Farm Credit Administration 1 9/28/2017

Economics Report

Farm Credit Administration 

Office of Regulatory Policy 

Agricultural and Economic Policy Team

September 28, 2017

Summary

An active hurricane season in 2017 

reminds farmers and lenders that 

Federal crop insurance can offset part 

of the losses caused by bad weather. 

The amount of loss farmers absorb 

depends in large part on their use of 

crop insurance, both in terms of the 

area covered and the coverage they

purchase (i.e., the deductible level). 

For major crops, including corn, 

soybeans, and wheat, nearly 90 

percent of the U.S. planted acreage is 

insured, and the weighted-average 

deductible for this set of crops is 26 

percent. (The producer is indemnified 

for all losses beyond the deductible.)

For fruits and nuts, and vegetables, a 

smaller share of acreage is insured

(74 percent and 34 percent, 

respectively). Also, the average 

deductible is higher (41 percent and 

35 percent), which means producers 

absorb a larger share of losses. 

The level of purchased coverage 

depends on the trade-off between 

risk reduction and the policy’s cost, 

as well as other risk management 

strategies employed on the farm.

Recent news reports indicate 

extensive damage to Puerto Rico’s 

agriculture sector due to Hurricane 

Maria. The hardest hit crops were 

reportedly plantains, bananas, and 

coffee. Of the insurable crops in 

Puerto Rico, coffee has the highest 

value and 56 percent of the 2016 

crop value was insured, according to 

USDA/RMA data. Almost threefourths of the coffee area was 

insured above the catastrophic level.

Author

Dennis A. Shields, Senior Economist, 

703-883-4056

Crop Insurance Covers Most Major 

Crops

The losses absorbed by farmers following a hurricane or other bad weather

depend in large part on their use of crop insurance, both in terms of the 

area covered and the amount of coverage (i.e., deductible level) purchased 

by each producer. Insurance typically does not cover all costs, but 

indemnities plus other actions (e.g., maintaining working capital) can 

significantly reduce the impact on producers when weather damages crops.

For major crops like corn, soybeans, and wheat, most of the U.S. planted 

acreage is insured (first blue bar in chart below). As for coverage amount, 

the average deductible for this set of crops is 26 percent (first orange bar; 

average is weighted by amount of acreage at each deductible level). The

producer is indemnified for all losses beyond this initial level. For fruits and 

nuts, and vegetables, a smaller share of acreage is insured, and the 

average deductible is higher, which means producers of these crops absorb 

a larger share of the losses.

The early development of crop insurance policies for the major crops and 

significant subsidies have resulted in widespread adoption of crop insurance 

by corn, soybeans, and wheat producers. Adoption has also increased for 

fruit/nut and vegetable crops as additional crop policies have become 

available. USDA has not developed policies for some commodities 

(particularly vegetables) because producers have feared that offering 

insurance could adversely affect the market if it reduces producer risk and 

encourages farmers to plant more acreage.

The level of purchased coverage depends on a farmer’s trade-off between 

risk reduction and the policy’s cost, as well as other risk management 

strategies employed on the farm. As a result, coverage can vary by region. 

For example, corn and soybean producers outside the Corn Belt (where 

yields are more variable) tend to purchase policies with higher deductibles 

because the premiums are more affordable. In North Dakota, the weightedaverage deductible for both corn and soybean policies is 27 percent, which 

is above the respective national averages of 23 percent and 25 percent.

See charts in Appendix A for average deductibles by state for corn, 

soybeans, and wheat.

Crop insurance coverage varies by crop type (2015 data)

Source: USDA/RMA, The Risk Management Safety Net, September 2017; deductible 

calculated by FCA-ORP using RMA data. *Includes corn, soybeans, wheat, cotton, 

sorghum, barley, rice, peanuts, potatoes, and tobacco.

89% 26% 74% 34% 41% 35%

0%

100%

Major crops* Fruits and nuts Vegetables

Insured share of U.S. crop acreage

Average deductible percentage (farmer absorbs this loss)
Farm Credit Administration 2 9/28/2017

Major crops are widely insured 

Most planted acreage for corn, wheat, soybeans, and other major crops is insured. About 90 percent 

of corn and soybean acreage is insured. Essentially all rice and cotton acreage is covered, while 73 

percent of barley area is insured. 

