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Feb. 13--Despite the crop-decimating drought, Midwestern farm incomes rose in the fourth quarter of 2012 thanks to record crop insurance pay-outs, according to a survey released today by the Federal Reserve Bank of St. Louis.
The survey, dubbed the Agricultural Finance Monitor, was based on responses from agricultural banks in seven Midwestern states, including Illinois and Missouri.
On average, lenders across the survey area said that fourth-quarter income and spending were higher than the same quarter in 2011.
In previous surveys lenders in St. Louis said they expected the drought would lower income and capital spending. But, instead, farmers received insurance pay-outs that protected them, especially in the hardest-hit areas.
As of last week, the bank said, Missouri and Illinois farmers took in nearly 23 percent of the $13.7 billion, or roughly $3.2 billion, in claims. The U.S. Department of Agriculture expects that total claims will reach a record $21 billion.
"The 2012 drought greatly reduced production, but all of our borrowers carried crop insurance," one surveyed lender told the bank. "Many farmers had higher levels of coverage. This has resulted in good income for most, and most will carry that income into 2013."
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