US Farmers Want to Adapt to Climate Change, But Crop Insurance Won’t Let Them

by Miranda Jeyaretnam (Bloomberg/Yahoo!) ... (Gail) Fuller is one of a growing number of farmers who are uninsured or under-insured because the industry doesn’t support switching from traditional to regenerative farming, an approach that has the potential to sequester enough carbon to halve agricultural emissions by 2030. That shift is becoming more urgent both to slow climate change and insulate farmers from its impacts, yet the insurance industry continues to stand in the way.

Regenerative farming reduces those emissions by soaking up carbon dioxide through photosynthesis, storing carbon in the soil and capturing nitrogen that would otherwise runoff into nearby streams.

Extreme weather also is becoming more frequent, threatening crop yields and supply chains.

Despite these risks — and the benefit regenerative agriculture can play in addressing climate change — stronger incentives have locked in the status quo, according to Anne Schechinger, Midwest director at the nonprofit Environmental Working Group (EWG).

Crop insurance policies mainly cover conventional commodity crops such as corn, soybeans, cotton and wheat. Farmers growing them typically enroll in multi-peril insurance, which insures individual crops against poor harvests caused by disease, flooding, droughts and other extreme weather.

Like health, car or property insurance, appraisals for losses or damages rely on standards — known as Good Farming Practices — that ensure low yields aren’t caused by mismanagement. But these rules cannot include a practice that may lower a crop’s yield and therefore tend to follow established industrial, monoculture practices: A farmer caught growing different crops between rows or terminating their cover crops too late, for example, is at risk of having their insurance claims denied.

Regenerative agriculture often involves interspersing different crops in the same field and growing lower-yielding perennial plants that can create issues for insurers. But crop insurance payouts largely don’t depend on whether a farmer’s practices increase or mitigate climate risks, according to University of Iowa professor Silvia Secchi.

He had grown cover crops in the off-season, one of the more commonly employed regenerative farming practices that involves planting non-market 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 market crop.

But when his insurance company appraised the land in August 2012, during a severe drought, it determined that the remnant cover crops were weeds. The company denied all of Fuller’s claims — which led to his lending institution dropping his operating line of credit.

Fuller sued his insurance company and won. Two years later, however, when he needed them to cover losses for two fields of soybeans, they denied his claims again. The financial turmoil across those two years forced him to downsize his farm to 400 acres from 1800, and he finally decided to quit crop insurance entirely.

The US 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 to plant cover crops during the offseason.

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

The crop insurance system is already under stress from climate change. The program has to evolve to incentivize practices appropriate to different regions and cover a variety of risks, a USDA spokesperson said, all while being actuarially sound — meaning the program must charge high enough premiums to cover expected losses.

Collecting sufficient data to prove that climate-friendly practices like crop diversification won’t impact yield is a big ask for any one farmer, however.

The USDA also initiated the Whole-Farm Revenue Protection Program in 2014, which insures a farm’s entire revenue 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 Revenue Protection Program is small, according to EWG’s Schechinger. About 1,800 policies were sold in 2023, according to the USDA, which accounts for less than 1% of crop insurance. The program involves significantly more paperwork and an insured revenue cap that doesn’t always cover the entire farm’s revenue, which can be prohibitive to insurance agents in selling and farmers in buying the policy, Layher said.

Companies like CoverCress Inc., which is majority-owned by Bayer AG, are trying to get farmers to plant cover crops that can be used for sustainable aviation fuel. And General Mills Inc. implemented pilot programs to help 24 wheat farmers in Wichita, Kansas, kickstart their regenerative practices.

One of the biggest challenges uninsured farmers face is from their lending institution, which often requires them to have an insurance policy to continue receiving loans. READ MORE