USA - 2020 disaster estimations reveal at least $3.6 billion in uncovered losses

09.07.2021
Not only was 2020 defined by COVID-19-induced volatility, over 22 weather and climate disasters, each with damages reaching over a billion dollars, hit the U.S. coast to coast last year. The National Oceanic and Atmospheric Administration (NOAA) reported that 2020 shattered a previous annual record of 16 individual billion dollar weather events which occurred in both 2011 and 2017. With over 262 lives lost and more than $96.4 billion in total economic damages, these disasters will haunt impacted communities for years to come. President Trump made over 100 major disaster declarations in 2020. According to the Federal Emergency Management Agency (FEMA), the president may declare a major disaster for any natural event that the president determines has caused damage of such severity that it is beyond the combined capabilities of state and local governments to respond.  Last year, this included hurricanes that drenched Southeastern and Gulf states, where farmers produce over 70% of the country’s peanuts, pecans and cotton by value. Wildfires and droughts blazed through Western states, home to 83% and 47% of our fruits and dairy production by value, respectively. And in the Midwest, a derecho in Iowa left large swaths of corn and soybean fields destroyed. In 2018 and 2019, crop losses associated with qualifying weather disasters were partially mitigated by the Wildfire and Hurricane Indemnity Program Plus (WHIP+), a disaster assistance program with origins in the 2017 WHIP, which provided financial assistance to producers with disaster-related production losses on both insured and non-insured crops (Reviewing WHIP+ and Other Disaster Assistance Programs). WHIP+ was established under the Additional Supplemental Appropriations for Disaster Relief Act of 2019 with $3.005 billion in funds alongside On-Farm Storage Loss, Milk Loss, and Tree Assistance programs. In its prior authorized form, WHIP+ eligibility was linked to counties that received qualifying presidential emergency disaster declarations or USDA secretarial disaster designations due to severe qualifying events and their related conditions. Related conditions referred to damaging weather or adverse natural occurrences that happened as a direct result of a qualifying storm – such as high winds related to hurricanes and tornadoes, or heat and smoke related to wildfires. Today’s Market Intel illustrates recent crop and rangeland damage estimates crucial to future discussions regarding an extension of WHIP+ or other forms of disaster assistance for 2020 losses. The assessment puts total crop and rangeland losses from major 2020 disasters at over $6.5 billion, or 6.7% of NOAA’s total economic impact figure. Of that figure, over $3.6 billion in losses were not covered by existing Risk Management Agency (RMA) programs. Drought alone accounted for over $790 million in unaccounted-for losses. AFBF crop loss estimates do not include infrastructure damage, livestock losses, horticulture crop losses or timber losses associated with the selected weather events. Unaccounted-for damage estimates should be viewed as a minimum baseline as data to estimate these other categories are not readily available. Calculations To begin, AFBF economists compiled a list of states impacted by weather events in 2020 that would have qualified for WHIP+. All D3/D4 droughts, hurricanes, tornadoes and wildfires were included. Affected states were selected using the National Drought Mitigation Center’s U.S. Drought Monitor and FEMA’s presidential disaster list. States that had any form of D3/D4 drought were automatically included in the analysis. States that suffered one or more of the weather events that qualify for WHIP+ and had a presidential declared disaster were also included in the analysis. The analysis utilizes RMA crop insurance data to estimate losses if all crop acreage was insured with complete (100%) protection. Methodologies mimic those used by the National Oceanic and Atmospheric Administration’s National Climatic Data Center to estimate losses in their annual “Billion Dollar Climate and Weather Disasters” reports (first described in Smith, Katz 2011). RMA reports on total indemnities (total insurance compensation) paid for each cause of loss (drought, hurricane, flooding, fire, excess moisture, hot wind, etc.) in a given month for each crop type by state. Each storm is defined with a set of cause of loss types based on the weather event and its related conditions covered by WHIP+. For instance, for hurricanes, the following cause of loss filters were included: excess moisture/precipitation/rain, flooding, hurricane/tropical depression, and wind/excess wind. Data was also filtered by the month(s) the storm impacted each state. Once indemnity payments for crops were totaled, adjustments were made for losses outside insured acreage and coverage levels. This is achieved by first calculating the percent of insured acres in each state (using 2020 data from USDA-National Agricultural Statistics Service and RMA summary of business data). It is assumed all acreage of a given crop has been impacted by a particular disaster. Then RMA coverage level data is used to find the average coverage rate for each crop in each state. Based on these stats, a factor approach defined as 1/ [(% acres insured) (average coverage level %)] is utilized to come up with a multiplier to estimate 100% of losses. This was repeated for crops in each affected state and totaled. Using a real-life example: In Florida 56% of pepper acreage was insured in 2020. Of the covered pepper acreage in Florida, insurance covered an average of 62% of losses. Following the formula described above, Florida pepper indemnities were multiplied by 1/(0.56*0.62), or 2.88, to estimate 100% of losses. Additional related loss estimates were calculated using reported indemnities paid out under code 55, or the “ARPI/SCO/STAX/MP/HIP WI Crops Only” RMA cause of loss category. RMA is unable to differentiate the cause of loss for indemnities paid out under code 55, therefore it is assumed all losses to “all other crops” and “pasture, rangeland, forage” were due to a qualifying disaster in the months the disaster took place. Pasture, rangeland and forage acreage coverage was calculated using a national Natural Resources Conservation Service private rangeland estimate. It is important to note that AFBF estimations include some losses that would not have traditionally qualified under the framework of WHIP+. For instance, WHIP+ assistance was not eligible on crops intended for grazing (rangeland). Clearly, with uncovered rangeland losses of over $1.6 billion related to 2020 disasters, farmers and ranchers still face a major hurdle to recovery. Additionally, the August derecho, a severe windstorm that took place in central Iowa, was included in this analysis. Derechos are not explicitly defined as a qualifying disaster under existing WHIP+ handbooks. The second article in this series will discuss these challenges and many others. Conclusion 2020 weather and climate disasters pummeled farms and ranches across the United States, leaving over $3.6 billion in uncovered crop and rangeland losses in their wake. The full extent of damages across the sector is likely far higher when livestock, infrastructure, timber and other ag-related factors are considered. Already in 2021, farmers and ranchers have been hit with severe winter storms, extreme drought, and record flooding. The stability of U.S. farms and ranches relies on their ability to be resilient under an array of climate and weather conditions. With disaster assistance top of mind for many lawmakers, ensuring future WHIP+ and disaster assistance extensions provide adequate support is of upmost importance – not only for farm-level stability but for a safe and secure domestic food supply. Source - https://www.fb.org
RISK EVENTS

