Research Insights: How Does Crop Insurance Impact On-Farm Conservation Practices?26 March 2021
The connections between the federal crop insurance program (FCIP) and adoption of conservation practices on working lands is an ongoing conversation in the food and agriculture sector. AGree has been exploring these connections since 2015, when we identified crop insurance as a key barrier to conservation practice adoption, as well as an important lever for change in the food and agriculture system. Recent discussions have revealed that there are still questions about whether the federal crop insurance program presents hurdles to conservation practice adoption. This Insight post outlines some key research findings about how crop insurance perceptions impact on-farm conservation, where further research is needed, and the opportunity to better connect conservation and crop insurance.
The Issue & Opportunity
Crop insurance plays a very important role in helping many U.S. farmers manage risk. Every year, there are farmers who have weather-related yield losses, or sometimes complete field losses, who benefit from the safety net of crop insurance. In some years, this safety net has to be very large, such as 2012, when two-thirds of the country was affected by drought and agriculture losses were estimated at $30 billion dollars, with overall U.S. corn yields reduced by 26% (Rippey, 2015). Another prime example was 2019, when an extremely wet April and May caused the majority of Midwestern farmers to be several weeks delayed in being able to plant. Ultimately, 19 million acres could not be planted at all and were declared “prevent plant,” meaning the farmers filed a crop insurance claim indicating the field could not be planted in a reasonable time frame. That year, they requested $4.2 billion in claims (Schnepf, 2020).
While crop insurance is a critically important tool in managing risk, there are other risk management strategies employed by farmers, including use of conservation practices that make soil more resilient. There is a strong body of research demonstrating the benefits of conservation practices to soil health, water retention, and crop resilience to extreme weather events. A recent study by The Nature Conservancy (Kane et al., 2021) analyzed county-level soil organic carbon (SOC), drought levels, and other environmental factors and found that increased SOC reduced the likelihood of farmers receiving an insurance payout.
Another key source of information on the interaction between conservation practices and insurance payouts has been the SARE/CTIC National Cover Crop Farmer Survey. The most recent SARE/CTIC survey report was released in 2020 and gathered information from about 1200 farmers on their 2019 crop year experiences, a year when so many had major planting disruptions from wet weather (72% of the surveyed farmers reporting having at least some “prevent plant” fields). The survey report included data showing how cover crops can reduce crop production risk, for example:
- When planting “green,” a strategy where farmers plant their commodity cash crop into a still living cover crop, 54.3% said they planted sooner in planting green fields than their other fields (or compared to neighbors), while only 9.7% said they planted later.
- 67.7% of farmers said planting green into living cover crops helped their soil moisture management, versus 7.0% that said the soil was too dry and 5.2% that reported soil being too wet from planting green (the remaining 20.1% said their soil moisture was about the same).
As it currently stands, the federal crop insurance program is not designed to reflect risk management benefits of conservation practices. The rating procedure for federal crop insurance is calculated on a county-basis using Average Production History (APH), or the average historic yield of a mixture of fields. A paper published by Woodard and Verteramo-Chiu (2016) in the American Journal of Agricultural Economics evaluated the potential of integrating high resolution soil data into models to calculate insurance rates. They found direct, compelling evidence that large-scale, highly available soil data can predict crop insurance loss rates and that the lack of soil data utilized in rating leads to potential errors. If federal crop insurance policies could be updated to reflect the risk-reducing impacts of soil health on yield, we could have a program where reduced insurance premiums provide a financial incentive for adopting soil health practices.
Do Perceptions of Crop Insurance Barriers Impede Conservation Adoption?
The National Cover Crop Farmer Survey has included several questions over the years about farmer perceptions of crop insurance barriers in terms of cover crops. For example, the 2017-18 survey asked whether perceived issues with crop insurance was impacting farmer adoption; a sizeable fraction of farmers, 30%, reported that they perceived crop insurance to be a barrier to cover crop adoption. What does that mean? Some have assumed if the majority of farmers are not reporting a problem, then there is no issue. But that’s like saying that the fact that only 21% of all Americans die from cancer means that cancer is not an issue (Nichols, 2019).
Likewise, some have cited a recent graduate student study (Fleckenstein et al., 2020) to make the argument that the federal crop insurance program does not present barriers to conservation. The paper by Fleckenstein and coauthors does provide some helpful survey data, but I think we should avoid drawing overly broad conclusions about crop insurance and conservation from that single paper. The Fleckenstein article shared results of survey work in Indiana, Illinois, and Iowa on selected aspects of how crop insurance affected farmer decision making on cover crops and no-till (or conservation tillage). One of the authors’ findings was that the majority of farmers who have already adopted conservation practices said they have been little impacted by crop insurance.
While the number of farmers who said they had the perception that crop insurance limited conservation was in the minority, it is not insignificant. The 26% who said that they perceived that crop insurance IS limiting cover crop adoption would translate to over 100,000 soybean and corn producers who are not as likely to adopt cover crops because of crop insurance concerns.
