Crop Insurance Today Second Quarter 2019 - 5

C r o p I n s u r a n c e

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2018 The Year in Review
By Mechel Paggi and Matthew South, NCIS

Overview

The recurring nature of adverse weather
events that underpin the need for a safety net
for U.S. agriculture were evident in 2018. While
some areas celebrated record yields and crop
production totals, other areas were devastated by
adverse weather and natural disasters. For those
affected areas, crop insurance once again provided the foundation of support that was needed to
begin the recovery process.
The year began with an unusually warm and
dry winter for most of the country. In contrast,
spring was characterized by extreme differences
in regional weather patterns with near record
wet conditions in the East and dry conditions in
the Southwest. However, overall dry conditions
prevailed in most of the country. Although the
planting of major crops got off to a rocky start,
favorable weather conditions in May allowed the

pace of plantings to approach their historic averages. By the end of the season, the area planted to
principle crops was just over 319.6 million acres,
up from 318 million acres in 2017.
The production of major commodities was
mixed, as corn, cotton, and winter wheat declined from the previous year, while other crops
increased in volume. Cotton production was
significantly lower than in 2017, due to hurricane-related damage in the Southeast and dryland crop failure in Texas. Corn production saw
a modest decline as yields fell short of last year's
record levels. A fall in acreage, combined with
lower yields, resulted in a winter wheat production decline during 2018. In contrast, favorable
growing conditions led to increased yields and a
record level of U.S. soybean production.
Although there was modest deterioration
compared to 2017, the crop insurance industry

experienced a favorable year, with a gross loss
ratio of 0.68; however, this value is expected to
increase a few points due to remaining open
claims. Texas had the largest insured dollar loss
in 2018 of all states, due in part to a drought in
the panhandle area, which varied from severe
through exceptional until October. North Carolina, Florida, and Georgia bore roughly 90 percent
of the total insured loss caused by hurricanes in
2018. This single category of loss was responsible for 38 percent, 64 percent, and 70 percent
of these state's respective annual insured losses.
Minnesota, Kansas, North Dakota, and Iowa also
experienced large loss volumes, caused primarily by a combination of excess moisture, drought,
and hail. Twelve states had loss ratios above 1.0,
accounting for $3 billion of loss, which is equivalent to 45 percent of total loss payments for 2018.
The crop insurance industry's favorable results,

Figure 1 Winter 2017 (Dec-Feb): Statewide Precipitation and Temperature Ranks, 1895-2018
Statewide Precipitation Ranks

Statewide Average Temperature Ranks

Period: 1895-2018

Period: 1895-2018

December 2017-February 2018

December 2017-February 2018

Record
Driest
(1)

Much
Below
Average

Below
Average

Near
Average

Above
Average

Much
Above
Average

Record
Wettest
(122)

Record
Coldest
(1)

Much
Below
Average

Below
Average

Near
Average

Above
Average

Much
Above
Average

Record
Warmest
(122)

Source: http://www.ncdc.noaa.gov/temp-and-precip/us-maps

CROPINSURANCE TODAY®

5


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Crop Insurance Today Second Quarter 2019

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Crop Insurance Today Second Quarter 2019 - Cover3
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