Europe - Around 66,000 ha damaged - 23 million euros in damages

02.07.2021

While Vereinigte Hagelversicherung VVaG reported 30,000 hectares damaged just a few days ago, this figure has more than doubled within a few days. A good 66,000 hectares were registered for regulation from June 18 to 25. This is due to so-called supercells, which came from France through Baden-Württemberg and Bavaria to Austria and the Czech Republic, causing hailstorms over a length of several hundred kilometers. Local heavy rainfall with enormous amounts of rain from so-called "water bombs" and hailstones the size of tennis balls caused damage to almost all crops, often with total losses. On June 22 and again on June 24, the damage area stretched from Lake Starnberg via Munich to Passau. In Baden-Württemberg, the Neckar-Alb region was hardest hit on June 21 and, just two days later, the strip from Freiburg via Reutlingen to Esslingen. A locally intense area of damage extended along the North Sea coast in the Groningen-Norden-Aurich triangle on both the Dutch and German sides of the border. In addition, abroad, the polder areas on the IJsselmeer and the Baltic region were particularly affected. After the first surveys, Vereinigte Hagel now expects damage of about 20 to 23 million euros, a doubling compared to the beginning of last week. Supercells and what they are about - currently no end in sight The background to the now considerably higher damage figures are so-called supercells, which have a much higher damage potential than ordinary thunderstorms due to their rotation and longevity. "Their most important feature is the so-called "mesocyclone," a powerful rotating updraft. It creates a negative pressure on the ground so that, like a vacuum cleaner, warm and energetic air can be constantly sucked in at the ground and reach the upper edge of the troposphere (above 10 km altitude). There the warm air is sucked in and there is also the danger of possible tornadoes. Subsequently, in the area of the sinking cold air, it is not uncommon for extreme downbursts to reach the hurricane range. Over time, supercells develop a momentum of their own that prevents the sinking cold air (as compensation for the rising warm air) from entering the warm air area. Thus, the mesocyclone is fed with warm air for several hours. Due to the longevity and massive power of the rotating updraft, hailstones can be flung into the air several times, growing into large hailstones. From Monday through Thursday, conditions in southern Germany were ideal for these rotating monsters. A warm and humid air mass was stored in the lower atmosphere, so to speak the fuel for the engine of the rotating mesocyclones. In addition, the wind near the ground came from an easterly to northeasterly direction (which favored suction), veered nearly 180° to the southwest up to an altitude of about 5 kilometers, and increased significantly. In short, there was sufficient directional and velocity shear. This is a basic requirement for the formation of rotation in the updraft region and helps to prevent the sinking cold air from reaching the front of the thunderstorm cell." And it's set to continue. The DWD forecasts heavy thunderstorms in the south and southwest of Germany on Monday evening, as well as on Tuesday. Experts prepared for this, because in June or July such weather phenomena are not uncommon, as Vereinigte Hagel knows from almost 200 years of experience. Source - https://www.freshplaza.com

