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Intense drought has propelled US farm insurance claims sharply higher this year, especially in wheat growing areas of the US West and Northern Plains. Following the Gro Drought Index (GDI) provides early signals of which counties are likely to see the greatest crop insurance claims and their potential costs.
So far this year, total indemnified wheat acreage due to drought jumped 270% to 9.52 million acres compared with a year earlier, with payouts totaling $1.1 billion, according to USDA Risk Management Agency (RMA) data in Gro. North Dakota, which the GDI shows as among the states hardest hit by drought, has had one of the costliest losses, totaling $640 million in insurance indemnities for wheat, corn, and soybeans combined. That amount should continue to rise as new claims are filed weekly.
See this display showing the Gro Drought Index and major crop indemnified acres for drought over the past decade.
The Gro Drought Index back in March showed drought levels in North Dakota at their highest since 2003, and dry conditions continued throughout the growing season. A Gro analysis shows that Gro climate and weather data, including the Gro Drought Index, can serve as leading indicators of RMA insurance claims, which don’t get recorded until they are confirmed by crop insurance adjusters. Some indemnified acres aren’t reported until after harvest, when the loss can be fully evaluated.
See this display of North Dakota’s indemnified wheat acres compared with Gro Drought Index levels.
McLean and Ward counties in central North Dakota have seen the greatest share of indemnified wheat acreage related to drought in the state. Gro Drought Index readings for both counties hit “extreme” levels in July 2021 and remain there today.
Other states also saw spikes in insurance claims that followed high drought levels, as can be seen in this display for Montana and Washington. Parts of Washington state saw record drought this year, including Whitman County, where wheat area indemnified has jumped from 42,777 acres to 344,769 acres since August.
The Gro Drought Index, which updates daily, measures drought severity around the globe on a scale from “0” (no drought) to “5” (exceptional drought). Data from the Risk Management Agency’s Cause of Loss report updates weekly on the Gro platform, providing users a ground-truthed look at the true extent of crop damage inflicted by a host of causes, from drought and flooding to mycotoxin infestation.
Gro’s Climate Risk Navigator for Agriculture is well designed for anticipating where crop insurance claims are likely to emerge. The application tracks daily updates of the Gro Drought Index and other climate and weather conditions, such as temperature, precipitation, soil moisture, and NDVI vegetative health. Contact support@gro-intelligence.com for more information about the Climate Risk Navigator.
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