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Crop insurance rates to drop in 2012

Rerating formula for corn, soybeans on rolling, 20-year average

December 4, 2011
By LARRY KERSHNER, For The Messenger , Messenger News

WASHINGTON - The U.S. Department of Agriculture's Risk Management Agency announced Monday that it will update the methodology to set crop insurance premiums, leading to lower premium rates for many corn and soybean producers during 2012.

Corn premiums could drop by as much as 7 percent for corn and 9 percent for soybeans, the USDA said.

For Midwest corn growers, especially those in Iowa, Indiana and Minnesota, the rates could lower by as much as 12 percent, said Bruce Rohwer, of Paullina, vice president of Iowa Corn Growers Association.

Rohwer said corn growers have been telling the RMA for several years that corn and soybean growers have been paying higher premium rates compared to other commodities grown around the U.S.

Rohwer echoed a news release by National Corn Growers Association saying "we congratulate the USDA," for its actions to reform crop insurance premiums.

The new rating system, Rohwer said, will be a rolling 20-year average, so that the value of crops will be properly determined, reflecting the yield advances made through genetics. "The seeds we're planting today are different than what they were 30 and 40 years ago."

He added "this is an important feature to ensure that we can keep in business, without gouging us.

"It keeps (crop insurance) affordable and reflecting what it needs to be."

The USDA's action is based on findings of an independent study and peer review process. The study is part of RMA's ongoing effort to improve the methodology of determining premium rates for crop insurance, the USDA said.

"We are moving to establish the most fair and appropriate premium rates for today's producers," said RMA Administrator William J. Murphy. "As good stewards of taxpayers' dollars, we welcome the opportunity to match premium rates more accurately with current risks."

RMA contracted for a study by Sumaria Systems Inc., headquartered in Danvers, Mass., which examined premium rates and the rating process, starting with the United States' two major commodities - corn and soybeans.

Murphy said RMA will conduct further review and analysis of the study's recommendations along with comments and issues raised by peer reviewers, making additional adjustments as warranted and appropriate. Accordingly, RMA is taking action to implement adjustments to premium rates in a "phased in" approach that allows for any further adjustment pending additional analysis of peer review comments.

Contact Larry Kershner at (515) 573-2141, ext. 453 or



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