What is in this article?:
- Corn loss estimates premature, may hit $10 billion
- Rare year
- Failure unlikely
- Kansas State University agricultural economist Art Barnaby is well aware of corn growers’ struggles this year as they deal with blistering summer heat and drought. But after crunching the numbers, he believes that some estimates of this year’s U.S. crop losses are premature and might be overstated.
Barnaby says he may get cards and letters reminding him that a large insurance company failed after the banking fiasco, but it was writing derivatives on housing loans and other products and the dollar amounts were much larger than the numbers affected by this year’s crop losses. Plus the $10 billion to $15 billion underwriting loss will not be completely borne by the insurance industry. The government will bear some of it.
He said some wells have been shut off because farmers have hit their irrigation limits. He’s encouraging producers to talk to their insurance agent to make sure everything is handled and documented properly.
“The crop insurance portion of the farm bill that’s been in place for the past several years has been successful in this sense – it got a lot of people insured,” Barnaby said. “There’s no doubt that farmers with this crop loss in 2012 are going to be covered a lot better than farmers were in 1988.
“Congress and the USDA have put a lot of effort into moving farmers from “free” disaster to a farmer-RMA premium shared crop insurance program. I find it ironic that many people are criticizing the size of the insurance program’s participation and the resulting payments.”