U.S. Farmers Want to Adapt to Climate Change, But Crop Insurance Won’t Let Them Do It

Miranda Jeyaretnam | (TNS) Bloomberg News

In Kansas, where a prolonged drought has destroyed crops and eroded the soil, Gail Fuller’s farm is like an oasis. Sheep, cows and chickens graze freely on crops and vegetation in a heavenly mess.

But if Fuller’s farm were to be hit by a tornado or flood, or seriously affected by drought, he would be the one left to foot the bill. That’s because his farming practices aren’t protected by federal crop insurance, a nearly century-old safety net that hasn’t adapted to the age of climate change.

Fuller is among a growing number of farmers who are uninsured or underinsured because the industry is not supporting the shift from traditional farming to regenerative agriculture, an approach that has the potential to sequester enough carbon to cut agricultural emissions in half by 2030. This shift is becoming increasingly urgent to both slow climate change and protect farmers from its impacts, but the insurance industry continues to stand in the way.

In the United States, agriculture is responsible for about 11% of greenhouse gas emissions. Much of this is from tilling soils, which releases carbon dioxide, and over-fertilizing, which releases nitrous oxide. Nitrous oxide is a greenhouse gas more than 270 times more potent than CO2. Regenerative agriculture reduces these emissions by absorbing carbon dioxide through photosynthesis, storing carbon in the soil, and capturing nitrogen that would otherwise run off into nearby waterways.

Extreme weather events are also becoming more frequent, threatening crop yields and supply chains. According to the US Drought Monitor, 24 states, including Kansas, are experiencing severe or exceptional droughts. That’s a problem, as are heavy rains that can waterlogged crops and are falling with increasing intensity. Nearly 20% of the $140 billion in crop insurance payouts between 1991 and 2017 were due to rising temperatures, according to Stanford University researchers. They estimate that percentage will continue to rise as extreme weather events become more frequent due to climate change.

Despite these risks — and the benefits that regenerative agriculture can bring in combating climate change — stronger incentives have locked in the status quo, according to Anne Schechinger, Midwest director at the nonprofit Environmental Working Group (EWG).

Crop insurance policies primarily cover conventional crops such as corn, soybeans, cotton and wheat. Farmers who grow them typically purchase multi-peril insurance, which protects individual crops against crop failures caused by disease, floods, droughts and other extreme weather conditions.

As with health, auto, and home insurance, loss or damage assessments rely on standards called “good agricultural practices” that ensure low yields aren’t caused by mismanagement. But these rules can’t include a practice that could reduce a crop’s yield, and so tend to follow established industry practices of monoculture: A farmer caught growing different crops between rows or removing cover crops too late, for example, is likely to have his or her claims denied.

Regenerative agriculture often involves mixing different crops in the same field and growing low-yielding perennials, which can pose challenges for insurers. But crop insurance payouts don’t depend largely on how much a farmer’s practices increase or mitigate climate risks, according to Silvia Secchi, a professor at the University of Iowa.

Fuller, a third-generation farmer, began experimenting with regenerative agriculture practices in the mid-1990s, believing he would get higher yields and more resilient crops in the long term. He had been growing cover crops in the off-season, one of the most commonly used regenerative agriculture practices that involves planting non-cash crops that improve soil health. At the time, Fuller still had crop insurance, and in accordance with insurance rules, he destroyed his cover crops with herbicide before growing his cash crop.

But when his insurance company assessed the land in August 2012, during a severe drought, it determined that the remaining cover crops were weeds. The company denied all of Fuller’s allegations, leading his lender to cut his operating line of credit.

Fuller sued his insurance company and won. Two years later, however, when he needed them to cover losses on two soybean fields, they again denied his claims. The financial turmoil of those two years forced him to reduce the size of his farm from 1,800 acres to 400, and he eventually decided to abandon crop insurance altogether.

“Once you’re bankrupt as a farmer, it’s pretty hard to get out,” Fuller said. “I didn’t want to be part of that system. We have to find a better way to farm.”

Over the past decade, the U.S. Department of Agriculture has introduced reforms and alternatives to the crop insurance program to address climate risks, including adding coverage for new crops and a $5 per acre incentive to plant cover crops in the offseason.

The Risk Management Agency, which oversees federal crop insurance, has also expanded its coverage to some climate-friendly practices, such as reducing water use, growing cover crops and injecting nitrogen into the soil, rather than layering it on top of the soil. Farmers still have to follow specific rules, such as stopping cover crops early, which some scientists say limits the ability of these practices to reduce emissions.

The crop insurance system is already under strain from climate change. The program must evolve to encourage practices that are tailored to different regions and cover a variety of risks, a USDA spokesperson said, while also being actuarially sound, meaning the program must charge premiums high enough to cover expected losses.

“Even on a small scale, a major storm can damage one crop type while providing much-needed rain to another crop,” the USDA spokesperson told Bloomberg Green.

“Crop insurance is optional,” said RJ Layher, director of government affairs at the American Farm Bureau Federation. Farmers who practice regenerative techniques not covered by good agricultural practices can seek other options, he added, including showing the Risk Management Agency that their practices are actuarially sound.

However, collecting enough data to prove that climate-friendly practices, such as crop diversification, will not impact yield is a difficult task for any farmer.