Net incomes for farmers should end 2020 at the highest levels in 7 years, according to the Department of Agriculture. Precision Risk Management says the government crop insurance programs are important to these gains.
The latest farm income forecast says net farm incomes will increase by 43.1% from 2019. Despite the good top line numbers, the year could have ended poorly if it wasn’t for direct federal government payments of $46.5 billion. A portion of that direct payment is from crop insurance programs.
Crop insurance not only gives security against major losses but can be tailored for the needs of each operation. “There’s a trade-off between how much premium do you want to pay versus how much risk can you absorb. Understanding the types of crops, cropping practices, counties all determine the best crop insurance solution,” said Tommy Jones, the Sales and Marketing Manager at Precision Risk Management.
The $46.5 billion direct payment is a 107% increase from 2019. Farm cash receipts are forecasted to be down by nearly 1%; meaning without the direct government payments, 2020 would be a loss for farmers on average.
This is the largest annual direct-to-farm payment. $32.4 billion was allocated to farmers through various COVID-19 relief bills. The remaining amount came from traditional crop insurance revenue loss programs.
Farmers faced many challenges in 2020, leading to the decreased cash receipts. A global trade war, low commodity prices, record storm losses across the Midwest, all took their toll.