Source:  USDA ECONOMIC RESEARCH SERVICE, 2/28/14



Drought is the leading single cause of production losses to crop farms, followed by excess moisture, hail, freezes, and heat. Over the past four decades, a portion of the farm losses from all these weather-related causes have been covered by a combination of crop insurance and disaster assistance payments. Over this period, crop insurance has gradually grown in significance and is now a major component of the Federal safety net for crop farmers. The rise in total insurance indemnity payments is due to a combination of expanded enrollment in crop insurance, increased liabilities due to higher yields and commodity prices, and a series of major droughts in recent decades, capped by the 2012 drought. More than 80 percent of the acres of major field crops planted in the United States are now covered by Federal crop insurance, which can help to mitigate yield or revenue losses for covered farms. Droughts also have a major impact on livestock producers, principally through their effect on feed prices.

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