Extreme weather forced the Federal Crop Insurance Program (FCIP) to pay out a record-breaking $17.3 billion in crop losses last year, much of which could have 
been prevented using water-smart strategies, according to the Natural Resources Defense Council. Payments made to farmers during the 2012 growing season to cover losses from drought, heat and hot wind alone accounted for 80 percent of all farm losses, with many Upper Midwest and Great Plains states hit hardest.
With extreme weather conditions such as drought expected to become more common, record-breaking insurance payouts will likely continue to increase. However, widespread adoption of crop-loss prevention methods that build soil health and improve water management on farms can limit these losses. From 2001 to 2010, crop losses averaged just $4.1 billion a year, making the 2012 record-breaking FCIP payouts even more staggering.
The Federal Crop Insurance Program has failed farmers and taxpayers by ignoring water challenges, said Claire OConnor, NRDC Agricultural Water Policy Analyst. The program was designed to be a safety net, not a subsidy for increasingly risky practices and less sustainable food production. We need to empower farmers to invest in low risk, water-smart practices that are proven to reduce crop losses.
The report finds that American farms, particularly in the Upper Midwest and Great Plains, were primarily impacted by three major forms of extreme weather in 2012: drought, heat and hot wind, all of which are expected to increase in the future. The top ten states with the largest overall crop insurance payouts due to drought, heat and hot wind were:
· Illinois: 98% of all crop losses were caused by drought, heat and hot wind, costing $3,011,443,799
· Iowa: 97% of losses, costing $1,924,444,160
· Indiana: 97% of losses, costing $1,130,302,660
· Kentucky: 96% of losses, costing $454,380,256
· Missouri: 95% of losses, costing $1,098,310,111
· Wisconsin: 94% of losses, costing $372,479,370
· South Dakota: 93% of losses, costing $1,029,780,352
· Kansas: 93% of losses, costing $1,273,662,944
· Nebraska: 92% of losses, costing $1,427,738,976
· Texas: 75% of losses, costing $974,548,606
Over 282 million acres of cropland – making up at least 70 percent of the nations total cropland – are insured under the Federal Crop Insurance Program, a public-private partnership between the RMA and 18 private insurance companies. The FCIP is the most expensive farm subsidy program, and serves as the primary risk management tool for farmers to prepare for potential crop loss, including from weather-related risks.