According to government data, the worst U.S. drought since the 1930s led to record payouts on crop-insurance claims, with farmers collecting $11.581 billion as of yesterday for damage in 2012.
Payments are up 6.8 percent from 2011, when claims reached the previous record of $10.843 billion, according to a Risk Management Agency report published today on the U.S. Department of Agriculture website. In 2010, the total was $4.251 billion.
Last year's Midwest drought sent corn and soybean prices surging to records as output fell, while dry fields across the Great Plains left winter-wheat conditions in November at their worst since at least 1985, when the USDA began collecting the data.
"Crop insurance payments made a huge difference for many farmers that suffered drought losses," William Edwards, an agricultural economist at Iowa State University in Ames, said in a telephone interview. "U.S. crop insurance is easy and a comprehensive marketing tool that protects against yield losses and price declines. The program works."
About 282 million acres of crops were insured in 2012, up 6.1 percent from a year earlier. Farmers planted 326.3 million acres of 16 principle crops in 2012, the USDA estimates. The total premium paid for government subsidized crops was $11.06 billion in 2012 compared with $11.97 billion a year earlier.
"Any good insurance program requires high participation to balance payments with premiums paid," Edwards said.