WASHINGTON (Reuters) – U.S. corn and soybean growers will pay lower rates from crop insurance in 2012 — down by an average 7 percent for corn and 9 percent for soybeans, the federal overseer said.
The U.S. Agriculture Department's Risk Management Agency said the lower premium rates were a result of updated methodology for setting rates. Administrator Bill Murphy said premium rates will more accurately reflect risks under the revisions.
The USDA pays 60 cents of each $1 in crop insurance premiums. Crop insurance subsidies were forecast for $7 billion in the fiscal year that ended on Sept. 30.
Some 256 million acres (104 million hectares) of U.S. cropland are covered by policies, most of them "revenue" insurance that shield producers from low prices and poor yields. Growers planted 167 million acres of corn and soybeans this year.
"Our farmers have historically paid more than their fair share of crop insurance premiums and we are pleased to see this is finally coming to an end," said Gary Niemeyer, president of the National Corn Growers Association.
But the Illinois Corn Growers Association said corn rates were still too high, compared with losses. It said "over-payments have accrued to crop insurance companies as profit."
RMA adjusted rates as a result of a study that it commissioned from Sumaria Systems Inc and opened up to peer review. The agency said it will review further Sumaria's report and make additional adjustments as warranted.
An industry trade group, National Crop Insurance Services, said growers "should pay fair premium rates, based on sound actuarial methods and principles" but it had questions about the new procedures.
Fifteen insurance companies are approved by RMA to provide coverage on 2012 crops. They include John Deere Insurance Co and Agrinational Insurance Co Inc, a branch of Archer-Daniels-Midland Co .
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