Ag, USDA and Climate Change

GAO Suggests Tighter Crop Insurance, Farm Program Rules Tied to Climate Resilience

Chris Clayton
By  Chris Clayton , DTN Ag Policy Editor
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Cover crops coming up through on-farm crop residue in winter. The GAO has released a report calling on USDA to make several changes that would incentivize -- or in some cases require -- farmers to implement certain climate resiliency practices to receive government assistance. Some of the more "politically challenging" recommendations would require congressional approval in the farm bill. (DTN file photo by Pamela Smith)

OMAHA (DTN) -- While USDA has boosted efforts to help farmers and livestock producers improve their resiliency to climate change, the department could do more to reduce the financial exposure of the federal government, according to the Government Accountability Office (GAO), including placing more requirements on farmers and ranchers to receive federal support.

The GAO, a non-partisan congressional watchdog, on Thursday released an 87-page report detailing 13 recommendations to USDA to improve the climate resiliency for farmers and ranchers, including suggestions to add more conservation requirements for crop insurance and commodity programs.

GAO pointed to the fiscal exposure of the federal government. That includes premium subsidies of $8.6 billion in 2021 as well as disaster costs in which Congress appropriated $15 billion in aid to farmers for natural disaster from 2018 to 2021. The GAO cited the agency has recommended the federal government invest more in climate resiliency efforts "to help limit its financial exposure to impacts from climate change."

Out of 13 recommendations with the pros and cons of each, the most politically controversial recommendations are GAO calls that USDA "incorporate climate resiliency into crop insurance rates," as well as require adoption of certain practices for farmers to receive crop insurance premium subsidies or require climate-resilience practices to maintain commodity program eligibility.

The recommendations come as Congress is starting to hold hearings on a new farm bill and special-interest groups begin weighing in on needs to cut programs or set tighter standards to become eligible for federal aid as well.

In response, USDA cited that setting any new climate or conservation requirements for crop insurance would not be consistent with "USDA's voluntary and incentive-based approach to help producers enhance their resilience."

Another recommendation from GAO recommends USDA offer crop insurance premium subsidies that would encourage a large portion of producers to adopt-climate resilient practices. Still, that "would add costs to an already costly program."

USDA also already has made some moves in that area. Last year, USDA created the Post-Application Coverage Endorsement (PACE) for crop insurance that incentivizes farmers to use split applications of fertilizer. The Risk Management Agency also has loosened rules to allow more farmers to use cover crops without affecting their crop insurance coverage levels.

The GAO, citing interviews with experts, noted some of the agency's recommendations involving crop insurance "may work at cross-purposes with efforts to enhance climate resilience. The GAO added that experts stated, "some practices that can enhance climate do so at the expense of crop yields." Cutting yields, even temporarily, "could discourage a producer from installing a practice."

Providing incentives for crop insurance falls more in line with USDA's voluntary approach, but would also require "a reliable, data-driven way to identify which producers are eligible for the subsidy." Also, USDA would need to ensure crop-insurance companies provide additional training to communicate the benefits of climate practices to producers.

Additional conservation compliance requirements for commodity programs could help reduce the fiscal risk to the federal government and create a "straightforward incentive for producers to adopt climate resilience good practice." The GAO notes, however, that "could be politically challenging to implement." It also could be technically a challenge for USDA, and disproportionately impact small, disadvantaged and minority producers. USDA also may lack expertise necessary to monitor and verify producer compliance with new requirements.

USDA officials told GAO investigators some options could be addressed administratively, but others require additional authority from Congress.

During a Senate Agriculture Committee hearing last week on commodity programs, Sen. Mike Braun, R-Ind., talked about the struggles of profitability for farmers. He said farmers want to make sure their commodity programs, "which is a small part of the money that we spend on the farm bill," are not tied to conservation practices, "which they do voluntarily."

"Where are you going to be on making sure that never gets connected to ... you're going to get this only if you do that?" Braun asked Robert Bonnie, USDA's undersecretary for Farm Production and Conservation.

"Our approach to climate, and conservation more broadly, is voluntary, incentive-based and collaborative," Bonnie said. "We look for opportunities to work with producers. That's going to cut across everything we do. If it doesn't work for agriculture and forestry, it's not going to work for the environment."

The Senate Agriculture Committee also has a hearing set for March 1 to examine conservation programs.

Rep. Chellie Pingree, D-Maine, had called on the GAO to examine USDA's work on climate change. She said she believes the report will help in crafting the next farm bill "in creating fact- and science-based solutions to help our farmers respond to the impacts of climate change." Pingree, an organic farmer, also pointed to legislation she had sponsored called the Climate Resilience Act that includes at least some of the recommendations.

"Ultimately, as the report says, making these investments now will not only help our farmers and help address the climate crisis, but it will also help limit federal fiscal exposure," Pingree said.

The GAO report also calls on USDA's Natural Resources Conservation Service to "expand technical assistance" for climate-resiliency practices. USDA stated this is a "high-priority option" for the department and NRCS is seeking to identify location-specific conservation practices. Yet, several experts pointed out to GAO investigators that NRCS is understaffed and lacks expertise to provide that assistance. USDA noted technical-service providers need to be trained in "climate-resilience options" for different regions of the country. Technical assistance also must be supported scientifically and regularly updated to provide the best available science and technology.

The Inflation Reduction Act provided USDA with $1 billion specifically to boost technical assistance to producers.

Another recommendation is that USDA should create "climate resilience standards" to help incentivize farmers. GAO pointed to the USDA organic certification as a model. Congress late last year passed the Growing Climate Solutions Act, which will actually create such a program to help set standards for carbon credit markets.

The GAO report highlighted its 13 different recommendations with the pros and cons of each proposal.

The full GAO report can be found at…

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Chris Clayton