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Crop insurance works too well for farmers who farm without regard for long-term soil health, and not well enough for the few who do. A new task force wants to change that.

Environment Farm Policy

This spring, historic flooding across the Great Plains and Upper Midwest engulfed millions of acres of cropland. The fields were so inundated, many farmers couldn’t farm; the pace of corn planting was the slowest in 40 years. With one eye on the sodden ground and the other on the calendar, farmers were faced with a terrible choice: risk planting late in the season, a move that could cost them a yield and income in the fall, or rely on crop insurance, which provides some coverage when extreme weather prevents planting.

The United States crop insurance program was created for years just like this one. As with other types of insurance, farmers pay a premium for coverage on their eligible crops, and put in a claim when they suffer a loss due to unforeseeable circumstances like flooding, hail, or drought.

The trouble is, we now live in a time when unforeseeable circumstances are becoming increasingly foreseeable. Last fall, the National Oceanic and Atmospheric Administration (NOAA) redefined the amount of precipitation that qualifies as a “100- or 1000-year weather event” in parts of the country. And as 100-year weather events become 25-year events, farmers will be more likely to suffer losses from natural disasters, and more reliant on crop insurance payouts to get by.

An aerial view of this year’s historic flooding in Missouri

Think of it this way: It’s as though 10-car pile-ups were suddenly the new normal for the car insurance industry. Only in this case, it isn’t the industry shouldering that burden. It’s the United States government. This July, the United States Department of Agriculture (USDA) published a study that found that crop insurance payouts are likely to increase because of increasing climate volatility.

The fact is, there are simple, affordable practices farmers can adopt to make their land more resilient to drought and floods, like planting cover crops and not tilling their fields. Unfortunately, the farmers who are taking steps to mitigate the impacts of climate change are treated the same as any other farmer by the crop insurance program, which rewards some of the riskiest farming practices, including cultivating marginal land especially prone to drought or flooding.

The current system gives farmers few real reasons to invest in conservation or regenerative agricultural practices that could help stabilize yields from year to year. But worse, it encourages them to continue practicing intensive farming that may yield bumper crops in good years but degrades the soil over time—an unfortunate result in any event, but particularly bad in this climate crisis.

After the wettest 12-month period since 1895, some farmers are reportedly incorporating cover crops into their flood-mitigation efforts. But it needn’t take a catastrophic natural disaster to get farmers thinking about conservation practices. The fact is, the U.S. government could be doing more to incentivize the adoption of these practices in both good and bad years.

The consequences of irresponsible farming don’t stop with poor or irregular yields.

In the meantime, a group of farmers, scientists, economists, environmental activists, and policy wonks calling itself the Conservation and Crop Insurance Task Force is working to create a new kind of crop insurance that supports and rewards regenerative agricultural practices.

Reforming the existing crop insurance program is not as sexy or simple an endeavor for the public to understand as, say, converting commodity fields to organic. But the federal crop insurance program covers more than 300 million acres of farmland across the country, including more than 80 percent of major field crops. Even small changes to the program can have widespread impact, which is why these efforts are so important and potentially so impactful.

There is a little-known regulatory backchannel that allows private companies and organizations to develop crop insurance products and petition to include them in the federally-subsidized crop insurance market. This channel has been used by companies for a kind of corporate activism, in which they create and bring to market crop insurance products that make their technologies (certain GMO seeds, for example) more appealing to farmers. The Conservation and Crop Insurance Task Force wants to use this mechanism to advance conservation goals that benefit both farmers and the environment.

Led by the Meridian Institute, a nonprofit with a wide range of interest areas, including agriculture, food security, climate change, and the environment, and with financial backing from the Walton Family Foundation, the task force is developing a crop insurance product that would reward farmers for adopting certain conservation practices. Consider it akin to a good-driver discount for farmers. If the task force succeeds and the product is approved by the Federal Crop Insurance Corporation (FCIC), it will be the first of its kind brought to market.

“The only permanent protection which can be given consumers must come from conservation practiced by farmers.”

