WEST LAFAYETTE, Ind. (WLFI) - State crop insurance payouts have set a record already this year at more than $1 billion thanks to the drought in 2012 – and that's without the ¼ of Indiana's crops that went uninsured.
According to The U.S. Department of Agriculture (USDA), as of Monday, Indiana farmers have received $1.04 billion in crop insurance payments from losses last year when the drought destroyed crops throughout the state.
That number is double the previous record.
Purdue Extension agricultural economist Christ Hurt says that number will most likely increase in the coming weeks as final claims are filed.
"These crop insurance indemnities are the primary reason the state's farm sector income has not collapsed under drought losses," Hurt said. "The income-stabilizing impact of crop insurance has helped keep rural communities economically healthy."
The old record amount of insurance indemnity payments to Hoosier farmers for those three crops was $522 million in 2008.
Of the total amount of last year's insurance indemnities, $900 million in payments have been for corn losses. Corn yields averaged 99 bushels per acre, close to 40 percent below normal. The previous high for corn was $269 million for the 2008 crop.
Corn sales from the limited crop are generating about $700 million less across the state than had been expected before the drought.
"So an infusion of an additional $900 million in insurance claims will bring total receipts to somewhat more than pre-drought estimates," Hurt said.
Due to the major losses in 2012, Indiana corn farmers on average received $3.47 of insurance indemnity for each $1 they paid for crop insurance premiums.
Losses in soybeans accounted for the second-largest insurance payouts, which was $138 million. Soybean yields were not affected as much as corn last year because of the heavier late-summer rains. Final yields in Indiana were 43 ½ bushels per acre, down about 10 percent from normal.
Soybean marketing revenues for the state are expected to be about $275 million less than had been expected before the drought, according to Hurt. That means crop insurance might not fully cover reduced returns from soybean losses across Indiana. Statewide, farmers received $1.09 of crop insurance indemnities for each $1 they paid for soybean insurance premiums.
Corn insurance indemnities were more than the losses, but soybean indemnities were somewhat less than the losses. The combination means, however, that insurance payouts covered the losses for both crops, Hurt said. Most farmers plant both corn and soybeans.
"With Indiana farm income expected to be in the range of $3 billion to $4 billion a year, it is clear that the recovery of more than $1 billion from crop insurance due to the 2012 drought is a significant part of that income," Hurt said. "Unfortunately, some producers did not elect crop insurance in 2012."
About 75 percent of Indiana crop acres were insured in 2012. Farmers wanting insurance for this year's crop must sign up for it by Friday (March 15).
You can find crop insurance indemnities by crop and state at the USDA's website.
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