The weighted-average deductible across all the crops is 26 percent, with corn and soybeans having the 

lowest at 23 percent and 25 percent, respectively. The average deductible is higher for rice (33 

percent), cotton (33 percent), and peanuts (32 percent). The highest average deductible is for 

potatoes (43 percent) because over half of insured potato acreage is covered by only catastrophic 

coverage, which has a deductible of 50 percent (i.e., the farmer absorbs a 50 percent loss before

indemnification begins).

Major crops in 2015: Deductible percentage and insured share of U.S. crop acreage

Crop, ranked 

by insured 

acreage

Insured 

acreage 

(mil. acres)

U.S. acreage

(mil. acres)

Insured share 

of U.S. crop 

acreage

Weightedaverage 

deductible

“Catastrophic” 

share of insured 

acreage**

Corn 78.4 88.0 89% 23% 5%

Soybeans 74.5 82.7 90% 25% 6%

Wheat 46.8 55.0 85% 29% 7%

Cotton 8.8 8.7 100% 33% 12%

Grain Sorghum 6.8 8.5 80% 32% 12%

Barley 2.6 3.6 73% 30% 11%

Rice 2.6 2.6 100% 33% 32%

Peanuts 1.5 1.6 92% 32% 14%

Potatoes 0.8 1.1 79% 43% 63%

Tobacco* 0.3 0.3 93% 28% 7%

Total 223.3 252.1 89% 26% 7%

Source: USDA/RMA, The Risk Management Safety Net: Market Penetration and Market Potential, September 2017; 

last two columns calculated by FCA-ORP using RMA data.

*Calculations for deductible and “catastrophic” share are for burley tobacco. **Deductible is 50 percent.

Corn

Wheat Soybeans

Cotton Grain Sorghum

Barley

Rice

Peanuts

Potatoes

Tobacco

0%

10%

20%

30%

40%

50%

0% 20% 40% 60% 80% 100%

Insured share of U.S. crop acreage

Weighted-average deductible percentage

(producer absorbs this loss)
Farm Credit Administration 3 9/28/2017

Insured acreage is also relatively high for other field crops

Crop insurance is also widely purchased for most other field crops. The insured share of plantings is at 

least 85 percent for canola, dry peas, sunflowers, sugar beets, sugarcane, and flax. The exceptions 

are hay/forage and oats, each with less than 20 percent of planted area.

Across all these crops, the weighted-average deductible (36 percent) is higher than for major field 

crops (26 percent in the table on the previous page). It is higher because most acreage for hay/forage 

and sugarcane is insured only at the catastrophic level (i.e., deductible of 50 percent). 

Selected field crops in 2015: Deductible percentage and insured share of U.S. crop acreage

Crop, ranked 

by insured 

acreage

Insured 

acreage 

(1,000 acres)

U.S. acreage

(1,000 acres)

Insured share 

of U.S. crop 

acreage

Weightedaverage 

deductible

“Catastrophic” 

share of insured 

acreage**

Hay/forage* 4,707 54,447 9% 44% 68%

Canola 1,718 1,777 97% 28% 2%

Dry peas 1,718 1,670 99% 31% 8%

Sunflowers 1,698 1,859 91% 30% 3%

Dry beans 1,382 1,765 78% 30% 8%

Sugar beets 1,039 1,160 90% 31% 23%

Sugarcane 760 887 86% 48% 89%

Oats 539 3,090 17% 37% 26%

Flax 425 463 92% 32% 5%

Millet 363 445 82% 34% 27%

Source: USDA/RMA, The Risk Management Safety Net: Market Penetration and Market Potential, September, 2017; 

last two columns calculated by FCA-ORP using RMA data. 

*Calculations for deductible and “catastrophic” share are for forage. **Deductible is 50 percent.

