More Droughts, More Flooding — Crop Insurance Payouts Rise

The Environmental Working Group (EWG) is worried. Droughts and flooding due to climate change is pushing the payments up for crops lost by U.S. farmers. After studying data from the federal government, EWG said payments have increased three-fold in the last quarter century.

The big worry? Crops for everyone — farmers, insurers, the taxpayer and consumers — will be more expensive going forward.

As most of you know, the U.S. federal government pays close to 60% of the crop insurance premiums for those in agriculture. There are others but most of the insured crops are corn, soybeans, wheat and cotton. The Congressional Budget Office (CBO) says premiums to insure those crops and the others will go up as payouts rise.

• Payments to farmers rose over 400% from 1995 to 2020
• Payments in that time frame hit $1.65 billion
• Payments for flooding jumped 300% in that time frame to $2.61 billion

EWG says during that time period the number of insured acres only rose 84.5%. So the balance between payouts and number of acres is way out of balance. “As extreme weather has become more frequent, the climate crisis has already increased insurance payments and premium subsidies,” the EWG report said. “These costs are expected to go up even more, as climate change causes even more unpredictable weather conditions.”

While the EWG report doesn’t outline this, the U.S. Department of Agriculture (USDA) looked at it in 2019 and found the cost of insuring crops could rise between 3.5% and 22% by 2080.

Climate change will drive those costs.

The federal crop insurance program has requirements that farmers and agribusiness meet some strict conservation standards. Anne Weir Schechinger is the Midwest director of EWG. She maintains those standards need to be higher.

“The program needs to be reformed so it encourages farmers to be resilient to extreme weather events that we know are ahead,” she said.

Source link: Insurance Journal — https://bit.ly/3HgJDIO