The 2014 farm law ended the direct-payment subsidy and made crop insurance the major farm support. For most states, there is little difference in the state’s share of the receipts. For a dozen, however, the disparity is significant, writes economist Carl Zulauf of Ohio State University, who asks if the difference will become a farm policy issue.
Four states – Texas, North Dakota, South Dakota and Kansas – got a notably larger share of U.S. crop insurance indemnities than thier share of direct payments from 2004-13, Zulauf wrote at farmdocdaily. Seven other states got a notably smaller portion of crop insurance – California, Louisiana, Iowa, Ohio, Minnesota, Nebraska and Arkansas. Texas’ share of crop insurance was 8.8 pct larger than its share of direct payments; for Iowa, Ohio, Minnesota and Nebraska, the crop insurance share was at 2-3 pct smaller, for Arkansas, it was 3.8 pct smaller.
“The more variable is a state’s value of field crop production, the higher is its share of net crop insurance payments,” said Zulauf. This…raises the possibility that crop insurance payments could, over time, alter the distribution of production by state by shifting production to more risky production areas…(T)his finding suggests the impact of crop insurance on the geographical distribution of field crop production is a potential future policy issue.”
Sales of crop insurance policies continue to run behind last year’s pace. According to USDA data, 222,488 policies were sold as of this week, down 4 pct from early April 2013. But the area insured is up 3 pct, to 87.9 mln ac. Premium paid was $1.8 bln to date vs $2.1 bln at this point a year ago. The most popular policies are tied to crop revenue and commodity prices are down sharply this year.