The crop insurance program was prompted by another unprecedented environmental crisis: The Dust Bowl. In the first half of the 20th century, an unfathomable confluence of loose, sandy soils, prolonged drought, and increasingly intensive farming practices made possible by new, mechanized farming equipment led to the worst man-made environmental disaster in American history. Crops failed and wind stripped the ground of topsoil. Somewhere between 300,000 and 400,000 Great Plains residents were forced to abandon their homes and farms. The dust storms that characterized this period blackened midday skies, inspiring fear and awe; according to historian R. Douglas Hurt, a particularly bad storm was likened to “the end of the world.” Another observer said, “The nightmare is becoming life.”

Toward the end of the Dust Bowl, which persisted from 1931 to 1939, Congress authorized the first federal crop insurance product, as well as the Soil Conservation and Domestic Allotment Act, which incentivized good soil management practices, like crop rotation. As President Franklin D. Roosevelt stated when he signed the act into law: “[The] recurring dust storms and rivers yellow with silt are a warning that Nature’s resources will not indefinitely withstand exploitation or negligence. The only permanent protection which can be given consumers must come from conservation practiced by farmers.”

As I’ve previously reported, some farmers and economists say that now, nearly a century after the destruction of the Dust Bowl, the federal crop insurance program actually incentivizes practices that degrade the soil, exacerbate the effects of drought and climate change, and could even lead to a Dust Bowl for the next generation. A 2017 report from the Environmental Working Group pointed out that a provision in the 2014 farm bill allows farmers to exclude particularly bad years when estimating their average yearly income, artificially inflating their expected earnings and, consequently, the inevitable insurance payouts.

Left: A farm in Liberal, Kansas during the Dust Bowl, right: A Dust Bowl refugeeLeft: Arthur Rothstein, right: Dorothea Lange

Left: A farm in Liberal, Kansas during the Dust Bowl. Right: A Dust Bowl refugee

To make things worse, confusing and overly restrictive rules set by the Risk Management Agency (RMA), which oversees the FCIC, have discouraged farmers from adopting practices like cover cropping, which helps soil retain nutrients like carbon, nitrogen, and phosphorous, and keeps topsoil in place through floods and drought. Although the worst of those rules was eliminated in the most recent farm bill, crop insurance still fails to properly incentivize conservation practices that improve soil health and water quality, sequester carbon, and stabilize or increase yields.

In short, crop insurance is working too well for farmers who farm without regard for long-term soil health, and not well enough for the few who do.

The consequences of irresponsible farming don’t stop with poor or irregular yields. Agricultural runoff in the Mississippi/Atchafalaya River Basin—which spans 31 states—is one of the leading causes of the hypoxic “dead zone” in the Gulf of Mexico, where oxygen levels in water drop so low that aquatic animals suffocate and die. In order to improve water quality in the river basin and shrink the dead zone, the Environmental Protection Agency (EPA) estimates that nutrient loads need to be reduced by 45 percent; after failing to meet an initial goal of reducing the Gulf of Mexico dead zone from about 15,000 km2 to 5,000 km2 by 2015, that goal has been pushed back to 2035.

The crop insurance program is so large, and so influential, that any changes to it can have an outsize influence on the ground.

In Iowa alone, meeting that target would require planting at least 15 million acres of cover crops on soybean and corn fields; at present, cover crops grow on only 600,000 acres across the state.

“We have basically 100 million acres of corn and soybeans in the Mississippi River Valley,” says Moira Mcdonald, Mississippi River Initiative lead for the Walton Family Foundation. “And we know that if we’re going to really address the water quality problem … we need to touch almost all of those acres.”

Incentivizing cover crops and other conservation practices through the crop insurance program is an attempt to do just that. Banks often require farmers to purchase a crop insurance policy before they will lend. The crop insurance program is so large, and so influential, that any changes to it can have an outsize influence on the ground. That’s precisely what’s needed to bring about transformative change.

