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HPPR Economy and Enterprise
Sun September 1, 2013
Report criticizes incentives in the Federal Crop Insurance Program
Farmers across the country received a record breaking 17.3 billion dollars in federal crop insurance payouts after last year’s drought. While the payments were critical for the financial well-being of farmers, the National Resources Defense Council has issued a report critical of the structure of the Federal Crop Insurance Program (FCIP).
The study contends the program is structured to incentivize risky farming rather than encourage risk-reducing and soil-building management practices such as no-till, cover cropping and efficient irrigation management. Moreover, farmers who do follow these practices do not receive the actuarial benefits of their actions.
Many of the recommended practices are familiar to the High Plains, given that it’s a region well accustomed to drought and weather extremes. And across the country many farmers aren’t sold on the report’s findings. Doug Wilson is a farmer in Livingston County Illinois, which had the highest crop insurance payout in the nation. He says it would have been hard for the practices to fend off last year’s extreme heat and dryness in his areas. He paraphrased former President Dwight Eisenhower when reacting to the report, noting “it’s a lot easier to farm with a pencil from a thousand miles away than it is to actually have your hand on the plow”.
By way of recommendations to reform the insurance program, the NRDC report advocates launching a pilot program that “reduces premium rates for farmers who apply low-risk/high-reward farming methods to reduce the risk of crop loss”. It believes the premium rate reductions would more than pay for themselves through reduced claims and that widespread adoption of the practices would lead to “more stable farms”, “a leaner and less relied upon FCIP” and “return of the program to its originally intended model: a safety net, rather than a crutch”.
Click here for complete information on the report. The NRDC is an environmental group whose mission is “to safeguard the Earth: its people, its plants and animals and the natural systems on which all life depends”. It advocates on a variety of environmental issues including curbing global warming, creating a clean energy future, reviving the world's oceans and ensuring safe and sufficient water.
This Harvest Pubic Media story was edited and supplemented by HPPR staff.
Harvest Public Media field note