Drought could cause $20 billion in crop insurance losses

The drought that has devastated crop production and farmland in the U.S. might have crop insurance losses of $20 billion, disaster modeler AIR told Fox Business on Tuesday.

Dry conditions that began in early spring 2011 sapped corn crops of moisture, according to Fox Business. Those dry conditions resulted in less than normal corn production across the country, but especially in Texas, which had agricultural losses of $7.62 billion with crop insurance losses of $2.58 billion. This year is expected to be even worse.

"After the hottest July on record, the 2012 drought is now expected to surpass the 1988 drought in terms of industry losses," AIR told Fox Business.

The total economic loss of the 1988 drought was $77.6 billion, when adjusted to 2012 dollars, according to the article. By the end of July 2012, the area of the U.S. affected by severe to extreme drought jumped to 42 percent, making 2012 the fifth worst drought since 1895. The last time there was a drought of this magnitude was in 1956.