Per Section 508(h) of the Federal Crop Insurance Act, which was added in 2000, a college or university, cooperative or trade association, or any other person can propose new crop insurance policies or policy provisions. The FCIC Board then reviews the proposal; if accepted, the product is incorporated into the federally subsidized and managed crop insurance program, and the government compensates the developer for research and other expenses.

Just like good-driver car insurance discounts, farmers could get good-practice crop insurance discounts.

Previously, global agrichemical company Monsanto (now Bayer) used the 508(h) process [PDF] to secure a premium rate reduction for farmers using a specific variety of Monsanto’s genetically modified corn. The process has also been used to reduce rates for farmers who limit their fertilizer applications to a recommended level. According to a report prepared by a consulting firm for the Walton Family Foundation, these two precedents demonstrate that the 508(h) process can be used for rate reductions “based on adoption of a technology or practice.” That’s the model that the task force is looking to emulate.

The Conservation and Crop Insurance Task Force first began looking at the 508(h) process five or six years ago, according to Bruce Sherrick, a professor of farmland economics at the University of Illinois and a member of the task force. Previously, Sherrick worked with Monsanto on its 508(h) proposal, so he knows the process inside and out.

Six years ago, the task force determined that there simply wasn’t enough data on the relationship between conservation practices and yield to present an actuarially-sound case. But over the past few years, the amount of agricultural data has exploded in quantity and quality, and there are many more sources in the private sector than there were before. Now, with modern agricultural technology, “when you’re in a field, you’re constantly collecting data,” Sherrick says.

When I ask if he thinks the group has enough data now to make its case, Sherrick says, “Yes, and five years ago I would not have said that at all. Three years ago, I would have said maybe.”

NOAA Climate

The size of the “dead zone” in the Gulf of Mexico, as predicted by NOAA

The task force began working on a formal concept proposal—the precursor to a 508(h) submission—more than two years ago. Under a section the Federal Crop Insurance Act, private developers can submit a concept proposal to demonstrate market demand and product viability. If approved, they will receive advance payment to cover the development expenses incurred during the 508(h) process, which Todd Barker, a senior partner at the Meridian Institute and project lead for the Conservation and Crop Insurance Task Force, estimates could take another year.

The entire ordeal is long, complex, and expensive.

Just composing the concept note takes “months and months to develop and quite a significant amount of money—tens of thousands of dollars,” says Barker. The Walton Family Foundation, a longtime financial supporter of the Meridian Institute, granted the organization more than $1 million dollars in 2018 alone for its work on conservation and agriculture, approximately a quarter of which was specifically earmarked for its crop insurance work.

Now that the task force is in the middle of the concept proposal process, the details are subject to a non-disclosure agreement. But previously, when discussing the 508/522 process, Barker said that they were considering creating crop insurance products for both cover crops and tillage practices.

Practices like cover crops and no-till are often celebrated more for their environmental benefits than their agricultural ones.

This makes sense when you consider what conservation and regenerative agricultural advocates have been demanding for years. Anecdotally, farmers have found that planting cover crops and refraining from tilling their fields reduces yield variability. That’s helpful because while they may not have the largest yields in good years, they fare better than their peers in bad years. If such practices mean some farmers are cashing in on their crop insurance less often, those farmers want to be rewarded. Just like good-driver car insurance discounts, farmers could get good-practice crop insurance discounts. That, in a nutshell, is what the task force is aiming to do.

The challenge is demonstrating that the anecdotal evidence is backed up by the data.

“You need independent outside actuarial reviews; you need independent outside market assessments; you need to consider the technical systems of the insurance providers and what the AIPs or the crop insurance companies can do to implement,” says Sherrick, listing some of the requirements they have to meet to create a viable product.

Sherrick is rather circumspect when asked about the goals of the project, in part because he doesn’t want to break his NDA—but also, perhaps, because he doesn’t want to sound like the task force is trying to force farmers to do anything.

It will be some years before we know whether the premium discount will be enough to persuade thousands of farmers to adopt cover crops or no-till.

