“Given the challenges of climate change and other pressures on farmers, there is an urgent need to innovate our approach to the farm safety net,” according to a new paper released by the AGree Economic and Environmental Risk Coalition calling for changes to the federal crop insurance program to better incentivize on-farm conservation practices.
Research shows that farmers who use conservation practices, such as cover cropping, conservation tillage, diversified crop rotation, and management-intensive rotational grazing, reduce yield risk, which, in turn, could result in fewer insurance claims, the AGree E2 Coalition reports.
As the Biden administration and Congress weigh climate change policies that will accelerate and expand conservation practices throughout the agriculture sector, including policies that would strengthen the Federal Crop Insurance Program, the AGree E2 Coalition sought to better understand how conservation practices reduce risk and improve farmers’ economic outcomes, enhance environmental performance, sequester carbon, and support working lands resilience.
“Agriculture contributes to climate change but is simultaneously uniquely suited to mitigate against its impacts,” says Deborah Atwood, AGree executive director and Meridian Institute senior fellow. “By improving crop insurance, we have an opportunity to build landscape resilience to protect agricultural yields and farmers’ livelihoods.”
There is also evidence that conservation practices can improve water quality and soil health by increasing soil organic matter, and relatedly, that healthier soils reduce risk, especially in very dry or wet conditions, as well as sequester carbon, according to the paper.
Federal crop insurance is a key risk management strategy for the majority of commodity crop producers. The three largest commodity crops—corn, soy, and wheat—are overwhelmingly insured under the FCIP, with more than 90% of corn and soy acres and more than 85% of wheat acres enrolled, totaling more than 195 million acres. According to the Congressional Budget Office, crop insurance is one of the largest expenditures under the farm bill, representing about 37% of the total farm portion of the farm bill or around $10 billion per year. Given the high enrollment and significant federal subsidization, crop insurance has the potential to drive broader adoption of agricultural conservation practices that reduce risk and provide a host of economic and ecological co-benefits including, for example, sequestering carbon and improving water quality.
“The crop insurance program needs to recognize the risk-reducing benefits of conservation practices. This will help farmers manage the risk of extreme weather events such as the drought we are currently experiencing,” said Lynn Tjeerdsma, former senior policy adviser for Sen. John Thune and South Dakota farmer.
The report notes mounting scientific evidence shows that conservation practice implementation reduces crop yield risk during times of drought, heavy precipitation and flooding. Additionally, conservation practices provide multiple environmental benefits, including improved water quality and soil moisture management, carbon sequestration and habitat.
The 2019 planting spring season was the wettest on record in many areas. As a result, farmers submitted over $4 billion in insurance claims for nearly 20 million acres where wet conditions prevented farmers from planting a cash crop within the time required by insurance. A recent National Cover Crop Survey found that 78.6% of the respondents reported wet planting conditions that delayed planting, but that 78% of farmers who planted cover crops did not have prevent plant claims.
The Conservation and Crop Insurance Research Pilot, a collaboration between AGree, researchers at the University of Illinois, and USDA, will shed further light on the impact of cover crops on risk management during wet years. Under the pilot project, researchers are looking at USDA data and other information for six states— Indiana, Illinois, Iowa, Missouri, Minnesota, and South Dakota—to better understand how the use of cover crops and no-till affected corn and soybean planting dates in the extremely wet spring of 2019, whether planting occurred at all (prevent plant crop insurance claim declared), and what impact the conservation practice(s) had on 2019 yields. Results of this data analysis effort should be available by early 2022.
Policy improvements to reward adoption
Although the use of cover crops has increased over the last decade, only a small percentage of cropland acres—about 3.9% of all U.S. cropland—is planted in cover crops according to the 2017 Agriculture Census. While important changes were made in the 2018 Farm Bill related to cover crops and crop insurance eligibility, policy impediments — both actual and perceived — hinder conservation practice adoption by farmers who participate in the federal crop insurance program.
Prior to the 2018 Farm Bill, farmers faced the danger that an indemnity claim would be denied if they did not either adhere to USDA guidelines regarding cover crop termination or receive advanced approval for deviations. RMA removed the advanced approval requirement, re-issued slightly modified termination “guidelines” to clarify termination options for cover crops, and provided that cover cropping, including termination issues, could also use the good farming practices process if necessary.
Over a quarter of farmers in a recent survey expressed the belief that crop insurance is a barrier to cover crops, and 34.7% did not know whether or not crop insurance is a barrier.
The Risk Management Agency has begun to look at how conservation practice implementation can reduce risk. AGree says its work is intended to support and inform the work RMA has begun to understand the effects of conservation practice adoption on yield variability, which is a measure of risk used by RMA. The AGree E2 Coalition has identified the following key areas where policy improvements can drive next generation crop insurance for the benefit of farmers, the environment, and taxpayers now and into the future:
- Data Innovation: Modernize data collection, interoperability, storage, and sharing while protecting producer privacy.
- Crop Insurance and Conservation Policy: Improve crop insurance and conservation policy so that they work better for farmers and reduce risk while adopting new policies that encourage adoption of conservation practices that reduce risk.
- FCIP Rating Model: Enable research that helps strengthen the FCIP risk rating model by addressing knowledge gaps and using data to assess and improve on-the-ground outcomes.
“By harnessing the power of agricultural data, growing our knowledge about what conservation practices work and where and applying this knowledge to USDA programs, we can improve risk management, generate a host of co-benefits and provide a better value for farmers and taxpayers,” the report notes.