Guest blog by Adam Kotin
After more than a year’s work crafting a new five-year Farm Bill, Congress decided to once again put off the hard decisions.
Instead, as part of the last-minute ‘fiscal cliff’ deal, it authorized a 9-month extension of the 2008 farm bill. This extension eschews reform and lacks vital funding for conservation, research, energy, specialty crop and organic programs.
Congress did, however, preserve piles of funding for a major aspect of the farmer ‘safety net’: subsidized crop insurance.
This past spring, as part of a cost-cutting farm bill that would have saved $23 billion over five years, the Senate voted to eliminate the longstanding direct payments program—a move that has been supported by the National Sustainable Agriculture Coalition (NSAC) and most conservation-minded organizations for many years. The bill passed out of committee in the House of Representatives did the same, with its additional $12 billion in cuts coming largely at the expense of food stamps and conservation spending.
But House Speaker John Boehner (R – OH) didn’t let the bill go up for a vote, paving the way for the gutless farm bill extension.
Above all, the 2012 Farm Bill debacle revealed a confused and divided Congressional leadership. Many commentators, and indeed many of the politicians whose job it is to pass agricultural legislation, are left wondering, ‘What next?’
The short answer is: we don’t know. Whether or not legislators will be able to pull together a comprehensive new farm bill before the current extension expires is anyone’s guess. But given the current cost-cutting zeitgeist on Capitol Hill, it’s a fair bet to say that any new farm bill will significantly slash all of the major agricultural programs—all, that is, except perhaps crop insurance.
Despite tremendous political pressure, including from the White House itself, rural lawmakers have stood firm in their desires to not just preserve crop insurance but to expand it. Both the House and Senate Farm Bills would have increased overall spending on crop insurance, even going so far as to create a new insurance mechanism for expanded coverage in cases of revenue loss.
The federally-subsidized crop insurance program, begun as a temporary emergency support to Dust Bowl and Depression-era farmers, has effectively become ‘too big to fail’.
The federal government now pays about 62 cents of every dollar in crop insurance premiums, and many farmers say crop insurance is the program they depend upon the most. Following the most recent spates of extreme weather, some say insurance is what keeps them afloat. Farmers’ unions across the country have let it be known that crop insurance is a top priority for the future.
But as the 113th Congress starts from scratch in 2013, the full cost of a farmer safety net during the United States’ hottest year on record is becoming clear. The taxpayer bill for crop insurance indemnities is expected to top out at around $15.8 billion for the 2012 year, shattering the previous cost of $9.4 billion for 2011 losses.
It is therefore easy to see why farm-state lawmakers are increasingly anxious about crop insurance being a ‘juicy target’ for spending cuts. They point out that indemnities are at an all-time high because the program is so badly needed—after all, high indemnity costs mean farmers are actually relying on crop insurance when extreme weather strikes.
So in the renewed farm bill talks, two things should be heard screaming out for lawmakers’ attention. First, the need for sensible and forward-thinking agricultural spending reform; and second, the need to plan for and address the impacts of extreme weather on our farming systems.
Here’s the good news: when used in tandem with a prudent package of other programs, crop insurance itself might be used to both reduce farm vulnerability and gird our agricultural systems for the future climate.
Insurance mechanisms will almost assuredly play a major role in adapting current social and economic systems to the effects of climate change. It’s insurance companies, by and large, who set the price of risk. They’re also the ones who can encourage you to take preventative action, such as by lowering your premium for driving safely or installing a burglar alarm.
When insurance companies incorporate future climate change risks into their models, people respond to them, as well, by building further away from the rising sea or, say, increasing water use efficiencyin a drought-prone area.
Research in the most recent issue of Science suggests that the global property/casualty insurance industry is actually becoming a vanguard for climate change mitigation and adaptation. Insurers are supporting climate-aware zoning measures and other adaptation measures that build resilience and, ultimately, reduce weather-related losses.
The crop insurance industry might do much the same. A climate-adaptive federal crop insurance program would reward growers who acknowledge future climate risks and plan accordingly. It would extend and expand insurance support to farmers using sustainable practices that build strong, healthy soil and reduce water use when water is scarce. It would, as CalCAN and NSAC have argued, tie conservation compliance to crop insurance, ensuring that farms’ ecological systems are protected. A healthy farm ecosystem can serve as its own form of insurance, softening the effects of heavy floods, droughts, and winds.
At present, organic, sustainable, small-scale farms and many specialty crop growers are largely excluded from government insurance support. Traditional insurance structures favor neither diversification nor small-scale production; the federal farmer ‘safety net’ benefits some farmers over others. The vast majority of farms receiving federal crop insurance subsidies are therefore large commodity producers, whose reliance on off-farm inputs and lack of diversification make them even more vulnerable when extreme weather hits.
Rather than proposing to use conservation funds to pay for disaster assistance, as the House did back in August, lawmakers should view our nation’s conservation, energy, specialty crop, and organic expenditures as investments in a more climate-resilient agricultural system.
Crop insurance is just one part of the huge farm bill apparatus, but extreme weather events and climate change impacts will continue to push it further to the fore. How crop insurance relates to other farm-level programs in the next farm bill could set our course on issues of climate adaptation for years down the road.