Coverage Up for Missouri Farmers

COVERAGE UP FOR MISSOURI FARMERS

Risk Management Agency (RMA) economists have long known affordable crop insurance will increase crop insurance sales. When a temporary across-the-board premium subsidy of 30 percent upped the number of Missouri policies sold by almost 17 percent from 1999 to 2000 (up to 81,700), many knew that a permanently legislated subsidy could have similar dramatic impacts.

What they didn't anticipate was how fast farmers would respond to the subsidies put in place by the Agricultural Risk Protection Act of 2000 (ARPA)--how many former Catastrophic protection (CAT) buyers would move to buy-up products, how buy-up insureds would flock to even higher coverage, and how the more desirable revenue products would come within the financial reach of many more producers.

Following implementation of ARPA, Missouri farmers followed a nationwide trend. Sales of basic CAT policies in Missouri decreased 10 percent from 2000 to 2001, down to 34,000. At the same time, sales of additional coverage policies increased almost 10 percent, up to 48,000. And many other farmers, knowing a bargain when they saw it, bought higher levels of coverage. Farmers who previously bought 65 percent coverage found they could easily afford 70 and 75 percent levels of coverage.

Subsidies also brought the pricier revenue products within reach of many farmers who also wanted price as well as the yield coverage offered by Actual Production History products. The sales of revenue products to Missouri wheat farmers show the highest percent increase for sales, up from 616 policies to more than 1,400 in 2001, a more than twofold increase.

This chart shows the steady increase in crop insurance protection in the state. The bump-up in sales shown in 1995-96 was due in part to participation in crop insurance being mandatory in 1995 and 1996 for producers who sought eligibility for other USDA program benefits.

Last Modified: 01/19/2007