WASHINGTON - Corn growers consider crop insurance one of their most important tools to manage risk, according to the results of a survey announced by the National Corn Growers Association. The Risk Management Tools Survey was conducted by Promar International and Forward Research.
More than 800 corn growers, geographically dispersed among the east, central and west regions of the U.S. Corn Belt, participated in telephone interviews on their risk management practices. NCGA commissioned the survey to gain a better understanding of how growers make risk management decisions and to gather feedback on how to improve the selection of federal crop insurance policies and other risk management products that are currently available in the private sector.
“NCGA is taking a proactive role in crop insurance and aiding corn growers with a better understanding of risk management,” stated Ron Litterer, chair of NCGA’s Public Policy Action Team. “This survey will ultimately aid our members in their decisions to use crop insurance products and other risk management tools, depending on their individual needs.”
Several significant findings from the NCGA survey include:
- Corn growers consider crop insurance one of their most important tools to manage risk, and 91 percent of those interviewed purchase it.
- Growers have many other strategies for managing risk as well, although 30-40 percent still do not use any type of forward contracts.
- Among crop insurance users, 62 percent buy revenue insurance, 53 percent private hail insurance, 50 percent catastrophic policies, 40 percent buy-up multi-peril and 8 percent group risk.
- Growers are moderately satisfied with crop insurance products. Overall, private hail insurance scored highest and the basic catastrophic coverage (CAT) policy scored lowest.
- 30 percent of farmers have submitted loss claims in consecutive years. In the West, 60 percent of crop insurance users reported experiencing it. But there was no difference in degree of satisfaction with indemnity payments.
- The two changes that farmers said would boost their use of crop insurance are reduction in cost and premium discounts for good claim experience.
- There was also strong support for a premium discount for having fewer prevented planting claims.
“This survey affirms what corn growers have known for years - crop insurance is becoming a more critical risk management tool in their farm operations,” Litterer said. “NCGA will continue to work for improvements in existing products and the development of new policies that better meet the diverse needs of growers across the Corn Belt. With agriculture disaster assistance becoming more uncertain every year, we want to make sure the federal crop insurance program is strengthened and positioned to offer farmers and ranchers affordable protection against weather related catastrophic losses.”
The federal crop insurance program over the past decade has become a much more important component in the farm safety net. In addition to expanding the program for livestock and other commodities, the Agriculture Risk Protection Act of 2000 increased the percentages of cost share assistance for growers to purchase federal crop insurance, resulting in a significant increase in participation and a dramatic shift toward higher levels of coverage. Still, major field crops such as corn account for the bulk of the crop insurance program.
In 2002, four crops accounted for 74 percent of total premium revenue – corn, soybeans, cotton and wheat. More than 90 percent of premiums were attributed to either the standard multiple peril policy or one of the three farm-level revenue insurance policies. The remainders were associated with either area-based yield and revenue products or policies on specialty crops.
The survey is available online at www.ncga.com.