Drought And Heat Waves Are Costing The Federal Government Billions In Crop Insurance Payouts


Jim Carlson

CREDIT: AP/Nati Harnik

Extreme weather has cost the federal government billions in crop insurance payouts over the last few years, but according to a new report, certain farming practices have the potential to lower that amount in the future and prepare farmers for the effects of climate change.

According to the report, released Tuesday by the Natural Resources Defense Council, the Federal Crop Insurance Program paid out a record $17.3 billion in insurance claims to farmers in 2012, just one year after the program set a record at $10.8 billion in claims in 2011. Climate change played a large role in these historic payments — in 2012, 80 percent of all payments made by the FCIP were for farmers whose crops had been lost to heat, drought or high wind, according to the NRDC. Many Midwestern states were hit even harder by these impacts — in Illinois, 98 percent of FCIP payouts in 2012 were to farmers with losses from heat, drought or hot wind, along with 97 percent in Iowa and Indiana.

These extreme costs are why the NRDC says that the FCIP should provide incentives to American farmers who adopt climate-smart tactics on their farms. In their report, the NRDC argues that practices such as no-till farming, cover cropping and using water conservation practices when irrigating fields should be incentivized by the FCIP.

According to the report, in 2010, farmers who used no-till farming techniques were 30 percent less likely to receive loss compensation payments from the FCIP. And in 2012, corn farmers affected by the severe drought who used cover crops in the regions affected by the severe drought saw yields of 79 percent of regular crop yields, compared to 68 percent for farmers who didn’t use cover crops.

Cover cropping increases the amount of organic matter and moisture in the soil and helps prevent erosion, so it’s helpful in both drought and heavy rains, and no-till farming has similar benefits. But the practices don’t just help protect farmers’ crops from extreme weather. Gabe Brown, a Great Plains farmer and advocate of cover crops and other soil health measures, said on an NRDC press call that cover cropping has increased the yields of his corn crop and decreased his costs. Brown said cover cropping and no-till practices allow him to avoid all synthetic pesticides or fertilizers and still harvest more than the average corn yield for his area.

“Corn can drop to $2 a bushel and I’m still going to make money. There’s not many producers across the country that can say that,” he said. “But the only reason I’m able to do that is that I’m focused on regenerating the soil resource.”

Right now, the FCIP doesn’t incentivize climate-smart behavior for farmers, unlike car insurance companies that incentivize safe driving or home insurance companies who offer discounts to homeowners who install security systems. As the report notes, the FCIP “actually tends to encourage farmers to make riskier choices, such as planting crops on fields that are not well-suited to agricultural production, because farmers who do so pay disproportionately low premium rates.” The NRDC recommends in its report that FCIP start a pilot program that reduces premium rates for farmers who adopt measures like no-till farming, a proposal it plans to take to the USDA.

Though the 2012 drought has let up in many parts of the country, some areas are still struggling with extreme weather and its negative effect on crops. Much of the West is still experiencing droughts, and in parts of the South, an area that has experienced record rainfall this summer, heavy rains are destroying crops like watermelons, peaches and wheat. And with climate change expected to increase drought in some regions and heavy rains in others, the effects of extreme weather on farming aren’t likely to let up soon.