US subsidised insurance premiums result in wasteful farming as well as unnecessary and costly pollution from farms, according to a recent report from the Union of Concerned Scientists.
The nonprofit science advocacy organisation is instead calling for subsidies that encourage environmentally friendly practices, such as planting cover crops that reduce chemical runoff.
Federal crop insurance is meant to provide some safeguards for US producers against weather risk and price volatility. For US farmland investors, particularly in major row crops like corn, wheat and soybeans, it also provides a reliable floor for returns.
However, guaranteed indemnities on every acre operators plant with soy, wheat or corn means farmers are discouraged from planting or allowing cover crops and native perennial plants that would prevent chemicals from leaching into groundwater, the report found. The resulting clean-up costs stack up to $1.7 billion annually, with fishing and tourism industries losing another $1.8 billion from the effects of excess nutrients in the water.
Planting narrow strips of native perennial prairie plants in and around farmland can reduce chemical run-off into surface waters by between 85 percent and 95 percent, at a cost of $25 to $34 per acre, including lost revenues or rents, according to the report, which cites research from the Iowa State University’s STRIPS project.
The report advocates subsidies to reduce these costs through existing US Department of Agriculture environmental and conservation programmes.
The effects of agricultural run-off on US fresh water sources have been the subject of a number of lawsuits from water district. For example,the Des Moines Water Works sued three Iowa agricultural counties last year over high nitrate levels, allegedly from farming activities. The federal government has also stepped up regulatory requirements aimed at cleaning US waterways.
Harn Soper, chief executive for Sustainable Farm Partners, which acquires and converts conventional farmland to organic production, told Agri Investor he does not see crop insurance as a the problem. Carbon markets and mitigation banking schemes could potentially incentivise more sustainable farming practices, he said, but the federal government has proven woefully slow to change a system built to support industrial farming.
Instead, state-level agreements between water districts and agricultural counties, along with stronger market incentives for organic production are more likely to reduce agricultural pollution.
The federal crop insurance programme is part of the 2014 farm bill, which expires in 2018.
The Union of Concerned Scientists is a US non-profit group founded at the Massachusetts Institute of Technology, advocating science-based solutions to global problems.