EWG analysis: Climate crisis has already cost taxpayers billions in crop insurance payouts to farmers

Federal policymakers must require climate-smart practices for resilience, adaptation

WASHINGTON – Farmers received more than $143.5 billion in federal crop insurance payouts from 1995 through 2020, much of it subsidized by taxpayers and most of it linked to extreme weather exacerbated by the climate crisis, according to a new Environmental Working Group analysis of Department of Agriculture data.

EWG is releasing the analysis together with its newly updated Crop Insurance Database.

During the 26-year period scrutinized by EWG, $87.6 billion, or 61 percent of total crop insurance payments, was paid to farmers for losses from drought and excess moisture – two phenomena that have become both more common and more extreme in many parts of the country, thanks to the rapidly worsening climate emergency.

“The numbers don’t lie: The climate crisis is already pummeling American farmers, at taxpayers’ expense,” said EWG Midwest Director and agricultural economist Anne Schechinger.

“Without better policies requiring climate-smart farming decisions to mitigate the climate emergency and build resilience, the cost of the already astronomically expensive crop insurance program will keep growing at a runaway pace. And farmers will continue to struggle with the effects of extreme weather,” Schechinger said.

EWG’s analysis finds that payouts for drought and excess moisture losses have skyrocketed since 1995, the first year the nonprofit watchdog group started tracking these and other subsidies in its renowned Farm Subsidy Database.

Crop insurance payments, called indemnities, for drought were $1.65 billion in 2020, four times more than the $325.6 million paid out for drought in 1995. Excess moisture indemnities were $2.6 billion in 2020, three times more than the $685.4 million paid out for this “cause of loss” in 1995.

But the USDA’s Crop Insurance Program doesn’t encourage or require farmers to adapt to climate change or reduce greenhouse gas emissions.

In fact, as EWG’s analysis shows, the USDA often pays farmers for the same type of loss year after year.

The 10 counties with the largest drought indemnities were in Texas, which has gotten hotter and drier in recent years.

The highest total amount of excess moisture payments went to a South Dakota county. The other nine counties with the most excess moisture payments were in North Dakota. Both states have been increasingly plagued by extreme rain events in recent years.

The Crop Insurance Program has been heavily subsidized by taxpayers for many years. Some indemnities come from money paid by farmers, but when losses exceed premiums, taxpayers largely fund the additional payments.

Taxpayers also bear most of the burden of crop insurance premiums, with the average farmer paying only 40 percent of his or her premium and taxpayers picking up the tab for the rest. Between 1995 and 2020, $103.5 billion in taxpayer-funded federal subsidies went toward farmers’ crop insurance premiums.

The new crop insurance data, and the Crop Insurance Database itself, are part of EWG’s Farm Subsidy Database. The database tracks $425 billion in federal farm subsidies paid to farmers and landowners from commodity, crop insurance, disaster and conservation programs. EWG gathers the data from the USDA’s website and Freedom of Information Act requests.

The 2023 Farm Bill, which Congress is beginning to discuss, is a once-in-a-lifetime chance to reform federal farm policies, including crop insurance, to encourage farmers to adapt to climate change and reduce emissions before it’s too late.

“Congress must reform the Crop Insurance Program in the next farm bill so the program helps farmers prepare for and adjust to changes in the climate,” Schechinger said. “It’s imperative that U.S. agriculture become as climate-resilient as possible, as quickly as possible.”

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The Environmental Working Group is a nonprofit, non-partisan organization that empowers people to live healthier lives in a healthier environment. Through research, advocacy and unique education tools, EWG drives consumer choice and civic action. Visit www.ewg.org for more information.

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