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Study says Crop insurance costs – subsidized by taxpayers – are rising because of climate change

Study says Crop insurance costs – subsidized by taxpayers – are rising because of climate change

Study says crop insurance costs – subsidized by taxpayers – are rising because of climate change

When water from the Missouri River and its tributaries flooded Jeff Jorgenson’s farmland near Sidney, Iowa in July 2011, crop insuranceHe was able to get back on his feet.

“If it wasn’t for crop insurance, it would have been a huge loss,” Jorgenson said. “It would have been really difficult to be farming the next year without crop insurance.”

Crop insuranceProvides a safety net for farmers to help protect them from crop loss due to natural catastrophes. The federally-subsidized crop policy insurance program pays farmers if their crops are damaged by a flood or drought.

But there is more. New analysisFrom the Environmental Working GroupTaxpayers paid nearly $40 billion in crop insurance premium subsidy subsidies between 2001 and 2020 in 13 states, the majority of which are located in the Mississippi River Basin. EWG predicts that crop insurance premium subsidies will increase in cost as climate change worsens.

According to the report, farmers pay for 40% of a crop insurance policy’s total premium. The premium subsidy is paid by taxpayers.

Anne Schechinger, EWG Midwest Director, authored the report. She stated that climate change is driving up crop insurance program costs. These are likely to increase as climate changes intensify. At the same time, she said, the program “discourages” farmers from adapting to climate change because, she said, “farmers are less likely to spend money [on new farming practices] when a lot of their losses are covered.”

“We really need to be reforming the crop insurance program to increase adaptation to climate change,” Schechinger said. “We want to be encouraging farmers to adapt instead of discouraging them.”

EWG looked at U.S. Department of Agriculture data between 2001 and 2020 in the USDA’s Mississippi River Critical Conservation AreaThe report covers 13 states, including Illinois, Missouri, and Iowa. The report shows that Iowa, Illinois and South Dakota received nearly $23 billion in premium subsidy over the same period. This is more than half the region’s premium subsidies.

EWG says the subsidies “may Encourage farmers to take more risks, such as farming in areas that because of the climate crisis are no longer suitable.”

Schechinger suggests some reforms to the crop insurance program that would help farmers adapt to climate change and “very likely” save some taxpayer money. She suggested that premium subsidies for high-risk land, such as farmland that floods easily, could be reduced.

“Since total premiums are higher in these high risk areas, that actually means that higher risk policies get higher amounts of premium subsidies,” she said. “Reducing premium subsidies in these high risk areas could really help encourage farmers to adapt to climate change and it would also decrease taxpayer costs.”

The USDA did no make it possible for anyone to comment on the study.

Scott VanderWal, a farmer from Volga, South Dakota and the president of the South Dakota Farm Bureau, said he disagreed with the report’s claim that premium subsidies may encourage farmers to take more risks and farm in areas they shouldn’t be farming.

“Farmers want to do the best job they can, using our natural resources in farming,” VanderWal said. “If you’re raising a crop that’s not suitable for a certain area, you’re not going to make any money at it.”

Aaron Lehman, an organic farmer in Alleman, Iowa said he would love to see crop insurance changes. He said that many farmers are now adopting practices that increase sustainability and counter climate change. These include no-till and cover crops.

He stated that crop insurance should encourage such resilience practices.

“We are definitely experiencing climate changes, we definitely need to address them,” Lehman said. “And our crop insurance system should take a more proactive approach to encourage farmers to use those climate smart farming practices.”

See Also
tropical malaria, geoengineering, climate change

Follow Katie on Twitter @katiepeikes

This story was created in partnership with Harvest Public Media, which is a consortium of public media newsrooms throughout the Midwest. It reports on rural issues, agriculture, and food systems. Follow Harvest on Twitter @HarvestPM

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