Strengthening Crop Insurance through Conservation

By Bruce Knight

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As debate heats up on deficits and the next farm bill, there's been considerable talk about eliminating commodity payments. That could have some serious ramifications for conservation.

If there are no longer any commodity payments, what happens to the conservation initiatives-swampbuster and sodbuster-from the 1985 Farm Bill that prohibited farmers who received those payments from planting on highly erodible land? Increased pressure from the marketplace could put marginal acres at risk. And that's a concern because 25 percent of the reduction in soil erosion from 1982 to 1997 is attributed to compliance with swampbuster and sodbuster requirements.

One possibility that's gaining traction is to link swampbuster and sodbuster provisions in the next farm bill to the purchase of crop insurance. In fact, these requirements were at one time a part of crop insurance agreements. However, with the 1996 Farm Bill, that linkage was severed in an effort to encourage more producers to purchase the insurance.

Now may be the right time to consider re-linking a commitment to protect highly erodible land with the purchase of crop insurance. Over the past 15 years, the public's investment in crop insurance has grown significantly-to a high of $7.3 billion in FY2009. A recent Congressional Research Service report projected that over the next 10 years, federal spending on crop insurance would outpace spending on traditional commodity programs by about one-third. We could argue that a minimum level of land stewardship is a fair exchange for that public investment. Farmers do pay premiums for crop insurance. But 60 percent of the cost of each crop insurance premium comes from the taxpayers. That's substantial support. I think linking that support to conservation strengthens the justification for crop insurance subsidies at a time when legislators are looking to reduce expenses by asking those who benefit from programs to pay a greater share of the cost. There would be no new obligations for farmers-just continuing current commitments.

On June 24, 2011, Risk Management Administrator William J. Murphy told the House Subcommittee on General Farm Commodities and Risk Management that “Crop insurance is a vital part of the farm safety net and has become an integral part of business life for a large majority of American farmers and ranchers.” According to Administrator Murphy, more than 250 million acres of farm and ranch lands are covered by crop insurance, with an 80-percent participation rate for major crops. So, most farmers are now participating in this program.

Beyond the current links to commodity payments, there are other linkages for swampbuster and sodbuster-prohibition of insurance purchases for five years for crops grown on native-sod acreage that has been tilled for crops in Prairie Pothole National Priority Areas. A similar provision is in place for the Farm Service Administration's Noninsured Crop Disaster Assistance Program (NAP). In addition, dairy farmers participating in the Milk Income Loss Contract Program (MILC) currently must also comply with swampbuster and sodbuster.

Tying crop insurance purchases to a promise to protect highly erodible land is a sensible approach to maintaining current environmental protections. It would continue conservation commitments and provide a stronger rationale for public investment in crop insurance premium subsidies. We need to embrace this approach to benefit both conservation and crop insurance as we put together the next farm bill.

About the author: Bruce I. Knight, Principal, Strategic Conservation Solutions, was the Under Secretary for Marketing and Regulatory Programs at the U.S. Department of Agriculture (USDA) from 2006 to 2009. From 2002 to 2006, Knight served as Chief of Natural Resources Conservation Service. The South Dakota native worked on Capitol Hill for Senate Majority Leader Bob Dole, Rep. Fred Grandy, Iowa, and Sen. James Abdnor, South Dakota. In addition, Knight served as vice president for public policy for the National Corn Growers Association and also worked for the National Association of Wheat Growers. A third-generation rancher and farmer and lifelong conservationist, Knight operates a diversified grain and cattle operation using no-till and rest rotation grazing systems.

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