Federal Crop Insurance and Conservation Programs: Should They Be Linked?

Helping agricultural producers manage the risks of uncertain and volatile commodity markets, prices for inputs, weather, and other hazards is key to sustaining the nation’s capacity to produce ample food, feed, fiber, and biofuels. Conserving the nation’s soil, water, biological diversity, and wildlife habitats and restoring the nation’s water quality and fisheries are also urgent national priorities. Yet conservation success lags far behind the success of agricultural production. Can the next Farm Bill encourage better balance - more production and much more conservation?

On March 15, the Senate Committee on Agriculture, Nutrition and Forestry held a hearing to consider "risk management and commodities in the 2012 Farm Bill." Click here for the witness list and testimonies. According to Michael Scuse, USDA’s Acting Under Secretary for Farm and Foreign Agricultural Services, "The Federal Crop Insurance Program provided more than $113 billion in risk protection on over a million policies covering 264 million acres in crop year 2011. Reflecting extensive crop losses, the program has paid out over $10 billion in claims for lost revenue or damaged crops."

What if all of those acres enrolled under federally subsidized crop insurance were also enrolled in conservation programs as a condition for receiving the federal crop insurance subsidies? The benefits for conservation could be significant for both producers and tax-payers. Linking participation in federal crop insurance and conservation programs could help set the stage for a new, beneficial social contract between agricultural producers and tax-payers: Tax-payers would continue to provide a safety net to agricultural producers, and producers would increase efforts to help protect and restore the nation’s environmental quality.

In testimony before the Senate committee March 15, the National Farmers Union endorsed this idea, saying "NFU members support the reestablishment of compliance requirements for federal crop insurance eligibility so that all existing or new crop and revenue insurance or other risk management programs are subject to all conservation compliance provisions."

A report from the USDA Natural Resources Conservation Service, released in February 2012, "Assessment of the Effects of Conservation Practices on Cultivated Cropland in the Ohio-Tennessee River Basin" , highlights both the progress made in recent years through voluntary conservation programs and also the significant challenges that remain. From the report summary :

Adoption of conservation practices has reduced edge‐of‐field waterborne losses of sediment by 52 percent, losses of nitrogen with surface runoff by 35 percent, losses of nitrogen in subsurface flows by 11 percent, and losses of phosphorus (sediment attached and soluble) by 33 percent. . . .

Opportunities exist to further reduce sediment and nutrient losses from cropland. The study found that 24 percent of cropped acres (6 million acres) have a high level of need for treatment for sediment or nutrient loss, or both. Forty‐six percent (11.5 million acres) have a moderate level of need for additional conservation treatment. Acres with a high level of need consist of the most vulnerable acres with the least conservation treatment and the highest losses of sediment and nutrients. . . .

Clearly, much greater participation in conservation is needed in this region, as well as other regions across the U.S.

The environmental impacts of corn production for feed and biofuel are of particular concern, according to a September 2011 article by Marc Ribaudo of the USDA Economic Research Service, "Reducing Agriculture’s Nitrogen Footprint: Are New Policy Approaches Needed?"