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Crop Insurance Losses Continue to Rise

Since the start of 2013, 597 counties in 14 states have been declared primary natural disaster areas by U.S. Agriculture Secretary Tom Vilsack due to drought and heat...
January 16, 2013

Since the start of 2013, 597 counties in 14 states have been declared primary natural disaster areas by U.S. Agriculture Secretary Tom Vilsack due to drought and heat. Indemnity losses paid by crop insurers for 2012 exceeded $10.7 billion as of Jan. 7, and they could reach $20 billion for all of fiscal 2012. Currently, the disaster area designations make up 27 percent of those made last year, meaning that 2013 could be the third consecutive year of substantial indemnity losses. Kansas, Colorado, Oklahoma, and Texas – which make up 33 percent of U.S. wheat production – are included in the most recent disaster area designations. Although the crop insurance program will not expire if Congress continues to delay passing a five-year farm bill package, crop insurers and farmers are anxious to know what is on the horizon. Congress was given another nine months by the recent fiscal cliff deal to come to an agreement on the farm bill.

The USDA’s announcement may be a sign the department believes that 2013 will bring substantial indemnity losses for the third consecutive year, reports A.M. Best. In 2012, USDA designated 2,245 counties in 39 states as disaster areas due to drought, or 71 percent of the United States. The latest disaster area designations account for approximately 27 percent of all drought-related designations made in 2012.

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