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The federal crop insurance program (FCIP) was created in 1938 to protect most U.S. agricultural commodities against financial losses caused by adverse growing and market conditions during the Great Depression.
More than 80 years later, FCIP is paying out staggering sums to farmers for crops that are being decimated by climate change-related factors like increasing temperatures, shifting agroecosystem boundaries, invasive crops and pests, and more frequent extreme weather events.
FCIP is overseen and approved by the USDA and provided by about a dozen insurers. The government covers about 60 percent of the premiums; farmers pay the remaining 40 percent.
An assessment of data from USDA’s Risk Management Agency by the Environmental Working Group (EWG) revealed that, between 1995 and 2000, FCIP payments to farmers rose more than 400 percent for drought-related losses and nearly 300 percent for rains and flooding losses. “As extreme weather has become more frequent, these costs are expected to go up even more," EWG said in the report.
Photo Credit: Environmental Working Group
Farming is big business In North Carolina. According to the most recent data, the agribusiness industry generates $92.7 billion of the $564 billion gross state product, roughly one-sixth of the state’s income and jobs. In order to maintain food quality and that production level in the face of changes brought on by climate change, agriculture must invest in adaptation.
But a study by researchers at NC State University suggests that, as currently configured, the USDA crop insurance program discourages farmers from making such changes. The research found that counties with crop insurance had higher extreme heat-related losses to corn and soybean crop yields than in counties without crop insurance.
The EWG created a new database that makes the case for change by breaking down crop insurance payments and subsidies by county and state, by commodity and by the cause of loss. Corn and cotton are North Carolina’s two leading subsidized crops. Counties in the coastal plains received the most farm subsidies in the state; Sampson and Robeson received $13 and $12 million in subsidies, respectively.
“This could be an unintended consequence of providing subsidies for crop insurance,” said study author Rod M. Rejesus. “The concept of moral hazard could be present here. If insurance will cover crop losses due to various effects like drought or severe weather, a farmer may not want to pay the extra expense for climate change adaptation efforts such as using cover crops to improve soil health, for example.”
A wide range of conservation practices already subsidized by the federal government can help the agriculture industry reduce greenhouse gas (GHG) emissions which, according to the EPA, accounts for 11% of the nation’s total. As long as their losses are covered, farmers have little incentive to plant cover crops or implement farming processes to reduce their carbon footprints. The crop insurance safety net has also pushed farmers to take more risks and continue to plant unsustainable, environment-damaging crops.
EWG is calling for FCIP reform that would encourage farmers to both adapt to the climate crisis and reduce their own emissions. “Some of the astronomical financial cost of this program — and the climate cost of agriculture — could almost certainly be alleviated by better choices, like taking environmentally sensitive land permanently out of production,” said EWG’s Midwest director Anne Schechinger.
**Cover photo: US Department of Agriculture.
