In late September the Risk Management Agency (RMA) of USDA released the results of commissioned studies that calculated the rate of return that U.S. crop insurance companies have received from selling multi-peril crop insurance (MPCI). Since 2000, the average annual rate of return on equity has been 19 percent. The study also estimated that a reasonable rate of return over the same time period for this line of business would be about 11 percent. One straightforward interpretation of this difference is that since 2000, the crop insurance industry has received a rate of return that is 72 percent higher than what would be needed to induce private companies to participate in the crop insurance program.

Are farmers paying too much for crop insurance? It sure seems so, at least in the Corn Belt. With the exception of 2008 when a large drop in price triggered payments, Corn Belt farmers have generally paid more into the program than they have gotten out, despite Congress’s intention that farmers get at least two dollars for each dollar they pay into the program.

This issue of the Iowa Ag Review closes out the 15th volume of this quarterly publication. Over the last 15 years we have strived to present timely information and insight into the important issues that impact Iowa and U.S. agriculture. Aided by the explosive growth of the Internet and Google, the Iowa Ag Review truly has a worldwide audience. We regularly receive comments on our articles from as far away as Nepal and Australia, as well as from more nearby towns in Northwest Iowa.