Crop Insurance That Conserves?

Submitted by Ferd Hoefner and Bruce Knight on Thu, 2015-02-19

The views presented in these blogs are those of the authors.

Is it possible to grow more food, increase profits for farmers, and improve the environment along the way – just by changing the way we insure crop loss? Based on anecdotal evidence, this reality may be well within reach; during the drought of 2012, Midwest producers who used conservation practices, such as cover crops, experienced lower yield losses. Given this and other similar emerging evidence that conservation practices lead to lower crop losses, could the federal crop insurance program recognize these practices as risk mitigation strategies? What if the Risk Management Agency (RMA) at USDA were able to quantifiably correlate improved soil health and water holding capacity with reduced crop losses during instances of extreme weather?

With roughly 900,000 farmers participating in the federal crop insurance program, we believe that these and other related questions are worth asking. A conservation-grounded crop insurance program could help drive broader-scale adoption of practices that are good for both a producer’s bottom line, the environment, and the taxpayer.

Determining the extent to which a practice such as cover cropping or managing for soil health reduces the risk of crop loss requires gathering and analyzing vast quantities of data. With the terabytes of data USDA already collects from farmers, a data integration and analysis effort could be done now, with no need to wait for the next farm bill.

USDA has some promising data integration efforts already underway – but these can and should go further. Producers, farm and conservation groups, crop insurance companies, NGOs, researchers, and others stand willing and ready to help support and work with USDA in an effort to make existing data more accessible to better understand how conservation practices reduce risks.

The results of these efforts could be significant.

First, they could drive changes in how RMA rates risks. Imagine if producers were able to pay less for their crop insurance because they use certain soil-enhancing practices. With 70% of total U.S. cropland in the crop insurance program, changes in crop insurance could dramatically accelerate producers’ adoption of conserving agricultural practices and yield far-reaching environmental and productivity benefits. Structured appropriately, these changes could also reduce both the short-term and long-term cost of the program to taxpayers.

Second, this data integration and analysis effort could help inform efforts by a growing number of agricultural supply chain sustainability initiatives that are recommending or prescribing the use of specific on-farm practices and technologies.

Third, data integration and analysis could also help support fledgling efforts underway in both the private and public sectors to develop markets for ecosystem services.

Fourth, the insights gleaned from this effort could help inform decisions by USDA, research institutions, and policymakers about where data and results gaps exist and, therefore, how to prioritize future investments and direct policy changes.

In a “point of view” paper released earlier this week by AGree (available here), Stephanie Mercier, the former Chief Economist of the Senate Agriculture Committee and currently with the Farm Journal Foundation, details and argues for the type of initiative we describe above. She provides details about public and private data sets that USDA and others could integrate and highlights potential uses of the data analysis findings. It deserves serious consideration.

Ferd Hoefner is Policy Director of the National Sustainable Agriculture Coalition. Bruce Knight is Principal and Founder of Strategic Conservation Solutions and formerly served as Chief of USDA’s Natural Resources Conservation Service.