shy of four percentage points in 2018
compared to 2017 thanks in part to higher base
prices for cotton, rice, and spring and winter
wheat, although the price for soybeans declined
marginally and corn remained unchanged. Premium also declined to just under $10 billion. On
a percentage basis, premium declined despite the
increase in liability partly due to the decreases
in the price volatility factors for corn, soybeans,
cotton, rice, and winter wheat. Similar to 2017,
insured acres surged 7.5 percent to 335 million
due exclusively to growth of over 31 percent in
the Rain Insurance product under the Pasture,
Rangeland, and Forage program. Farmers continued to purchase high coverage levels in 2018
with the share of acres covered at 70 percent or
higher increasing to 83.5 percent after having
stabilized around the 82 percent level during the
prior three years (Figure 12).
The public cost of the crop insurance program
can be calculated using program outlays and revenues. These are equal to gross indemnities, less
farmer-paid premiums, plus administrative and
operating expense (A&O) payments made on
farmers' behalf to the companies, plus company
underwriting gains. While final costs for 2018 are
still uncertain, the current total cost is estimated
at $7.042 billion, below the long-run annual average of $7.9 billion as reported in the January 2015
projections of the Congressional Budget Office
(CBO) for the life of the 2014 Farm Bill.
Table 4 provides the standard measures summarizing the performance of the crop insurance
CROPINSURANCE TODAY®

17
Crop Insurance Today Second Quarter 2019

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