The survey finding that a majority of farmers didn’t perceive crop insurance as a barrier to conservation may reflect in part that early adopters of conservation practices are motivated strongly by conservation and stewardship values that outweigh any crop insurance concerns.
Fleckenstein and co-authors did show that farmers were more likely to be held back on adoption of cover crops than no-till/reduced-till because of crop insurance concerns, perhaps reflecting that cover crops are a newer practice while conservation tillage has been around for longer and is much more common. While the reported survey data was certainly helpful, more research is needed on the specific factors holding back the majority of commodity farmers (the so-called middle adopters) from adoption of cover crops and other soil health practices.
The most recent SARE/CTIC National Cover Crop Survey provided additional information on crop insurance perceptions. Of the 1,200 farmers surveyed who are not yet using cover crops, 21% said that crop insurance rules made them nervous about trying cover crops on their farm, which is similar to the 26% of farmers in the Fleckenstein survey that said they perceived crop insurance to be a barrier to cover crop adoption. As noted before, while this is a minority of farmers, it still reflects tens of thousands of farmers being discouraged by crop insurance concerns when it comes to cover crop adoption, potentially reducing adoption by millions of acres.
Our Path Forward
There is significant and growing evidence that conservation practices reduce farmer risk. There is also substantial evidence that tens of thousands of farmers are sufficiently concerned about crop insurance eligibility that it is one factor holding back their adoption of conservation practices. As the next Farm Bill is planned, consideration should be given to ways of making sure that all farmers feel that the federal crop insurance program is supportive of conservation adoption rather than a potential barrier to conservation. Likewise, if conservation practices are truly reducing risk for farmers as they appear to be, then crop insurance policies should reflect the risk mitigation benefits of conservation.
However, there is clearly more we need to learn about how crop insurance and conservation are connected. A recently launched Conservation and Crop Insurance research pilot  is going to shed light on this topic. This pilot project, led by researchers at the University of Illinois, in partnership with USDA, is looking at USDA agency data and other information to better understand how use of cover crops and no-till affected corn and soybean planting date in the extremely wet spring of 2019, whether planting occurred at all (prevent plant crop insurance claim declared), and what impact the conservation practice(s) had on 2019 yields. Results of this major data analysis effort should be available by early 2022.
I do believe there is opportunity to have crop insurance policies that actually incentivize conservation practices such as cover crops. Programs in Iowa and Illinois that give farmers a discount on crop insurance premiums in return for planting cover crops have been very popular and should be considered for the next Farm Bill. Overall, we need to continue to think creatively about farm policies that reflect the risk-reducing benefits of conservation practices.
 SARE is the Sustainable Agriculture Research and Education program, a grants and outreach program funded through USDA-NIFA.
 CITIC is the Conservation Technology Information Center.
 The 2017 USDA Census of Agriculture reports 492,639 U.S. farmers growing soybean in 2017.
 In the summer of 2019, USDA did relax crop insurance policy restrictions on cover crops in a way that improved the situation for farmers making use of cover crops.
 Link for more information on the AGree Agriculture Data Pilot project: https://s31207.pcdn.co/wp-content/uploads/sites/4/2020/12/Frequently-Asked-Questions.pdf
CTIC. Report of the 2019-20 national cover crop survey. 2020. Joint publication of the Conservation Technology Information Center, the North Central Region Sustainable Agriculture Research and Education Program, and the American Seed Trade Association.
Fleckenstein, M., Lythgoe, A., Lu, J., Thompson, N., Doering, O., Harden, S., Getson, J. M., and Prokopy, L. 2020. Crop insurance: A barrier to conservation adoption? Journal of Environmental Management, (276) 111223.
Kane, D.A., Bradford, M.A., Fuller, E., Oldfield, E.E., and Wood, S.A. 2021. Soil organic matter protects U.S. maize yields and lowers crop insurance payouts under drought. Environmental Research Letters (16) 044018.
Nichols, H. 2019. What are the leading causes of death in the US? Medical News Today. July 4, 2019.
Schnepf, R. 2020. Federal crop insurance: Record prevent plant acres and payments in 2019. Congressional Research Service. January 15, 2020. Washington, DC.
Woodard, J.D., and Verteramo-Chiu, L.J. 2016. Efficiency impacts of utilizing soil data in the pricing of the federal crop insurance program. American Journal of Agricultural Economics 99(3) 757–772.
About Rob Myers
Rob Myers is Director of the Center for Regenerative Agriculture at University of Missouri, and also serves as Regional Director of Extension Programs for the North Central Region Sustainable Agriculture Research and Education program. He has been a member of the AGree task force addressing conservation and crop insurance issues since 2015. The following are also acknowledged for their helpful input on this blog post: Madelyn Smith, Deb Atwood, and Heather Lair.
*The asterisk indicates Coalition members that do not participate in any lobbying activities related to the Coalition.