Report: Crop insurance subsidies projected to skyrocket

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The effects of climate change on agriculture could cost the federal government as much as $4.2 billion more annually in crop insurance subsidies by 2080, a report released Wednesday by the Government Accountability Office found.

The GAO released its annual look at areas of high risk for the federal government, and the agency identified “Limiting the Federal Government’s Fiscal Exposure by Better Managing Climate Change Risks” as one of the 34 risks.

One area most effected by that is crop insurance, which is likely to increase because of more extreme weather events, including both drought and flooding.

The U.S. Department of Agriculture pays about 60 percent of crop insurance premiums; the farmer pays the remainder. The USDA also pays insurance companies a percentage to administer the program as well as cover any crop insurance claims. All total, the crop insurance program cost the USDA $5.9 billion in 2015.  In 2012, owing to drought that devastated many crops, the program cost was $13 billion.

The GAO has found that current crop insurance policies may exacerbate climate change, including that some farming practices “maintain short-term production but may inadvertently increase the vulnerability of agriculture to climate change through increased erosion and inefficient water use.”

An annual $4.2 billion increase in insurance subsidies would nearly double what the federal government pays now to supplement crop insurance coverage. In 2015, the federal government paid nearly $6.1 billion to subsidize crop insurance premiums, compared to $6.2 billion in 2014.

That number would also have to be adjusted for future inflation.

“For crop insurance, we recommended in October 2014 that the Secretary of Agriculture direct the FCIC to consider working with agricultural experts to incorporate resilient agricultural practices into good farming practices—which farmers must follow to have their losses covered—so that these practices take into account long-term resilience to climate change,” the report said.

The USDA has not specified whether it agrees or disagrees with the recommendation, the report said.

Additionally, the GAO found that the federal food safety oversight system is ineffective and foodborne illness causes 48 million people to get sick each year. This poses a significant cost to the economy that the FDA and the USDA’s Food Safety and Inspection Service are unable to effectively address.

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