(Bloomberg) — In Kansas, where a prolonged drought has killed crops and eroded soil, Gail Fuller’s farm is an oasis. Sheep, cows and chickens graze freely on crops and vegetation in a paradisiacal chaos.
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But if Fuller’s farm were hit by a tornado or a flood, or severely affected by the drought, he would be the only one footing the bill. That’s because his farming practices aren’t protected by federal crop insurance, a safety net that’s nearly a century old and hasn’t adapted to the age of climate change.
Fuller is one of a growing number of farmers who are uninsured or underinsured because the industry isn’t supporting the shift from traditional to regenerative agriculture, an approach that has the potential to sequester enough carbon to halve agricultural emissions by 2030. That shift is increasingly urgent to slow climate change and protect farmers from its impacts, but the insurance industry continues to stand in the way.
In the U.S., agriculture is responsible for about 11 percent of all greenhouse gas emissions. Much of that comes from tilling the soil, which releases carbon dioxide, and excessive fertilizer applications, which release nitrous oxide, a greenhouse gas more than 270 times more potent than CO2. Regenerative agriculture reduces those emissions by capturing carbon dioxide through photosynthesis, storing carbon in the soil, and capturing nitrogen that would otherwise run off into nearby streams.
Extreme weather is also becoming more common, threatening crop yields and supply chains. According to the U.S. Drought Monitor, 24 states, including Kansas, are experiencing severe to exceptional droughts. That’s a problem, as are increasingly severe, heavy rains that can strangle crops. Nearly 20 percent of the $140 billion in crop insurance payouts from 1991 to 2017 were due to rising temperatures, according to Stanford University researchers. They estimate that percentage will continue to rise as extreme weather becomes more frequent due to climate change.
Despite these risks – and the benefits regenerative agriculture can provide in addressing climate change – stronger incentives have perpetuated the status quo, said Anne Schechinger, Midwest director of the nonprofit Environmental Working Group (EWG).
Crop insurance policies primarily cover conventional staple crops such as corn, soybeans, cotton and wheat. Farmers who grow these crops typically sign up for multi-peril insurance, which insures individual crops against poor harvests caused by disease, floods, droughts and other extreme weather.
Like health, auto or property insurance, assessments for losses or damages rely on standards — known as Good Farming Practices — that ensure that low yields aren’t caused by mismanagement. But these rules can’t cover practices that could reduce a crop’s yield, and so often follow established industry monoculture practices: a farmer caught growing mixed crops between rows or finishing his cover crops too late, for example, risks having his insurance claims denied.
Regenerative agriculture often involves planting multiple crops in the same field, and growing lower-yielding perennials, which can pose problems for insurers. But crop insurance payouts are largely independent of whether a farmer’s practices increase or reduce climate risk, says University of Iowa professor Silvia Secchi.
Fuller, a third-generation farmer, began experimenting with regenerative farming practices in the mid-1990s, thinking he would see better yields and more resilient crops in the long run. He had been growing cover crops in the off-season, one of the most common regenerative farming practices that involves planting non-cash crops that improve soil health. At the time, Fuller was covered by crop insurance, and, as per insurance rules, he killed his cover crops with herbicide before growing his cash crop.
But when his insurance company appraised the land in August 2012, during a severe drought, it determined that the remaining green manure was weeds. The company denied all of Fuller’s claims, leading his lending institution to drop its operating line of credit.
Fuller sued his insurance company and won. Two years later, when he needed them to cover losses on two soybean fields, they again denied his claims. The financial turmoil of those two years forced him to downsize his farm from 1,800 to 400 acres, and he eventually decided to cancel the crop insurance altogether.
“Once you’re broke as a farmer, it’s hard to fight your way back,” Fuller said. “I didn’t want to be part of that system. We’ve got to find a better way to farm.”
The U.S. Department of Agriculture has implemented reforms and alternatives to its crop insurance program to account for climate risks over the past decade, including coverage for new crops and a $5-per-acre incentive to plant cover crops outside of the season.
The Risk Management Agency, which administers federal crop insurance, has also expanded coverage for certain climate-friendly practices, such as reducing water use, green manuring and injecting nitrogen into the soil rather than putting it on the surface. Farmers still have to follow specific rules, such as ending their green manure crops early enough, which some scientists think limits the extent to which these practices can reduce emissions.
The crop insurance system is already under pressure from climate change. The program must evolve to encourage practices that are appropriate for different regions and to cover a variety of risks, a USDA spokesman said, all while being actuarially sound — meaning the program must charge high enough premiums to cover expected losses.
“Even on a micro scale, a major storm can damage one crop while providing much-needed rain for another crop,” the U.S. Department of Agriculture spokesperson told Bloomberg Green.
“Crop insurance is voluntary,” said RJ Layher, director of government affairs for the American Farm Bureau Federation. Farmers who use regenerative technologies that aren’t covered by Good Farming Practices can seek other options, he added, including demonstrating to the Risk Management Agency that their practices are actuarially sound.
However, collecting enough data to demonstrate that climate-friendly measures such as crop diversification do not impact yields is a major challenge for each individual farmer.
In 2014, the U.S. Department of Agriculture also launched the Whole-Farm Revenue Protection Program. This program insures the entire yield of a farm, rather than individual crops. This creates a safety net for farmers who grow additional crops or keep animals in their fields.
But the number of farmers participating in the Whole-Farm Revenue Protection Program is small, EWG’s Schechinger said. About 1,800 policies were sold in 2023, according to the USDA, which represents less than 1% of crop insurance. The program involves significantly more paperwork and an insured income cap that doesn’t always cover the entire farm’s income, which can be prohibitively expensive for insurance agents to sell and for farmers to buy, Layher said.
Layher said the Farm Bureau supports improvements to the Whole-Farm Revenue Protection Program, which would make it more accessible to farmers and easier for insurance agents to sell. Both reforms are proposed in the Farm Bill, which is stalled in the House of Representatives until at least September.
The regenerative agriculture movement is relatively small, but it has gained traction in recent years thanks to federal support and agribusinesses looking to align their supply chains and sustainability goals. Companies like CoverCress Inc., majority owned by Bayer AG, are trying to get farmers to plant green manure that can be used for sustainable jet fuel.
But for now, the push to change insurance rules still largely depends on farmers like Fuller and Rick Clark, a third-generation farmer from west-central Indiana who has been uninsured for six years because he practices regenerative agriculture.
When he’s not working on his farm, which grows green manure across its entire 7,000-acre property, Clark teaches other farmers how to avoid chemical fertilizers and use green manure on their farms.
“We need to make sure that the path to change is an easy path,” Clark said. One of the biggest challenges uninsured farmers face is their lending institutions, which often require them to have insurance policies to continue receiving loans.
Clark testified before Congress in late 2022 on behalf of Regenerate America, a coalition lobbying for agricultural reform, calling for the legislative reforms Schechinger said were necessary. The day after Clark testified, Congress passed the Inflation Reduction Act, President Joe Biden’s landmark climate bill that includes a $19.5 billion investment in USDA conservation programs. He felt he could play a small role in that.
“At some point when you’re out there, you wonder if anyone is even paying attention to what you’re saying,” Clark said. But then “you feel like maybe your words aren’t falling on deaf ears and maybe there are people out there who are actually paying attention.”
–With assistance from Sophie Butcher.
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