Midwestern farmers still drying out their formerly flooded farmland are likely to get hit with another punch – steep increases in crop insurance premiums. The reason: much of the damage from last summer’s epic flooding still has not been repaired.
The Missouri River rose to its highest levels in recorded history this past year, following the release of massive amounts of water from upstream dams and reservoirs in Montana, Nebraska and the Dakotas.
Weakened levees were overtaken, flooding thousands of acres, ruining fields, homes and infrastructure.
The U.S. Department of Agriculture’s Risk Management Agency said this week $114 million in claims have been paid so far for flooding damage on 436,000 acres downstream from the Gavins Point dam on the Nebraska/South Dakota border.
The Mississippi River was not immune to the devastation. On the Birds Point levee south of St. Louis, the U.S. Army Corps of Engineers blew a hole in a levee, attempting to save the tiny town of Cairo, Illinois. Thousands of acres were flooded as a result of the Corps’ decision. One Missouri producer, watched helplessly as 8,000 acres of his farm succumbed to floodwaters. He received $1.5 million in federally-subsidized crop insurance benefits. But, his premium increased five-fold on a recently planted wheat crop because, USDA now considers his land to be high-risk.
Officials with the USDA's Risk Management Agency began warning farmers of potential rate increases over the summer because they didn't want them to be shocked when the 2012 rates were announced.
It can be two to three times more expensive to insure farmland behind damaged levees than those where repairs have been made.
The corps estimates it will cost more than $2 billion to repair damage this year's flooding inflicted on levees, dams and riverbanks. With a funding bill stalled in Congress, the corps has been focusing its limited resources on fixing vital levees protecting communities and facilities such as water treatment plants.
Farmers also must restore their soil to pre-flood conditions to get their insurance rates back down. Flooding often cuts massive ruts in the land, washes away top soil and inundates fields with sand.
The levee at Birds Point was 62.5 feet high before the explosion. Generally levees must be restored to their pre-flooding condition, but in the case of Birds Point, farmers won't face big premium increases if the corps gets it back up to 55 feet before spring planting.