With falling corn prices and a hot, dry summer taking a toll on crops, Iowa farmers could be facing the need to file more crop insurance claims. Crop insurance payments are determined based on the difference in price between the spring and fall forecasts. This spring, corn was trading at $5.91 per bushel, but now it has dropped to $4.78 per bushel. This decrease in price could potentially lead to more farmers filing claims, as explained by Logan Lyon from the Iowa Corn Growers Association.
Lyon suggests that if the current price holds true, there is a good chance for crop insurance payments. The decline in price, coupled with the variability of this year’s crop, creates an opportunity for farmers to receive indemnity payments. Additionally, the heat and drought experienced during this summer might also contribute to an increase in claims. Lyon mentions that struggling yields or the predictions for such yields this year create a perfect storm for larger indemnities.
The changing weather patterns, including an increase in storms, may further drive the number of claims. Lyon explains that if there are ongoing challenges in getting enough moisture or experiencing extreme conditions like too much rain, heat, or drought, crop insurance is available to cover these issues. All of these factors create more opportunities for claims.
However, the Farm Bill, which includes the crop insurance section, is currently being debated on Capitol Hill and set to expire at the end of the month. Lyon suggests keeping an eye on the progress of this bill, specifically the crop insurance section, as it subsidizes up to 50 percent of the cost.
In conclusion, falling corn prices, a hot and dry summer, and changing weather patterns have put Iowa farmers in a position where they may need to file more crop insurance claims. The decline in price and struggling yields create opportunities for indemnity payments, while the availability of crop insurance coverage for extreme weather conditions further supports potential claims. As the Farm Bill is being debated, its outcome will also play a role in the future of crop insurance for Iowa farmers.