Abstract
American farmers are increasingly relying on the subsidized Federal Crop Insurance Program (FCIP) to manage weather-related risks. Unfortunately, the program is structured so that it does not recognize soil security and may actually be putting American soil resources at risk. The FCIP is highly subsidized; on average, 62 % of individual premium costs are paid for by the federal government. As climate change causes more extreme weather and the cost of the FCIP continues to rise, lawmakers will be forced to consider whether the US government can continue to afford the heavy subsidies offered by the FCIP without changes to the program. The FCIP is currently structured using a flawed formula that lets high-risk farmland and management off the hook and ignores soil regenerative practices that would secure the soil. What if the FCIP rewarded good stewardship practices, like cover crops, that could result in lower indemnity payments and also improve carbon sequestration, water quality, and biodiversity? NRDC proposes the development of a pilot crop insurance program offered by the FCIP in select areas of the Mississippi River Basin. The 508(h) pilot program would offer actuarially sound crop insurance discounts to producers whose appropriate use of cover crops puts them at a lower risk for crop loss.
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- 1.
Total indemnities are paid by the federal government and private insurance companies. While we have included total indemnity numbers because they reflect actual crop loss, the subsidized portion is a smaller number, for example, government cost of the FCIP was $14 billion in 2012 (Risk Management Agency 2015).
- 2.
7 USCA § 1523 requires that several additional conditions be met in order for the RMA to approve a premium reduction. For instance, such a reduction must avoid unfair discrimination among farmers, be offered in an adequate geographic area, have the potential to be expanded, and meet all technical and procedural requirements. Any premium reduction program for risk-reducing management practices could be designed to meet these final criteria.
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Bryant, L., O’Connor, C. (2017). Creating Incentives to Improve Soil Health Through the Federal Crop Insurance Program. In: Field, D.J., Morgan, C.L.S., McBratney, A.B. (eds) Global Soil Security. Progress in Soil Science. Springer, Cham. https://doi.org/10.1007/978-3-319-43394-3_37
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