26.08.2021

India - Crop loss imminent as IMD rules out rainfall till August-end in Odisha

With the India Meteorological Department (IMD) on Tuesday ruling out the possibility of any significant rainfall in the State till the end of August, drought seems to have become imminent. IMD Director General Mrutyunjay Mohapatra told media persons that 27 districts of the State have received 33 per cent less than the normal rainfall from June to August and deficit rainfall in August was 55 per cent. 

26.08.2021

Germany - 2021 wheat crop to fall 3.6% after adverse weather

Germany's 2021 wheat crop of all types is expected to fall 3.6% on the year to 21.37 million tonnes after poor weather, according to estimates released by the agriculture ministry on Wednesday. Crops suffered from swings in weather, with a cold spring followed by a hot, dry start to the summer and then unwelcome harvest-time rain and storms, the ministry said in preliminary forecasts for the 2021 harvest. 

26.08.2021

Egypt - Weather has caused a reduction in the mango harvest

There’s still a few more months left in the Egyptian mango season, but the year has brought significant challenges. The weather resulted in 30% less production this year, and the heat could be a threat to other Egyptian produce as well. Demand has been solid, but the lower harvest has resulted in a price increase. 

26.08.2021

USA - Severe weather destroys thousands of acres of crop in Fairbank

Thousands of acres of corn and soybean in Fairbank were destroyed Tuesday night after severe storms rolled through eastern Iowa. A clearer picture of the scale of destruction was made clear on Wednesday. Adrienna Olson with the Buchanan County Farm Service Agency says only a few reports from Fairbank and Hazelton Township have been reported. They include corn and soybean damage. 

26.08.2021

USA - Heat bears down on California grapes

California grape growers continue to contend with heat and drought issues. “There is ample volume of red and green seedless. There will be some shortages though I imagine,” says Philippe Markarian of Fresno, CA-based Mirabella Farms. “We won’t see them at the moment but it will be on red and black seedless grapes. 

26.08.2021

India - Farmers in Erode urged to insure crops for Kharif season

The district administration has asked the farmers in the district to insure crops under the Pradhan Mantri Fasal Bima Yojana (Prime Minister’s Crop Insurance Scheme) for Kharif season 2021 so that they can get relief for crop loss due to natural calamities, pest attack or disease outbreak in the current rabi season. 

24.08.2021

Online Agroinsurance Conference to be held on October 4-5, 2021

Due to the concerns around health safety of conference participants and in accordance with the guidance from the Georgian health authorities, AgroInsurance is forced to reschedule Conference to year 2022. More detailed information about new dates and arrangements will be provided in February 2022. Notwithstanding another reschedule of the Conference, AgroInsurance is committed to conduct the online webinar with 2 sessions on October 4-5, 2021. 

24.08.2021

Malaysia - Sarawak Disaster Management Committee to assist durian farmers

The Sarawak Disaster Management Committee is intent on working out a mechanism for durian farmers in areas under Covid-19 lockdown to bring out their fruits to the market. Its chairman Datuk Amar Douglas Uggah Embas said he would discuss with the divisional health department to work out a suitable arrangement.