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(Article Summarized by Meridian Institute) This article begins: “Another growing debate over crop insurance is whether conservation methods should be rewarded for reducing risk through lower crop insurance premiums. If you take steps to protect your soil with no-till and cover crops, should you be rewarded with a discounted crop insurance premium? The idea is not new, but it’s never found its way into a farm bill.” Jerry Hatfield, the director of the National Laboratory for Agriculture and the Environment, says, “Tying crop insurance to conservation programs would have ecological, conservation and production impacts that we could not even imagine.” One example, adds Hatfield, is yield variability. Farmers who use good soil health practices rarely see variable yields in their corn and soybean crops. “When we improve aggregation in soil, we improve gas exchange and capacity to set yield both in corn and soybeans,” he says. “We can alleviate some of this variability, like the area of a field subject to flooding. Conversely, late in the season, if I improve water-holding capacity and get crops to transpire at maximum rate, the higher the yield. You can do all that through activities like covers and no-till.” But not everyone believes there is enough data to implement an insurance discount for conservation practices. Brandon Willis, the former head of the U.S. Department of Agriculture Risk Management Agency, says there is currently not enough data on cover crops. The next farm bill, he suggests, could focus on gathering that data to determine if it is actuarially sound to say that conservation practices reduce risk. Iowa, with its recently announced pilot program offering a $5 per acre premium reduction on crop insurance in 2018 if farmers plant cover crops this fall, would offer a perfect learning opportunity. Hatfield suggests that a discount policy could be implemented by looking at five-year average yield and five-year standard deviation in yield. He adds: “If they go to the bank and tell them they want to make changes [to no-till], but the banker sees it as too risky, there’s a problem. We have to make sure the financial institutions and farm managers are in tune with the operators and landowners.”

Posted December 5th, 2017
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