The continuing effects of climate change on weather patterns are pushing crop insurance costs skyward, according to an analysis by the Environmental Working Group (EWG).
Farmers were paid a record $19.13 billion in indemnities last year. For comparison, only $2.96 billion in indemnities were paid out in 2001, EWG reported. Indemnities are paid for reductions in crop yield or revenue.
Many of the 2022 indemnity payments were made for weather-related losses. According to EWG, this inextricably links climate change to skyrocketing crop insurance costs.
“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,” said EWG Midwest director and report author Anne Schechinger. “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.”
The organization also pointed out the imbalance in the effects of the federal Crop Insurance Program. According to EWG, the program benefits only about 20% of all US farms – and those benefits mostly accrue to larger farming operations rather than smaller farms.
EWG also found that about two-thirds of crop insurance payments were paid to farmers in just 10 states – California, Illinois, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, South Dakota and Texas. These farmers received $104.6 billion in indemnities between 2001 and 2022 – 65% of all indemnities paid. Farmers in just three states – Texas, Kansas and North Dakota – received $48.2 billion, accounting for nearly a third of all indemnities paid.
According to EWG, three-quarters of all indemnity payments went to farms growing one or more of only four crops: corn, soybeans, wheat or cotton. More than $55.6 billion – 34% of total indemnities – went to corn growers alone, EWG said.
The effects of climate change will continue to make the Crop Insurance Program more expensive for farmers and taxpayers, EWG said. The organization called for reforming crop insurance to encourage farmers to increase their climate resilience, as agricultural operations currently account for about 11% of US emissions.
“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.”
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