For the past 25 years, Illinois farmer Steve Pigg has been trying to forget that he didn't carry crop insurance in 1988.
That was the year when drought burnt his average corn yields to 40 to 60 bpa and he even disked down some of his McDonough County's fields.
"If it hadn't been for a very understanding banker who let me defer some payments I'd have been put out of business," the 700-acre corn and soybean grower said. "We'd just come off another drought in 1983, and I was not fully recovered from that."
The near-death experience made such a crop insurance believer of Pigg that he became an agent and has purchased coverage on his farm ever since.
It's a consolation now that he expects his immediate area to yield only about half a corn crop based on spot field checks this week.
That means roughly yields of 95 to 100 bpa on his fields with a 10-year yield history of 213 bushels.
"I was so convinced corn prices were going to be $4 this fall on a record crop, rather than corn's $5.68 spring price, I didn’t buy a revenue policy with a harvest-price adjustment," he said.
Still he could qualify for claims worth about $35,000 on his corn crop.
"It won't make me whole," he said, "but I should come out OK."
Pigg hasn't collected much back for his crop insurance premiums since that last epic drought, and neither have many of the state's growers.
Since 1989, Illinois corn growers received 43 cents in indemnities for every $1 paid in premiums even though the federal guidelines aim for a 1:1 ratio.
But estimates of the size and scope of crop insurance payouts throughout the heart of the country's corn production region this year is sparking a budget debate that could tilt the outcome of the Farm Bill.
In hardest hit regions such as northeast and southwest Indiana, western Kentucky and western Tennessee, a number of growers already are thinking of mowing down their crops.
"We're seeing a large percentage of very low -- 10 to 30 bpa or 60 bpa -- yields. That's well below what people are used to," said Tom Sloma, vice president of insurance for Farm Credit Services of Mid-America with 3,500 customers in their four-state area. "Some ears just never formed."
The magnitude of those losses means some insurance carriers are privately estimating that crop claims nationwide could total $40 billion or more this season, nearly four times the all-time record of $10.8 billion in 2011, Sloma said.
"They've seen lower numbers, but they think they are way too conservative."
Source: Argentine Beef Packers S.A.