It is believed that employment was maintained for 17,000 people in Iowa and Nebraska due to the protection.
The results of a recent study have shown that the payouts from farms that had federally subsidized crop insurance generated an economic impact of an estimated $2.2 billion across a region of four states, and that it saved 17,000 jobs in Iowa and Nebraska, alone.
The researchers who conducted the study were seeking to define the impact of the coverage on the state economies.
The purpose of the research was to find out the true economic impact of crop insurance and the way that it assisted in offsetting the revenue losses that resulted from the extreme drought last year. It was conducted by economists from the University of Nebraska-Lincoln, Eric Thompson and Brad Lubben, and was underwritten by Farm Credit Services of America, which is a farm lender based in Omaha.
The economists found that many jobs were saved due to the existence of the crop insurance.
They also determined that the payments received by the regional farmers totaled approximately $4.5 billion from their crop insurance over the growing season in 2012. The breakdown was $1.5 billion in Nebraska, $1.9 billion in Iowa, $19.6 million in Wyoming, and $1.1 billion in South Dakota. The premiums from those farmers totaled about $885 million, so the net receipts came to approximately $3.6 billion.
According to Lubben, an expert in agricultural economics, “That translates into a lot of additional farm income that helped to offset what was by all accounts a historically disastrous year production-wise.” Lubben also pointed out that “Crop insurance filled that void. It filled the exact role crop insurance is designed to serve.”
Thompson and Lubben had a look at the way that the producers would usually spend the $3.6 billion that they received from the crop insurance payments, including everything from capital investments, such as machinery, to purchases on Main Street. What they determined was that the economic impact from the payments that were received was an estimated $2.2 billion.
The economic impact of the crop insurance payments broke down to $780 million in Nebraska, $1 billion in Iowa, $5 million in Wyoming, and $386 million in South Dakota.
