By DAN REYNOLDS, senior editor of Risk & Insurance®
When hurricanes, tropical storms or freak October snowstorms strike, media reports usually focus on the impact to technology, or bricks and mortar. Inevitably, reporters dutifully phone the local utility company and ask them how many people are without power, and for how long.
No minimizing that from an insurance perspective, because business interruption from loss of electricity is very much worth noting.
But what about those pieces of the economy that aren't close to media centers? Your local, regional or superregional wheat or apple farmer isn't likely to go running to the media when the creek runs over and wipes out a few dozen acres of crops.
And with food prices on the rise, what's happened nationally to agriculture due to a series of unusual weather events should have gotten people's minds focused on the risks of food security, or insecurity, if they weren't focused on it already.
Kansas, for instance, one of the nation's breadbaskets, had by late September racked up a record year for crop losses. That state's insurance commissioner, Sandy Praeger, was quoted in the Kansas City Business Journal as saying that the state had rung up $1.09 billion in insured property and crop losses by the end of the third quarter. Compare that to the previous full-year record of $700 million in 1992 and you get one piece of the picture.
In Kansas' case, hail, high winds and tornadoes that slapped the state in April, May and June were the culprits.
In New York State, first Hurricane Irene, then Tropical Storm Lee played roles in devastating farmland. Gov. Andrew Cuomo doled out $2.4 million from the state's Agriculture and Community Recovery Fund to assist 125 farmers who lost more than 140,000 acres of crops due to flooding from the hurricane, and that was before the slow-moving Tropical Storm Lee dropped even more water on the Northeast.
Hurricane Irene also flooded cotton fields and tobacco fields in North Carolina and disrupted the lucrative shellfish harvesting industry in the Chesapeake Bay, which provides incomes in Maryland, Delaware and Virginia.
In another agricultural center, Vermont, Hurricane Irene wiped out farms and small farming villages. That state's United States Department of Agriculture Farm Service Agency office estimates that 454 farms sustained roughly $10 million in damage. Vermont saw the loss of 5,000 acres of corn, 6,000 hay fields and a thousand acres of maple trees, just to name a few crop categories.
Drought in Texas this summer and fall had so devastated cattle farmers that they were reduced to feeding their cattle stale bread because farmers couldn't grow enough hay in the dry conditions.
Zurich-based Reto J. Schneider, head of agriculture Americas for Swiss Re, a crop peril reinsurer, said full figures for 2011 won't be available until February or March. But he said underwriting results in this sector in 2011 were on track to be well below average.
And that's in the area of direct insured losses. The losses of uninsured orchards and fields in places like Pennsylvania and Vermont that were wrecked by a freak snowstorm in October may have impacts on our food sourcing and food pricing that have yet to play out and might not be immediately quantifiable.
November 8, 2011
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