Hay/forage

Canola

Dry peas

Sunflowers

Dry beans

Sugar beets

Sugarcane

Oats Flax

Millet

0%

10%

20%

30%

40%

50%

0% 20% 40% 60% 80% 100%

Insured share of U.S. crop acreage

Weighted-average deductible percentage

(producer absorbs this loss)
Farm Credit Administration 4 9/28/2017

Crops insurance coverage varies widely for fruit and nut crops 

Both the insured share of acreage and the weighted-average deductible vary widely for fruit and nut 

crops, as shown by the wide dispersion in the chart below. Also significant is the higher deductible 

(i.e., less insurance purchased) for most of these crops compared with field crops, with significant 

portions of insured acreage covered by policies with a 50 percent deductible (catastrophic coverage). 

Selected fruit and nuts in 2015: Deductible percentage and insured share of crop acreage

Crop, ranked by 

insured acreage

Insured 

acreage 

(1,000 acres)

U.S. acreage

(1,000 acres)

Insured 

share of U.S. 

crop acreage

Weightedaverage 

deductible

“Catastrophic” 

share of insured 

acreage**

Almonds 737 890 83% 40% 42%

Grapes 663 1,023 65% 40% 49%

Oranges 498 576 86% 43% 55%

Apples 239 316 76% 46% 72%

Pecans 156 Not avail. Not avail. 35% 26%

Walnuts 154 300 51% 46% 80%

Pistachios 106 233 45% 45% 66%

Cherries 89 128 69% 31% 11%

Blueberries 69 90 77% 47% 78%

Peaches 68 143 48% 41% 39%

Grapefruit 63 67 93% 36% 25%

Tangelos/mandarins 49 66 74% 44% 60%

Lemons 43 55 78% 45% 64%

Avocados 37 59 62% 47% 82%

Cranberries 33 41 80% 41% 51%

Pears 33 49 68% 43% 58%

Olives 26 36 73% 39% 33%

Strawberries 1 59 2% 39% 26%

All fruits and nuts* 3,160 4,285 74% 41% 51%

Source: USDA/RMA; last two columns calculated by FCA-ORP using RMA data. 

*Total acreage includes other crops not listed. Not shown is that most orange and grapefruit trees are also insured, 

but the purchased level of coverage is relatively low—mostly catastrophic coverage. **Deductible is 50 percent.

Almonds Grapes Oranges

Apples

Walnuts Pistachios

Cherries

Blueberries

Peaches

Grapefruit

Tangelos/ 

mandarins

Lemons Avocados

Cranberries

Pears

Olives Strawberries

0%

10%

20%

30%

40%

50%

0% 20% 40% 60% 80% 100%

Insured share of U.S. crop acreage

Weighted-average deductible percentage

(producer absorbs this loss)
Farm Credit Administration 5 9/28/2017

A smaller share of vegetable acreage is insured 

Compared with major crops and fruits/nuts, the share of vegetable acreage that is insured is relatively 

low at 34 percent. As with fruits/nuts, the insured share of vegetable acreage varies widely by crop. 

However, of the vegetable acreage that is insured, producers typically purchase coverage that is above 

the catastrophic level. Only 27 percent of purchased insurance for vegetables is at the catastrophic 

level compared with 51 percent for fruit/nut crops, on average. 

For crops that are not insurable, similar coverage might be available through the USDA Farm Service 

Agency’s noninsured crop disaster assistance program (NAP).

Vegetables in 2015: Deductible percentage and insured share of U.S. crop acreage

Crop, ranked by 

insured acreage

Insured 

acreage 

(1,000 acres)

U.S. acreage

(1,000 acres)

Insured 

share of U.S. 

crop acreage

Weightedaverage 

deductible

“Catastrophic” 

share of insured 

acreage**

Processing tomatoes 296.0 314.3 94% 35% 21%

Sweet corn 208.9 325.1 64% 31% 16%

Green peas 138.5 181.2 76% 30% 11%

Onions 102.9 144.6 71% 43% 59%

Processing beans 94.2 164.9 57% 35% 23%

Fr. market sweet corn 42.9 242.1 18% 39% 45%

Fr. market tomatoes 39.0 95.2 41% 45% 67%

Cabbage 13.5 59.5 23% 44% 64%

Pumpkins 8.0 Not avail. Not avail. 24% 0%

Peppers 6.6 41.9 16% 45% 65%

Fresh market beans 4.5 77.7 6% 45% 54%

Chile peppers 1.9 19.4 10% 48% 88%

Total vegetables* 949.0 2,752 34% 35% 27%

Source: USDA/RMA, The Risk Management Safety Net: Market Penetration and Market Potential, September 2017; 

last two columns calculated by FCA-ORP using RMA data. 

