Indiana farmers are receiving more than $1 billion in crop insurance because of last year’s drought. That is nearly double the previous record of $522 million that was paid out in 2008, according to Purdue University figures released this week.
About $900 million of the total is being paid in corn insurance because of a 40 percent drop in corn yields. Nearly all of the remaining payments were for soybeans, which saw declines of about 10 percent.
However, more than 25 percent of the state’s crop was uninsured. Purdue University agriculture economist Chris Hurt says the drought, combined with the large insurance payout will likely convince those farmers that did not insure their crops to sign up for insurance before the deadline on Friday, March 15.
“Then secondly we expect the coverage levels that they have to also be higher,” he says. “There’s nothing like a disaster to tell people it can happen on their farm and of course, that really encourages them to think about increasing insurance levels in the following year.”
Indiana Farm Bureau Director of Farm and Crop Insurance Jim Rink says he expects about half of the farmers without insurance will buy it this year. He says now is a good time to do so because premiums are dropping.
“If you combine last year’s rate reduction with this year, we’re seeing a rate reduction of about 14 percent on corn and about 15 percent on soybeans,” he says.
Rink says that is because over the past several years Indiana has had a low payout rate, even though last year more than three times as much money was paid to farmers as was taken in.
What all this means for taxpayers, Rink says is complicated. On one hand, Congressional lawmakers might provide more money for the farm insurance program when they update the Farm Bill later this year. But on the other hand, the federal government might not have to pay out as much in the future as it did last year.