Creating Incentives to Improve Soil Health Through the Federal Crop Insurance Program

Abstract

American farmers are increasingly relying on the subsidized Federal Crop Insurance Program (FCIP) to manage weather-related risks. Unfortunately, the program is structured so that it does not recognize soil security and may actually be putting American soil resources at risk. The FCIP is highly subsidized; on average, 62 % of individual premium costs are paid for by the federal government. As climate change causes more extreme weather and the cost of the FCIP continues to rise, lawmakers will be forced to consider whether the US government can continue to afford the heavy subsidies offered by the FCIP without changes to the program. The FCIP is currently structured using a flawed formula that lets high-risk farmland and management off the hook and ignores soil regenerative practices that would secure the soil. What if the FCIP rewarded good stewardship practices, like cover crops, that could result in lower indemnity payments and also improve carbon sequestration, water quality, and biodiversity? NRDC proposes the development of a pilot crop insurance program offered by the FCIP in select areas of the Mississippi River Basin. The 508(h) pilot program would offer actuarially sound crop insurance discounts to producers whose appropriate use of cover crops puts them at a lower risk for crop loss.