*Insured acreage excludes pumpkins; U.S. total includes other vegetable crops. **Deductible is 50 percent.

Processing 

tomatoes

Sweet corn Green peas

Onions

Processing beans

Fresh market 

sweet corn

Fresh market 

tomatoes Cabbage Peppers

Fresh market 

beans

Chile peppers

0%

10%

20%

30%

40%

50%

60%

0% 20% 40% 60% 80% 100%

Insured share of U.S. crop acreage

Weighted-average deductible percentage

(producer absorbs this loss)
Farm Credit Administration 6 9/28/2017

Nursery crops

For nursery crops, producers can purchase federal crop insurance to protect against a decline in value 

due to damage that caused a yield shortfall. USDA estimates that approximately 20 percent of the 

U.S. value of nursery production is insured. More than three-fourths of policies are purchased with 

catastrophic coverage (1,175 of 1,529 policies sold in 2015). 

Crop insurance coverage in Puerto Rico

Recent news reports indicate extensive damage to Puerto Rico’s agriculture sector due to Hurricane 

Maria. The hardest hit crops were reportedly plantains, bananas, and coffee. Dairy barns and poultry 

houses were also destroyed. Of the insurable crops in Puerto Rico, coffee has the highest value, and 

56 percent of the 2016 crop value was insured. Almost three-fourths of the coffee area was insured 

above the catastrophic level. 

Source: USDA/RMA; https://www.rma.usda.gov/pubs/2017/stateprofiles/puertorico16.pdf.
Farm Credit Administration 7 9/28/2017

Appendix A – Weighted-average deductible by state for 2015

Source: FCA-ORP using USDA/RMA data.

49%

48%

47%

45%

44%

44%

43%

42%

42%

42%

40%

39%

39%

39%

38%

37%

35%

35%

34%

33%

33%

32%

31%

31%

31%

30%

30%

29%

28%

28%

28%

28%

28%

28%

27%

27%

27%

27%

26%

25%

25%

25%

23%

21%

21%

19%

19%

18%

23%

0% 20% 40% 60%

RI

ME

UT

WA

NH

CA

CT

MA

ID

FL

AZ

AR

VT

GA

OR

NM

MT

NY

LA

TX

WV

SC

WY

MS

OK

NC

PA

AL

CO

TN

VA

NJ

MD

DE

KS

SD

MI

ND

MO

NV

NE

WI

KY

OH

MN

IN

IL

IA

U.S.

Corn

50%

50%

41%

40%

40%

37%

36%

35%

34%

34%

34%

33%

32%

31%

30%

30%

30%

29%

29%

29%

29%

29%

28%

28%

28%

27%

27%

26%

25%

25%

24%

24%

24%

22%

21%

21%

20%

19%

25%

0% 20% 40% 60%

CT

WA

VT

MA

AR

FL

GA

LA

MT

SC

TX

OK

MS

NC

TN

MD

PA

NY

AL

WV

CO

VA

NJ

DE

MO

KS

ND

SD

MI

WY

WI

NE

KY

MN

OH

IL

IN

IA

U.S.

Soybeans

44%

40%

40%

39%

39%

38%

37%

37%

37%

35%

34%

34%

34%

34%

33%

33%

32%

32%

32%

32%

32%

32%

31%

31%

30%

30%

30%

29%

29%

29%

28%

28%

28%

28%

27%

27%

27%

27%

26%

24%

24%

23%

23%

20%

18%

29%

0% 20% 40% 60%

CA

LA

VT

AZ

WV

AR

UT

NM

GA

AK

SC

MS

TX

AL

MD

NJ

SD

NY

MO

NC

MT

VA

TN

FL

OK

DE

PA

CO

WY

WI

ND

IA

KS

MN

MI

NE

IL

ID

ME

IN

KY

NV

OH

OR

WA

U.S.

Wheat