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How You Pay Farmers to Watch Their Crop Shrivel Up and Die

The federal crop insurance program puts farmers in a real bind. And as climate change intensifies, it's only getting worse.

| Wed Oct. 30, 2013 5:00 AM EDT

Eric Herm, 40, unloads non-genetically-modified cotton seed into a storage barn on his 6,700 acre farm in West Texas.

In 2011, Eric Herm's cantaloupes exploded.

A fourth-generation cotton farmer in West Texas, Herm was experimenting with a home garden to help feed his family during the onset of a drought in the area. Blistering heat, including 100-degree days as early as May, was wilting Herm's cotton—and in the end, it turned his melons into pressure cookers.

Most of Herm's neighbors have lost their cotton crop the last three of four growing seasons—part of the most severe regional drought in more than 50 years. According to the National Oceanic and Atmospheric Administration, 2012 temperatures in the United States were the hottest in recorded history. And a May 2013 report by the American Meteorological Society's Journal of Climate concluded that "human-induced climate change" played a statistically significant role in the record-breaking temperatures of 2011, adding that the period from October 2010 to September 2011 "was Texas's driest 12-month period on record."

As of October 2013, more than 80 percent of Herm's neighbors declared their cotton a failure and collected crop insurance claims, subsidized by US taxpayers.

With the exception of scattered irrigation, most farmers in West Texas practice "dryland" farming, meaning they're entirely dependent on rain. Rainfall on Herm's acreage had previously averaged 17 inches a year, but in 2011 and 2012 the annual averages were 3 and 8 inches, he said. Even the driest years of the Dust Bowl, which lasted off and on from 1930 to 1940, brought about 9 to 14 inches of rain to Herm's region, according to Natalie Umphlett of the Nebraska-based High Plains Regional Climate Center.

"In the back of my mind I'm wondering, 'Where do I go if things get that bad?'" Herm said back in May, while planting for the 2013 growing season. "If we do not make a crop this year, I'm going to have to a real serious look at [the] future."

The latest news is not reassuring. As of October 2013, more than 80 percent of Herm's neighbors declared their cotton a failure and collected crop insurance claims, subsidized by US taxpayers.

If recent research by the US Department of Agriculture is any indication, the crop failures will be a sign of the future. In a February 2013 report, the agency rounded up relevant scientific findings from 56 experts from federal service, universities, and nongovernmental organizations. The results cast doubt on the viability of the US heartland in the age of warming—and not just for dryland cotton. "Continued changes by mid-century and beyond," the report said, "are expected to have generally detrimental effects on most crops and livestock." Among other problems, "weed control costs total more than $11 billion a year in the US. Those costs are expected to rise with increasing temperatures and carbon dioxide concentrations."

Interviews with more than a dozen climatologists, agronomists, agro-economists, and agricultural statisticians have generally echoed the USDA's prognosis: After about 30 years, greenhouse gas concentrations will reach critical enough levels to significantly disrupt agriculture. But even the next 10 years will probably prove challenging for American farmers, because the weather will be more variable. As Columbia University associate professor of international and public affairs Wolfram Schlenker put it, "There's more certainty that there will be less certainty."

In any case, taxpayers are on the hook for climate-related disruption of US food production—mainly in annual outlays for crop insurance. In February 2013, the same month that the USDA released its bleak assessment on global warming, the Government Accountability Office released a statement warning about the federal government's "fiscal exposure to climate change," including the crop insurance program.

If the current version of the farm bill were extended 10 years into the future, crop insurance could cost $8.41 billion per year.

Based on USDA data, if the current version of the farm bill were extended 10 years into the future, even without expansions under debate, crop insurance would cost $8.41 billion per year, or $84.1 billion total, according to Jim Langley of the Congressional Budget Office. With the expansions the projected costs rise to about $99 billion. And that figure does not account for recent climate-related impacts on crop yields, including the drought of 2011 and 2012 in Texas and the Midwest.

"We treated those two years as outliers," said Langley. "We don't explicitly take into account climate change. It's not like something dramatic is going to happen in next ten years. We assume weather going to be normal."

To be sure, it's hard to turn estimates about climate impacts on agriculture, and by extension crop insurance outlays into hard numbers. And there's no consensus that taxpayers will pay more than projected. Advocates of crop insurance claim that the program works better than disaster relief. "It forces farmers to manage risk before, not after it happens, which saves taxpayers money," Tom Zacharias, president of National Crop Insurance Services, an industry group, has written.

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Still, the tab has been steadily rising. According to the Midwest Center for Investigative Reporting, taxpayer subsidies for crop insurance averaged $3.1 billion annually between 2000-06, but have more than doubled to an average of $7.6 billion for 2007-12. Much of the fiscal bleeding has resulted from what's called a "harvest price option," an insurance option that compensates farmers for the revenue they missed when prices skyrocket amid climate-related scarcity. In the extreme weather since 2009, costs have tripled overall, rising every year from about $4.8 billion to the record high of more than $13 billion in 2012, according to Patrick Westhoff of the University of Missouri's Food and Agricultural Policy Research Institute.

These increasing costs, at least partially related to climate variability, have called attention to the role of crop insurance in the farm bill. Under the new bill, the crop insurance program would largely replace traditional crop subsidies, becoming the main way taxpayers are asked to support farmers. On Wednesday, a House-Senate conference will begin to reconcile two versions of the bill, both of which are strongly favored by agribusiness and insurance interests. Most of the politicking has long since been choreographed, as a range of lobbying reports and campaign contributions could attest. But the stakes in the debate are profound and long lasting, and they can be seen clearly in the desiccated row crops of West Texas.

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