Posted Online: Aug. 31, 2013, 7:21 pm

Federal government lost billions on 2012 crop insurance payouts

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By Tyler Langan

The Federal Crop Insurance Program paid farmers a record-breaking $17.4 billion for crop losses last year after the biggest drought in 25 years.

Illinois had the highest percentage of crop loss in 2012, totaling nearly $3 billion in federal aid to farmers. Iowa received about $2 billion.

Farmers who participate in the Federal Crop Insurance Program buy policies from private insurance companies, but the policies are subsidized by the federal government. The U.S. had about $8.4 billion in crop insurance subsidies for 2012, according to Claire O'Connor, an agricultural analyst at the National Resources Defense Council.

The 2012 payout more than quadrupled the yearly amount paid from 2001 to 2010, which averaged $4.1 billion per year, according to an NRDC news release.

Ms. O'Connor said the NRDC plans to talk with the Risk Management Agency at the U.S. Department of Agriculture to propose incentives for safer farming practices such as no-till planting and planting cover crops to make soil healthier and allow crops to better withstand adverse weather.

"There are practices we know that can reduce losses to crops," she said. "We know that healthy soil can be an extremely effective insurance policy that prevents this scale of loss."

Safer farming practices, Ms. O'Connor said, will benefit taxpayers, farmers and the environment.

For every dollar the government spent on crop insurance policies in Illinois, they lost $4.53, according to USDA data. Iowa had the third highest percentage of crop loss and lost $2.23 on the dollar.

"Most years are pretty decent years," a USDA spokeswoman said. "There are just some years whenthings go badly."

The last couple of years really show why it's important to help farmers prepare for the weather challenges they're facing," Ms. O'Connor said. "We can't control the weather, but we can give farmers the tools they need to be resilient in the face of these challenges."

Locally, Henry County farmers received the most insurance payouts at $36.3 million. Rock Island County farmers received $4 million and Mercer County farmers received $3 million, according to NRDC data. Scott County farmers were paid $12.2 million.