Top 10 States for Extreme Weather Crop Insurance Payouts

August 27, 2013

Extreme weather forced the federal crop insurance program to pay out a record-breaking $17.3 billion in crop losses last year, much of which could have been prevented using water-smart strategies, according to the Natural Resources Defense Council (NRDC).

Payments made to farmers during the 2012 growing season to cover extreme weather losses from drought, heat and hot wind alone accounted for 80 percent of all farm losses, with many Upper Midwest and Great Plains states hit hardest, the group said.

In comparison, crop losses averaged just $4.1 billion a year from 2001 to 2010, the NRDC report said.

The report says that American farms, particularly in the Upper Midwest and Great Plains, were primarily affected by three major forms of extreme weather in 2012: drought, heat and hot wind.

The top 10 states with the largest overall crop insurance payouts due to drought, heat and hot wind were:

  1. Illinois: 98% of all crop losses were caused by drought, heat and hot wind, costing $3,011,443,799
  2. Iowa: 97% of losses, costing $1,924,444,160
  3. Indiana: 97% of losses, costing $1,130,302,660
  4. Kentucky: 96% of losses, costing $454,380,256
  5. Missouri: 95% of losses, costing $1,098,310,111
  6. Wisconsin: 94% of losses, costing $372,479,370
  7. South Dakota: 93% of losses, costing $1,029,780,352
  8. Kansas: 93% of losses, costing $1,273,662,944
  9. Nebraska: 92% of losses, costing $1,427,738,976
  10. Texas: 75% of losses, costing $974,548,606

According to NRDC, extreme weather conditions such as drought are expected to become more common and thus record-breaking insurance payouts will likely continue to increase. However, the group says that widespread adoption of crop-loss prevention methods that build soil health and improve water management on farms can limit these losses.

“The federal crop insurance program has failed farmers and taxpayers by ignoring water challenges,” said Claire O’Connor, NRDC Agricultural Water Policy Analyst, in a statement accompanying the report. “The program was designed to be a safety net, not a subsidy for increasingly risky practices and less sustainable food production. We need to empower farmers to invest in low risk, water-smart practices that are proven to reduce crop losses.”

NRDC’s study, “Soil Matters: How the Federal Crop Insurance Program should be reformed,” includes an interactive crop loss and weather map at detailing crop losses county-by-county in all 50 states in 2012, when the group says more than 80 percent of agricultural lands nationwide suffered drought.

The federal crop insurance program insures more than 282 million acres, or about 70 percent, of the nation’s total cropland. The program is a public-private partnership between the U.S. Department of Agriculture’s Risk Management Agency (RMA) and 18 private insurance companies.

NRDC is an international nonprofit environmental organization.

Another environmental group, Environmental Working Group, has also been critical of the crop insurance program. It maintains that crop insurance payouts are among the factors encouraging farmers to plow fragile lands and put ecosystems at risk. About 5.3 million acres of fragile lands and 1.9 million acres of wetlands have been plowed, the group said. The environmental group found North Dakota, South Dakota and Minnesota accounted for 39 percent of all wetland conversion, while more than half of fragile lands were plowed in a swath across 10 states from the Great Plains to western Corn Belt regions.

Congress has been at odds over reforming and renewing the crop insurance program. The Democratic-run U.S. Senate has passed a $500 billion, five-year farm bill that expands a taxpayer-subsidized crop insurance program and rejects sweeping cuts in food stamps sought by the House of Representatives.

The current farm law expires on Sept 30. Without a new law, farm subsidies will revert to higher subsidy levels dictated by a 1949 law.

Topics Profit Loss Agribusiness Pollution

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