Even with its higher participation rate, Kansas wheat crop includes 7.9 million protected acres and 2 million with no insurance, the economist said. Besides, when yields are bad, even insured farmers lose money, due to their insurance policy s deductible. Depending on the type of insurance, they may have to swallow a 25 to 35 percent loss in expected yield or wheat revenue before they can have a claim, he said. Adding to farmers potential setback, some market analysts are now speculating that a smaller U.S. wheat harvest could bring lower, not higher prices. At best, spring s export sales have been stagnant.
Many experts believe ad hoc disaster aid has been a drag on farmers buying crop insurance.
In the past, Congress tried to offset this drag by cutting uninsured farmers disaster aid by 5 percent. Plus, uninsured farmers reduction often was less than many insured farmers paid in premiums, Barnaby said. I imagine many of this year s winter wheat growers with a failing crop would consider a 5 percent reduction in disaster aid a small price to pay for having decided not to buy crop insurance. Other approaches to assigning aid might be less discouraging to future insurance sales. Even so, zero disaster aid has always been the clearest way for Congress to send the message that growers who can t afford the financial risk of farming should protect themselves with crop insurance, Barnaby said.