Many farmers relied on their federally subsidized crop insurance this year after the drought in the Midwest drastically reduced their yields.
Earlier this week the USDA changed the way it calculates the premiums for crop insurance.
The amount farmers pay is based on how much the program paid out in previous years. Few people used the program in its early years, including the 1988 drought. The data from that time skewed farmer’s premiums higher.
Former President of the Illinois Corn Growers Association, Jeff Scates, explained.
He says that the land that was in the program was not prime farm ground but fields on steep slopes or with sandy soil. These types fields are more likely to be greatly damaged by a severe drought.
Scates said with the price of inputs like fertilizer increasing, even a small drop in premiums will greatly help farmers.
“Everything is going up and the amount of money we have out in the field, Scates said. “ We hope Mother Nature doesn’t deal us too bad a card that we can produce enough that we can pay back all of our inputs and have a little bit left over for family.”
The adjusted rates will come into effect for the next year’s crop.
The rates vary by state. Corn farmers will see a 4 percent drop in premiums in Illinois, a 6 percent drop in Iowa, and a 1 percent increase in Missouri.
