Last year was a terrible year for weather in the United States, and many farmers felt the full wrath of Mother Nature. New data from the Risk Management Agency recently revealed 2011 hit a record high for crop insurance payouts, according to Western Farm Press.
Most farmers purchase crop insurance in order to protect themselves in case of a disaster, and 2011 illustrated exactly why that was a good idea. The payouts have now exceeded $10.7 billion and are continuing to increase as more claims come in. The previous record for crop insurance payments was 2008, when $8.76 billion was paid to make up for lost harvests. Thus far, 2011's total has already surpassed that figure by more than 25 percent, and may top $11 billion when all is said and done.
For the most part, insurance companies have still come out ahead with regards to their payouts. The national average loss ratio for 2011 is 0.90, which means farmers got back 90 cents for every dollar of coverage they purchased. However, farmers who suffered major catastrophes came out well ahead of that figure. The loss ratio in Vermont, where Hurricane Irene tore through crops, is 2.59 - nearly triple what farmers put into their insurance. Texas and Oklahoma have ratios of 2.35 and 2.15, respectively, thanks to the prolonged drought that killed crops throughout those states.
Farmers who have recently received crop insurance payments should consider re-investing the money in their farm to ensure a better harvest this year. The online auction site IronPlanet offers a wide array of used agricultural equipment, which can often be purchased for a more affordable price than buying new. In addition, the site's IronClad Assurance allows potential buyers to view full inspection reports before they place a bid, ensuring they know exactly what they're getting.
