Climate Change Seriously Impacting Crop Insurance

The cost of crop insurance is going sky high. An analysis by the Environmental Working Group (EWG) says climate change and its effect on weather patterns is the reason.

According to the report, last year farmers paid a record $19.13 billion in the indemnities paid for crop yield reductions or revenue. To give you a better perspective on the seriousness of the issue, in 2001 those payments were just $2.96 billion.

The high costs attributed to the 2022 payments are weather-related losses. And report author, Anne Schechinger is tying it to climate change.

“Our analysis showed that the costs of the Crop Insurance Program have spiraled, in large part because of increasingly extreme weather tied to the climate emergency,” Schechinger said. “Over the past 22 years, taxpayers have largely shouldered the monumental expenses of a program that does little to help farmers adapt to climate change.”

She also noted problems with the federal crop insurance program. It only helps 20% of the nation’s farmers and those benefits are largely given to the bigger farming operations.

Smaller farms are mostly left out.

The EWG report notes that 2/3 of the federal crop insurance payments were made to farmers in just 10 states. They are:

  • The PIA Western state of California
  • Illinois
  • Iowa
  • Kansas
  • Minnesota
  • Missouri
  • Nebraska
  • North Dakota
  • South Dakota
  • Texas

Between 2001 and 2022 farmers picked up $104.6 billion in indemnities. And of the 10 states took in 65% of that money with $48.2 billion going to three of them:

  • Texas
  • Kansas
  • North Dakota

Three quarters of the indemnities also went to four crops: corn, soybeans, wheat and cotton. Over $55.6 billion went to corn alone.

EWG says the effects of climate change are making the federal crop insurance program much more expensive for farmers and for taxpayers. Schechinger’s report urges major changes and reforms in the crop insurance program to help.

“Without meaningful reform, the federal Crop Insurance Program will become unsustainably expensive for both farmers and taxpayers,” Schechinger said. “The 2023 Farm Bill provides a critical opportunity for Congress to update the program by cutting rapidly climbing costs, spurring growers to adapt to the climate emergency and better protecting small farmers.”

Source link: Insurance Business America —

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