The U.S. is heading toward a record corn crop this year. With farmers growing more corn than ever, farm subsidies should be lower, right? Think again. According to DTN, corn growers can expect to see crop insurance payouts despite no loss in crop yields – and that’s on top of soaring corn subsidy payments. What gives? Most people likely believe that the farm safety net – a combination of traditional commodity subsidies and crop insurance – is intended to safeguard against the worst of the worst disasters, like devastating hail or flooding. Yet these farm subsidy programs increasingly pay out nearly ever year, in good and bad growing years.
The sum of premiums collected in 2006 was 4,57 billion USD. Most premiums were collected on corn (appr. 35%), soy beans (20%), wheat (15%) and cotton (10%) insurance contracts. RMA representatives indicated that nursery insurance becomes an important line of crop insurance program. Farm-level revenue plans (crop revenue insurance, revenue assurance and income protection) are the most popular with farmers. Revenue plans supply over 60% of premiums collected on the agricultural insurance program. Farm-level yield plans (actual production history and grower yield certification) provide about 20% of the premiums. Group risk income protection is the third important insurance plan providing about 10% of the premiums collected.
There are several great examples on the territory of Eurasia that represent well-tailored working models of crop insurance with state support. For many years Israel (KANAT) and Turkey (TARSIM) are being great examples of such effective systems. These countries managed to create and continuously develop highly effective crop insurance programs with the state support.
State subsidies and support of agricultural insurance – is one of the most important topics for discussion at the 2013 International Conference «Agricultural Insurance, Reinsurance & Brokerage in CIS, Europe & Asia». State subsidies and support of agricultural insurance – is one of the most important topics for discussion at the 2013 International Conference «Agricultural Insurance, Reinsurance & Brokerage in CIS, Europe & Asia».
Strategies to reduce income risk depend on the characteristics or risk and require a set of tools and instruments. The role for the government in risk management is to provide a sound business environment with competitive markets and clear regulations, to facilitate the development of market mechanisms and, when market fails, to provide instruments (in general from high levels of risks) according to reform principles.
The publication provides a short overview of the agricultural insurance system in France including description of the new agricultural insurance initiatives introduced in 2002 and 2005. The system is highly supported by the public finance system providing ad hoc payments and catastrophic assistance. The government also provide insurance premium subsidies - this program will be developed in the nearest years.
All types of economic activity involve risk. These risks may take many forms. They may include risks relating to physical production, input and output prices, currency movements, institutional change, legal liability and personal circumstances. Agriculture is generally regarded as one of the more risky activities because of the price inelastic nature of demand and short run supply and its exposure to natural shocks. In this report we focus upon the risks for agricultural producers relating directly to prices and revenues.
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