The 2012 budget will likely include modifications and reductions to the farm safety net. Policy makers should consider 12 essential strengths that make crop insurance the corner stone of the farm safety net programs. In this on-going series, we'll introduce one strength of crop insurance per month and explain how the sum of these strengths has given us the successful program we have today.
Strength: Producers receive crop insurance indemnities in the timeliest way.
Although some farm programs make payments fairly quickly - such as marketing loan benefits - others pay out long after the actual payment is needed.
For example, final countercyclical and Average Crop Revenue Election Program (ACRE) payments for the 2010 spring planted crops will be made no earlier than October, 2011. Payments for the Supplemental Revenue Assistance Payments Program (SURE) may occur about one and a half years after harvest.
Crop insurance, on the other hand, pays out its indemnities very close to when the losses occur - the very time when farmers need the money the most. In fact, companies make indemnity payments usually within 30 days of claim settlement. Losses from natural disasters, prevented planting and replants are sometimes paid before harvest.
This news item is brought to you by:National Crop Insurance Services