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The Federal Crop Insurance Program Needs Reform

MINNEAPOLIS

Crop insurance premium subsidies in the Mississippi River region cost taxpayers almost $39.5 billion between 2001 and 2020, a new Environmental Working Group analysis of Department of Agriculture data finds.

Total premium subsidies increased during that 20-year period by almost 260 percent – from $656.7 million to $2.3 billion. The USDA’s Crop Insurance Program is a massive initiative whose price tag has skyrocketed since the 1990s, in part due to more frequent and severe bouts of drought and rain linked to the climate emergency. Premium subsidy costs will almost certainly continue to increase as the crisis intensifies.

“The federal Crop Insurance Program must be reformed to encourage farmers to adapt to a rapidly changing climate before costs spiral even more out of control,” said Anne Schechinger, EWG Midwest director and author of the report. “The USDA should start by reducing premium subsidies in environmentally sensitive areas like those found in many parts of the Mississippi River region.”

EWG’s report spotlights the Mississippi River Critical Conservation Area, or MRCCA, a USDA-designated “area of focus” encompassing more than 387 million acres in about 1,000 counties across 13 states. The region is integral to American agriculture yet is especially vulnerable to increasingly extreme weather associated with the climate crisis.

In the 20-year period analyzed by EWG, Illinois, Iowa, Minnesota and South Dakota got the most money in premium subsidies – over $22.9 billion combined, or 58 percent of total premium subsidies in the MRCCA.

EWG’s report explains the many ways the USDA’s Crop Insurance Program discourages farmers from adapting to climate change. It also makes recommendations for crop insurance reforms to encourage on-farm climate adaptation, which can reduce farmer risks and taxpayer costs.

Taxpayers fund about 60 percent of crop insurance premiums – and foot some of the bill for indemnities to insured farmers when losses cost more than premiums.

As previous EWG research has shown, U.S. farmers received more than $143.5 billion in federal crop insurance indemnity payments from 1995 through 2020, much of it for damage from extreme weather associated with the accelerating climate emergency.

The new report builds on prior EWG studies finding that crop insurance indemnity payments to farmers in the MRCCA totaled over $50 billion from 2001 to 2020 and that almost $1.5 billion of those payouts went to farmers for flooding damage – enough money to instead have paid farmers to permanently retire more than 330,000 flooded acres.

“As the USDA evaluates all of its programs for how they could better support climate adaptation and mitigation, the agency should be taking a long hard look at the Crop Insurance Program,” Schechinger said. “Crop insurance reforms are especially imperative in the MRCCA, a region with millions of critically important cropland acres that are particularly vulnerable to extreme weather wrought by the climate emergency.”

Contact:

Sarah Graddy

Senior Communications Advisor for Agriculture and Climate

Environmental Working Group

(202) 939-9141

sarah@ewg.org