NRDC report seeks RMA program to reward soil management
August 27, 2013 | 05:20 PM
The Natural Resources Defense Council said today that “water-smart” strategies could have prevented much of the 2012 crop losses that resulted in $17.3 billion in federal crop insurance payments that year, and called on the Agriculture Department’s Risk Management Agency to establish a pilot program that would reward farmers who adopt “soil-building management practices.”
Claire O’Connor
But National Crop Insurance Services, an industry-funded research group, said that the NRDC’s contention that the current crop insurance rate formula encourages farmers to engage in risky practices “lacks an adequate analytical foundation.”
“The Federal Crop Insurance Program has failed farmers and taxpayers by ignoring water challenges,” said Claire O’Connor, an agricultural water policy analyst in NRDC’s Santa Monica, Calif., office who wrote the report.
“The program was designed to be a safety net, not a subsidy for increasingly risky practices and less sustainable food production,” she said. “We need to empower farmers to invest in low-risk, water-smart practices that are proven to reduce crop losses.”
The report, called “Soil Matters,” says that more than 90 percent of crop losses in nine states — Illinois, Iowa, Indiana, Kentucky, Missouri, Wisconsin, South Dakota, Nebraska and Kansas — and more than 70 percent of losses in Texas were caused by heat, wind and drought that are expected to increase with climate change. NRDC said that cover crops, no-till farming and improved irrigation scheduling could all reduce these losses and that farmers who engage in these practices should get lower crop insurance premiums in the pilot project.
Gabe Brown, a Burleigh County, N.D., farmer, said on a NRDC call with reporters that he has been able to increase his corn yields with these practices while reducing his input costs.
The report notes that the Risk Management Agency could undertake the pilot without congressional action, but O’Connor acknowledged that NRDC has not yet approached RMA.
The report also says that the current premiums “encourage farmers to make riskier choices such as planting crops on fields that are not well suited to agricultural production,” but NRDC did not suggest general reductions in crop insurance premium subsidies, as the Environmental Working Group has.
EWG said today that the NRDC report shows the need for “fundamental reform” of the crop insurance program.
Tom Zacharias
National Crop Insurance Services President Tom Zacharias said, “NRDC’s assertion that crop insurance enticed farmers to plant in risky areas lacks adequate analytical foundation. The primary driver behind planting decisions is crop prices — which have increased dramatically, doubling since 2006 — not crop insurance policies that farmers purchase to manage risk.”
The 326 million acres planted in 2012 was about the same as the 328 million acres averaged over 1981 to 2012, Zacharias noted.
“If anything, crop insurance serves as a disincentive to unnecessary risk taking,” he continued. “That is because farmers have high deductibles and pay a significant portion of the premium out of their own pockets.”
“Before farmers received a single dime in crop insurance indemnity payments in 2012, they shouldered $12.7 billion in losses as part of their deductibles to crop insurance policies, in addition to the $4.1 billion that they spent on premium,” Zacharias said. “So farmers invested roughly $17 billion in their crops before collecting any indemnities in 2012, which totaled approximately $17 billion.”
“In other words, crop insurance allowed them to break even, not collect excessive indemnities as implied by NRDC,” he said.
Zacharias also noted that new technologies are helping curtail losses due to extreme heat and drought, and that RMA has has been working with the Natural Resources Conservation Service to facilitate the use of cover crops with the crop insurance program.
“But in many cases, drought is not the only weather peril farmers face,” he concluded. “Nearly every year, farmers somewhere in the U.S. must contend with flooding or drought, harmful freezes or extreme heat, damaging hail or high winds, tornadoes or hurricanes. And in each and every instance, crop insurance is the best tool available to help farmers manage their many risks.”
Claire O’Connor
But National Crop Insurance Services, an industry-funded research group, said that the NRDC’s contention that the current crop insurance rate formula encourages farmers to engage in risky practices “lacks an adequate analytical foundation.”
“The Federal Crop Insurance Program has failed farmers and taxpayers by ignoring water challenges,” said Claire O’Connor, an agricultural water policy analyst in NRDC’s Santa Monica, Calif., office who wrote the report.
“The program was designed to be a safety net, not a subsidy for increasingly risky practices and less sustainable food production,” she said. “We need to empower farmers to invest in low-risk, water-smart practices that are proven to reduce crop losses.”
The report, called “Soil Matters,” says that more than 90 percent of crop losses in nine states — Illinois, Iowa, Indiana, Kentucky, Missouri, Wisconsin, South Dakota, Nebraska and Kansas — and more than 70 percent of losses in Texas were caused by heat, wind and drought that are expected to increase with climate change. NRDC said that cover crops, no-till farming and improved irrigation scheduling could all reduce these losses and that farmers who engage in these practices should get lower crop insurance premiums in the pilot project.
Gabe Brown, a Burleigh County, N.D., farmer, said on a NRDC call with reporters that he has been able to increase his corn yields with these practices while reducing his input costs.
The report notes that the Risk Management Agency could undertake the pilot without congressional action, but O’Connor acknowledged that NRDC has not yet approached RMA.
The report also says that the current premiums “encourage farmers to make riskier choices such as planting crops on fields that are not well suited to agricultural production,” but NRDC did not suggest general reductions in crop insurance premium subsidies, as the Environmental Working Group has.
EWG said today that the NRDC report shows the need for “fundamental reform” of the crop insurance program.
Tom Zacharias
National Crop Insurance Services President Tom Zacharias said, “NRDC’s assertion that crop insurance enticed farmers to plant in risky areas lacks adequate analytical foundation. The primary driver behind planting decisions is crop prices — which have increased dramatically, doubling since 2006 — not crop insurance policies that farmers purchase to manage risk.”
The 326 million acres planted in 2012 was about the same as the 328 million acres averaged over 1981 to 2012, Zacharias noted.
“If anything, crop insurance serves as a disincentive to unnecessary risk taking,” he continued. “That is because farmers have high deductibles and pay a significant portion of the premium out of their own pockets.”
“Before farmers received a single dime in crop insurance indemnity payments in 2012, they shouldered $12.7 billion in losses as part of their deductibles to crop insurance policies, in addition to the $4.1 billion that they spent on premium,” Zacharias said. “So farmers invested roughly $17 billion in their crops before collecting any indemnities in 2012, which totaled approximately $17 billion.”
“In other words, crop insurance allowed them to break even, not collect excessive indemnities as implied by NRDC,” he said.
Zacharias also noted that new technologies are helping curtail losses due to extreme heat and drought, and that RMA has has been working with the Natural Resources Conservation Service to facilitate the use of cover crops with the crop insurance program.
“But in many cases, drought is not the only weather peril farmers face,” he concluded. “Nearly every year, farmers somewhere in the U.S. must contend with flooding or drought, harmful freezes or extreme heat, damaging hail or high winds, tornadoes or hurricanes. And in each and every instance, crop insurance is the best tool available to help farmers manage their many risks.”