Conservation and regenerative agricultural practices, as I previously reported for this publication, have been pigeonholed by the government, corporate agronomists, and some farmers as “environmental” practices, and not “good farming.” As Sarah Carlson, director of strategic initiatives for Practical Farmers of Iowa, previously told The New Food Economy, practices like cover crops and no-till are often celebrated more for their environmental benefits than their agricultural ones. That is to say, they often appear to be more about conservation or environmentalism than about successful production and big yields.

If this effort is seen by farmers as competing against their best interests, they might not buy into the program, especially if the incentive isn’t large enough to cover the additional time, money, and effort that planting cover crops or going no-till might take. It’s a fine line that the task force will have to walk when it promotes its work on this issue.

Sherrick describes the task force’s goal as “right-sizing” crop insurance, or “getting rid of the friction” for farmers.

“We don’t want to ever end up being in the position of advocating for a particular outcome that’s not driven by a farmer’s best interest,” he says.

“There’s a misinterpretation that crop insurance and conservation are not compatible,” says Sherrick. But they are in fact interconnected. Advocates for practices that emphasize resilience say that better, healthier soil is directly connected to a stronger bottom line for farmers.

If the task force can convince the FCIC and RMA that conservation practices have a proven record of improving or stabilizing yields, it could go a long way toward correcting the misconception.

Because of the secretive nature of the process, it’s difficult to judge the strength of this particular proposal against its peers. “Since submissions can be withdrawn by the applicant or the products may be approved only in part, there is not a useful correlation between submissions and approved products,” a USDA spokesperson told me.

A farmer rolls down cover crops before planting corn

It will be some years before we know whether the premium discount—or whatever form this crop insurance product eventually takes—will be enough to persuade thousands of farmers to adopt cover crops or no-till. In Iowa and Illinois, there are ongoing or forthcoming pilot programs for state-funded crop insurance discounts on cover crops. They may give us some idea of how effective an alternative can be.

But much will still come down to the balance sheet.

“Margins have been super, super tight the last few years,” says Kristin Duncanson, a Minnesota farmer who sits on the Conservation and Crop Insurance Task Force. “Any opportunity that makes it more enticing to engage in something just a little different, I think is worth working on. There will be producers who will always put it on a spreadsheet … To be able to see the long-term benefits with a little lessening of the crop insurance premiums—that might just be what some need.”

Jack Boyer, who farms a mix of mostly corn and soybeans across 700 acres in Iowa, has been practicing no-till and cover cropping for more than 10 years. While he says there are some short-term gains with cover crops, the real advantage is increasing the value of the land over time. That’s harder to see in a spreadsheet.

“Leveraging the crop insurance program is so important to farmer decision making.”

Boyer is somewhat more skeptical of the power of a hypothetical crop insurance discount to convince a farmer, especially one who might be struggling, to start growing cover crops. (Unlike Duncanson, Boyer is not on the task force, so his assessment was based only on a brief description.)

“If they’re on the ropes, $10-$20 an acre is not going to be the deciding factor,” he says. “If you count the full cost of applying the cover crops, the crop insurance premium [reduction] will not cover it. So they’ll still be able to use the excuse that, ok, that’s still added money, if they’re not giving credit to any of the benefits of it.”

Boyer says that opinions on cover crops are changing, that more and more people are recognizing the benefits, albeit slowly.

“We understand that there is risk involved here, that it is not necessarily going to produce hundreds of thousands of acres of cover crops overnight,” says Mcdonald. “But we also see that, leveraging the crop insurance program is so important to farmer decision making, it’s really worth exploring.”

Assuming the product eventually makes it to market—and the overwhelming impression given by those on the task force was one of cautious confidence—Mcdonald looks forward to seeing whether it does in fact advance conservation. If so, it would open up a world of opportunity for environmentalists looking to change the future of farming at the ground level.

headshot of Jessica McKenzie

Jessica McKenzie

Jessica McKenzie is a freelance journalist in Brooklyn, NY. Previously, she was the managing editor of the civic technology news site Civicist and interned at The Nation magazine. You can follow her on Twitter @jessimckenzi.

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