Federal crop insurance -- a case study in Audrain County, Missouri
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"Net farm income varies greatly from year to year and uncertainty of income is a characteristic of the farm business. Although the total production of agricultural products indicates a trend toward stability, there is considerable variations in yields and prices of farm products from one year to the next. This yield variation may cover large areas, involving several counties or even states, but it frequently occurs among neighboring farms within the same community. The inevitable result of these unpredictable crop losses has caused financial distress to most farmers and to others without adequate reserves, financial failure. The desire and need for some method to add stability to the farm business led to the passage of the Federal Crop Insurance Act in February of 1938. This act created the Federal Crop Insurance Corporation (FCIC) as an agency of and within the United States Department of Agriculture. Since its inception, all risk crop insurance has been available only in designated areas. Initial insurance coverage was authorized only on wheat, beginning with the 1939 crop year. In 1941, the act was amended to include cotton. Other ammendments have since been added until in 1971, coverage was provided for 22 separate crops in 1,422 counties of the United States. While reasonable growth has developed in recent years and early losses have been recovered, participation in many areas has not been sufficiently heavy to make the program effective. This type of situation is present in Missouri agriculture. In 1971, 62 counties out of 114 counties in Missouri were authorized to write all-risk crop insurance. In these 62 counties, 6,556,774 acres were harvested in the 1971 crop year; but only 168,013 acres, or 2.6 percent, were insured by the Federal Crop Insurance Corporation. However, this is not an entirely valid measure of interest by Missouri farmers because all-risk insurance is not offered in all areas within the designated 62 counties. Table 1 indicates the importance of various commodities in Missouri. The importance of Missouri commodities for the entire United States is summarized in Table 2. As the table indicates, corn, wheat, and soybeans account for a large portion of the number of crops insured by the FCIC in the United States."--Introduction.
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