January 7, 2013

Iowa corn, soy farmers experience losses due to drought

Iowa corn and soy farmers face losses in excess of US$1 billion due to last summer and fall's drought and heat wave.

This is according to figures reported Wednesday (Jan 2) by the USDA's Risk Management Agency.

Federally-subsidised crop insurance, administered by the USDA Risk Management Agency, covered the losses. The federal government subsidises about 57% of the insurance premiums for Iowa corn and soy crops.

Congress on Tuesday (Jan 2) extended the subsidies through September as part of the extension of the 2008 Farm Bill, which prevented a spike in milk and dairy prices. The Washington, D.C.-based Environmental Working Group has campaigned to end federal subsidies for crop insurance, contending they are unnecessary and contribute to what it calls "corporate welfare."

Iowa farmers were paid US$933.6 million in loss claims for corn, or 157% of the US$627 million in premiums paid through December 31. The federal government subsidized US$362 million of the premiums for corn coverage.

Iowa claims for soy losses totalled US$158.9 million, or 62% of the US$257 million paid in insurance premiums. The federal government subsidised US$147.1 million of the soy insurance premiums.

Nationally, corn farmers received payments totalling US$6.1 billion, or 143% of the US$4.3 billion in premiums that were paid. The federal crop insurance premium subsidy totalled US$2.7 billion.

Soy farmers were paid US$1.3 billion for crop losses, less than the US$2.3 billion in premiums, of which US$1.46 billion was federally-subsidised. The figures represent claims for corn and soy losses that were submitted by December 31.

The total loss for the drought and extreme heat that stretched across more than half the country, from California north to Idaho and the Dakotas and east to Indiana and Illinois, is projected at US$35 billion primarily due to crop failure.

By comparison, the USDA said crop losses from Hurricane Sandy over the north eastern Atlantic coast and inland are estimated at US$62 billion. The Derecho event of high winds and severe storms in a swath from Illinois to a mid-Atlantic zone stretching from New Jersey to South Carolina is estimated to produce at least US$3.75 billion in losses.