Economists at the American Farm Bureau Federation estimate major weather disasters caused $21.5 billion in damage to crops and rangeland last year, well above the $12.5 billion in damage reported in 2021.
The estimates do not include infrastructure damage, livestock losses, horticulture crop losses or timber losses, as data for them aren’t readily available.
The full extent of damage is likely far higher when those and other ag-related factors are considered, Daniel Munch, Farm Bureau economist, said in his “Market Intel” report.
More than $11 billion in losses in 2022 were covered by Risk Management Agency programs as of February 2023.
More than $10 billion in losses were not insured through RMA, were outside policies’ coverage levels or did not qualify under an existing risk management program.
Drought and wildfires were behind the vast majority of losses, accounting for over $20.4 billion in total crop losses. The remaining $1.08 billion in losses were linked to hurricanes, hail, flooding and other severe weather.
Texas suffered the most significant hit in 2022, with over $6.4 billion in losses. Kansas ranked second with over $3.3 billion in losses.
Nebraska ranked third with total losses of over $2 billion. South Dakota ranked fourth with over $1.4 billion in losses.
Forage and rangeland suffered the most significant losses at $6.3 billion, which is not surprising given the correlation between drought and rangeland, Munch said.
“Reductions in hay stores and abysmal forage conditions forced many farmers and ranchers to liquidate cows early or pay upward of $400 a ton for hay shipped across state lines,” he said.
Importantly, he said, the geographic footprint of extreme drought shifted between 2021 and 2022, altering the categories of crops most impacted compared to 2021. Losses in 2022 were much higher in corn and cotton compared to 2021.
Traditionally, federal crop insurance programs are the preferred mechanism for managing risk associated with weather-related disasters for most agricultural products.
Losses that occur outside the scope of probable and common loss conditions and the specified terms of a policy complicate farmers’ ability to qualify for indemnity payments, Munch said.
“For some crops, like strawberries, lettuce and hazelnuts, RMA options are unavailable and other programs, like the Noninsured Crop Disaster Assistance Program, often fall short,” he said.
Nearly half of the losses in 2022 were not effectively protected under risk management programs, highlighting the importance of inclusive protections for growers of all crops in all regions of the nation.
“The stability of U.S. farms and ranches relies on their ability to be resilient under an array of climate and weather conditions. The 2023 Farm Bill will give lawmakers a chance to fill gaps in existing risk management programs, providing similar risk management opportunities for farmers regardless of what they grow,” he said.
The sure and timely payments associated with crop insurance and other farm bill programs is often critical for farm-level stability and a safe and secure domestic food supply, he said.
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