US farmers want to adapt to climate change, but crop insurance won’t let them

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

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

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

In the US, agriculture is responsible for about 11% of all greenhouse gas emissions. Much of this is linked to soil cultivation, which releases carbon dioxide, and the excessive application of fertilizers, which emit nitrous oxide. The latter is a greenhouse gas 270 times more powerful 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 streams.

Extreme weather conditions are also becoming more frequent, threatening crop yields and supply chains. Twenty-four states, including Kansas, are experiencing severe to exceptional drought, according to the US Drought Monitor. This represents a problem, as do the heavy rains that can flood crops and are falling with increasing intensity. Nearly 20% of the $140 billion in crop insurance payments between 1991 and 2017 were due to rising temperatures, according to researchers at Stanford University. They estimate that the percentage will continue to increase as the frequency of extreme weather due to climate change increases.

Despite these risks — and the benefits that regenerative agriculture can have in addressing climate change — stronger incentives have maintained the status quo, according to Anne Schechinger, Midwest director of the Environmental Working Group (EWG), a nonprofit organization. profitable.

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Crop insurance policies primarily cover conventional commodity crops such as corn, soybeans, cotton and wheat. Farmers who grow them typically sign up for multi-risk insurance, which insures individual crops against poor yields caused by disease, floods, drought and other extreme weather conditions.

Just like health, car or property insurance, loss or damage assessments are based on standards – known as Good Agricultural Practices – that ensure low yields are not caused by poor management. But these rules cannot include a practice that could decrease a crop’s yield, and therefore tend to follow established industrial and monoculture practices: A farmer caught growing different crops between rows or finishing his cover crops too late, for example, you run the risk of having your insurance claims denied.

Regenerative agriculture often involves intercropping different crops on the same field and growing low-yielding perennials, which can create problems for insurers. But crop insurance payments largely do not depend on whether farmers’ 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 farming practices in the mid-1990s, believing he would see better yields and more resilient crops in the long term. He grew off-season cover crops, one of the most commonly used regenerative agricultural practices, which involves planting non-cash crops that improve soil health. At the time, Fuller was still covered by crop insurance and, per insurance rules, killed 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 claims – which led his lending institution to cancel his operating credit line.

Fuller sued his insurance company and won. Two years later, however, when he needed them to cover losses in two soybean fields, they again denied his claims. Financial turmoil over these two years forced him to reduce the size of his farm to 400 acres from 1800, and he eventually decided to abandon crop insurance entirely.

“Once you go broke as a farmer, it’s very difficult to recover,” Fuller said. “I didn’t want to be part of that system. We need to find a better way to farm.”

The U.S. Department of Agriculture has introduced reforms and alternatives to the crop insurance program to accommodate climate risks over the past decade, including adding coverage for new crops and a $5 per acre incentive for plant cover crops during the off season.

The Risk Management Agency, which controls federal crop insurance, has also expanded its coverage of certain climate-smart practices, such as reducing water use, covering crops and injecting nitrogen into the soil rather than putting it on the surface. from soil. Farmers must still follow specific rules, such as finishing their cover crops early enough, which some scientists say limits how much these practices can reduce emissions.

The crop insurance system is already under pressure due to climate change. The program must evolve to encourage practices suited to different regions and cover a variety of risks, a USDA spokesperson said, while also being actuarially sound — meaning the program must charge sufficiently high premiums. to cover expected losses.

“Even on a microscale, a strong storm can be damaging to one type of crop while providing much-needed rain to another crop,” a USDA spokesperson told Bloomberg Green.

“Crop insurance is voluntary,” said RJ Layher, director of government affairs for the American Farm Bureau Federation. Farmers who practice regenerative techniques not covered by Good Agricultural Practices can look for 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 like crop diversification will not impact yield is a big task for any farmer.

The USDA also started the Whole Farm Income Protection Program in 2014, which guarantees a farm’s total income rather than individual crops, providing a safety net for farmers who plant companion crops or raise animals in their fields.

But the number of farmers participating in the Whole Farm Income Protection Program is small, according to EWG’s Schechinger. About 1,800 policies were sold in 2023, according to the USDA, representing less than 1% of crop insurance. The program involves significantly more paperwork and an insured income limit that doesn’t always cover all farm income, which can be prohibitive for insurance agents in the sale and for farmers in purchasing the policy, Layher said.

According to Layher, the Farm Bureau supports improvements to the Comprehensive Farm Income Protection Program that would make it more accessible to farmers and easier for insurance agents to sell — both reforms are proposed in the Farm Bill that has been stalled in the House until at least least September.

The regenerative agriculture movement is relatively small, but it has gained momentum in recent years thanks to federal support and agribusinesses eager to align their supply chains and sustainability goals. Companies like CoverCress Inc., majority-owned by Bayer AG, are trying to convince farmers to plant cover crops that can be used as sustainable aviation fuel.

But for now, the effort to change insurance rules still largely depends on farmers like Fuller and Rick Clark, a third-generation farmer from west-central Indiana who has been without insurance for six years because he practices regenerative agriculture.

When he’s not working on his farm – which uses cover crops on all 7,000 acres – Clark teaches other farmers how to eliminate chemical fertilizers and use cover crops on their farms.

“We have to make sure the path to change is easy,” Clark said. One of the biggest challenges uninsured farmers face is their lending institution, which often requires them to have an insurance policy in order to continue receiving loans.

Clark testified before Congress in late 2022 on behalf of Regenerate America, a coalition that lobbies for agricultural reform, calling for the legislative reforms that Schechinger said are needed. The day after Clark’s testimony, Congress passed the Reducing Inflation Act, President Joe Biden’s landmark climate law that includes a $19.5 billion investment in USDA conservation programs. He felt he had a small role to play in this.

“At some point when you’re there, you wonder if anyone is paying attention to what you’re saying,” Clark said. But then, “you feel like maybe your words aren’t falling on deaf ears and maybe there are people who are actually paying attention.”

–With help from Sophie Butcher.

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