The agricultural insurance market is facing rising demand along with pressures to adapt to changes in farming and to become more efficient in delivering products.
Increasing world demand for food is driving up commodity prices for corn, soybeans, wheat and other food staples. At the same time, the U.S. farming economy is strong, the federal crop insurance program is being changed and today’s farmers are getting bigger and adopting new technologies.
These and other trends promise to affect crop insurance, farmowners and agribusiness insurance, creating challenges as well as opportunities for insurers that develop more sophisticated insurance products and work hand-in-hand with agribusinesses and farmers.
The U.S. has long enjoyed the least expensive food in the world with just 6.2 percent of Americans’ average income spent on food. In China, the average is 32.9 percent of income. This illustrates a need to decrease the cost of food per capita and increase the standard of living in other parts of the world.
The U.S. Department of Agriculture (USDA) has reported that demand for corn has pushed U.S. supplies to their lowest point in 15 years. A recent Associated Press story blamed projected corn futures orders from the ethanol industry and noted that low supplies of other food staples from wheat to coffee are contributing to the upward surge in world food prices. The United Nations food agency has warned that a severe drought in China is also expected to drive wheat prices higher.