St. Louis, Missouri
March 23, 2004
Corn growers consider crop
insurance one of their most important tools to manage risk,
according to the results of a survey announced today by the
National Corn Growers Association
(NCGA). 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.
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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. Over 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.
Survey
results in PDF format:
http://www.ncga.com/public_policy/PDF/PromarNCGAsurvey2.pdf
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