RMA Discusses '13 Crop Insurance With Commodity Groups

USDA's Risk Management Agency held a conference call with commodity groups on Nov. 27 to discuss 2013 crop insurance premium rates. Nationally, average premium rates for upland cotton will not change but the average of individual states will see varying increases and decreases.

Published: November 27, 2012
Updated: November 27, 2012

Today, RMA held a conference call with commodity groups to discuss 2013 crop insurance premium rates.  Nationally, average premium rates for upland cotton will not change.  However, the average of individual states will see varying increases and decreases.  The second link below includes a map with state averages for commodities including upland cotton.  Premium rates for ELS cotton will also be affected but that data has not yet been generated by RMA. 

Last year, RMA began using a new rating methodology for corn and soybean producers.  For the 2013 crop year, this new methodology will be expanded to include cotton.  While moving cotton and other commodities to the new methodology, RMA also updated various rate factors that "individualize‟ the county base rate to a specific grower's situation as a normal course of business.  The new rates will update the premium subsidy percentage at varying levels of coverage to reflect recently accumulated loss data. There will be an update of county reference yields (mid-point average of the county).  If a producer is above the reference yield, then they have received a discount, and if they were below, they received a surcharge.  With this update RMA is now using data from the insurers and not NASS data.  RMA now has considerably more prevented planting information and has updated the loads to reflect actual experience.  Lastly, producers will have the option of a APH yield trend adjustment for the 2013 crop year.  This will initially only be available in major growing counties.  This adjustment was offered to corn and soybean producers last year and had a 55% participation rate. 

After all of these adjustments RMA determines the target rates for commodity and county but this only reflects information through the 2011 crop year.  RMA will phase in the new rates limiting year-to-year premium changes to limit potential increases due to significant 2012 losses as a result of drought. This approach will help keep premiums stable and provide predictable rates. For 2013, RMA will fully implement targets that result in 15 percent or less change (increase or decrease) in yield protection premium on average. RMA will partially implement targets beyond 15 percent, not to exceed the maximum of 20 percent change on average.

As more specific information becomes available from RMA we will review and provide you with that information. 

Below are links to the RMA news release and a background paper that includes state maps for cotton and other crops.

News Release -- http://www.rma.usda.gov/news/2012/11/rateadjustment.html

Backgrounder including state maps http://www.rma.usda.gov/news/2012/11/2013premiumrateadjustment.pdf