Weather-associated production risk is an inherent factor in farmers’ and ranchers’ everyday business environment. Through heavy rain, hail, snow, winds and drought, farming families prepare land, plant and harvest knowing their livelihoods are reliant on local weather conditions.
In 2022 there were 18 weather and climate disasters, each with damages exceeding $1 billion, that struck the United States coast to coast. The National Oceanic and Atmospheric Administration reported that 2022 surpassed 2021 as the third-costliest disaster year in history, with an estimated $165 billion in total economic losses, behind only 2017’s $346 billion and 2005’s $244 billion. With more than 470 lives lost, these disasters will haunt impacted communities for years to come.
Updated crop- and rangeland-damage estimations for 2022 provide a window into the recent impacts of natural disasters on domestic food production. The assessment puts total crop and rangeland losses from major 2022 disasters at more than $21.4 billion, or 7.7% of NOAA’s total economic-impact figure.
Of that figure, more than $11 billion in losses were covered by existing USDA Risk Management Agency programs as of February 2023. More than $10 billion in losses were not insured through the agency, existed outside policy coverage levels or did not qualify under an existing risk-management program.
Drought and wildfires alone accounted for more than $20.4 billion in total crop losses, with the remaining $1.08 billion linked to hurricanes, hail, flooding and severe-weather events.
American Farm Bureau Federation crop-loss estimates do not include infrastructure damage, livestock losses, horticulture-crop losses or timber losses associated with the selected weather events. Estimates should be viewed as a minimum baseline because data to estimate these other categories are not readily available.
Drought shifts disasters
- Texas suffered the most significant hit in 2022, with more than $6.4 billion in incurred losses primarily comprised of $2.9 billion in damages to cotton, $1.7 billion in damages to forage and rangeland, and almost $1 billion in wheat damage mainly attributed to widespread exceptional-drought conditions, but also partly linked to May hailstorms and severe weather in April.
- Kansas ranked second with more than $3.3 billion in incurred losses from drought conditions. Kansas corn losses totaled more than $1.2 billion followed by $777 million in losses of other grains including crops such as grain and silage sorghum. Soybeans valued at almost $700 million also succumbed to drought conditions in Kansas.
- =Nebraska’s losses mirrored those of its southern neighbor, with total losses of more than $2 billion. Of that, $1.8 billion was linked to drought including almost $1 billion in corn and $400 million in soybeans. Nebraska also experienced losses from heavy derecho winds and severe weather in June, which resulted in almost $200 million in corn losses.
- South Dakota, in fourth place, was also plagued by drought, with more than $1.4 billion in total damages — including $660 million in corn losses and $300 million in forage and rangeland losses. In addition, South Dakota experienced hailstorms in May.
Seeing forage and rangeland with the most significant losses is not surprising given the correlation between drought and rangeland. Western states are no strangers to arid conditions and vast landscapes grazed by livestock herds.
People are also reading…
Reductions in hay stores and abysmal forage conditions forced many farmers and ranchers to liquidate cows early or pay upward of $400 per ton for hay shipped across state lines.
Importantly, the geographic footprint of extreme drought has shifted between 2021 and 2022, with states in the Pacific Northwest like Washington and Idaho having relatively better conditions. States like Texas, Kansas and Nebraska have faced widespread drought in the highest D4-exceptional-drought category. This has shifted the categories of crops most impacted compared to the past year, including a much higher value of corn and cotton lost across the country.
Fruit and nut losses were less but still significant in 2022, largely linked to the different geographic footprint of drought — a primary reason California is not as high on the list as in past years.
Traditionally, federal crop-insurance programs are the preferred mechanism for managing risk associated with weather-related disasters for most agricultural products. These policies provide protection from yield losses, increased costs and revenue declines.
For some crops, like strawberries, lettuce and hazelnuts, the Risk Management Agency options are unavailable — and other programs, like the Noninsured Crop Disaster Assistance Program, often fall short.
To fill gaps in existing risk-management programs during periods of extreme disasters, Congress has often responded through authorization of ad hoc disaster-assistance programs. The USDA announced May 16, 2022, that some commodity and specialty-crop producers impacted by natural disasters in 2020 and 2021 would be eligible to receive emergency-relief payments to offset crop yield and value losses through Phase 1 of the Farm Service Agency’s new Emergency Relief Program — previously known as the Wildfire and Hurricane Indemnity Program. Phase 1 payments were made to farmers who had risk-management program enrollment in prior years.
Phase 2 opened Jan. 23 and is meant to support producers who did not participate in existing risk-management programs by using tax returns to show a decline in revenues compared to prior years.
Thus far there has been considerable concern surrounding Phase 2 design and execution by both farmers and lawmakers. By the end of February, $7.4 billion in payments had been disbursed under Phase 1 for 2020 and 2021 losses. The $1.7 trillion omnibus spending bill passed this past December included an additional $3.74 billion for agricultural-disaster losses in 2022.
Already in 2023, farmers and ranchers are experiencing flooding, freezes and persistent drought conditions. 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. The sure and timely payments associated with crop insurance and other farm-bill programs is often critical for farm-level stability, and so for a safe and secure domestic food supply.