By Scout Nelson
Crop insurance has become an essential tool in Nebraska crop producers’ risk management strategies. This federal program allows farmers to pay premiums, with the government providing subsidies to reduce the cost.
The premiums are shared between farmers, private companies, and the federal government, helping producers protect themselves from the financial impacts of uncontrollable risks.
Since 2007, the number of acres covered by crop insurance in Nebraska has grown significantly, from 14.1 million acres in 2007 to 25.1 million acres in 2023. In 2023, a total of 24.76 million acres were covered. Over the years, Nebraska farmers have paid a cumulative $4.9 billion in premiums, averaging 42% of the total premium amount.
While crop insurance aims to protect farmers from extreme weather, pests, and market volatility, it has also proven to be financially effective for many. Nebraska farmers experienced underwriting gains (when premiums exceed indemnity payments) every year, except for three drought years: 2012, 2022, and 2023.
As a result, there has been a cumulative underwriting gain of $3.5 billion since 2007. In half of the years, premiums paid by farmers were higher than the indemnity payouts, showing the overall effectiveness of the program in minimizing financial risk.
The purpose of crop insurance is to offer financial certainty and income stability, allowing farmers to manage risks beyond their control, such as unpredictable weather or fluctuating prices. With its broad adoption in Nebraska, crop insurance continues to be an effective tool for providing financial protection and securing the necessary financing during uncertain times.
Crop insurance plays a vital role in helping Nebraska farmers weather financial storms and maintain the stability needed to sustain their operations.
Photo Credit:gettyimages-eugenesergeev
Categories: Nebraska, Crops, Weather