There is no disputing the fact that crop insurance will be a very important factor for many farmers around the country. Payments may well exceed $25 billion, more than double the record high of 2011 of $10.8 billion.

More than 80 percent of the corn acres planted in 2012 were covered by crop insurance, far more than the 15 percent covered in the drought of 1988. In addition, crop insurance policies offered today provide much better coverage than the policies did in the 1980s.

Data indicates that insurance companies wrote more than 1.2 million policies for all crops in 2012 and crops on more than 280 million acres were covered. The cost to farmers was about $4 billion indicating that crop insurance companies will pay out more than they took in and that the toll on taxpayers may be more than $10 billion, in addition to the nearly $5 billion in premium subsidies. Claims will be made on more than half of the crop insurance policies written for this year’s crops.

With the harvest price option, some payouts will be quite large. Based on data so far this month, the harvest price option for corn will be about $7.50 per bushels and the soybean price will be near $15.50. Those prices are used to figure how much a producer’s revenue deviated from the benchmark. There are some reports of payments as high as $1,200 per acre of corn.

The combination of crop insurance payments for areas hard hit by the drought and high prices for the crops that were produced, the outlook for the crop sector is really pretty good for this year despite low yields.

Livestock revenues will also be high this year with cattle prices above year ago levels and hog prices down by just 6 percent. However, high feed costs are reducing livestock production profits. Still, net cash farm income is expected to reach a new record high this year, near $135 billion. And land values continue to rise, albeit more slowly than in recent years. That suggests that farm equity will continue to rise from the $2.13 trillion reported for 2011.