Potential Habitat Impacts from Proposed Crop Insurance Subsidies




Wildlife Management Institute   October 16, 2012

While it remains to be seen whether the 112th Congress will pass a new Farm Bill before the end of the session, it is clear that direct federal payments to farmers that have been in effect since the mid-1990’s will very likely become a thing of the past. In lieu of direct payments, many in the agricultural community are championing a stronger federal subsidy program for crop insurance, according to the Wildlife Management Institute. If Congress adopts this approach, it will be critical that any crop insurance subsidy program underwritten by the federal government be guided by policy that protects against poor land and agricultural management decisions that result from artificially low-risk conditions for program participants.

If not properly implemented, subsidized insurance programs can provide economic incentive for agricultural producers to undertake risky production practices. Conversion of native prairie lands to crops is a good example of this. Without insurance, few producers are willing to risk attempting to convert these lands because of the high crop failure rates associated with them. However, if these lands become eligible for federally-subsidized crop insurance, much of the short-term risk for the individual producer is removed.

In addition, there are substantial long-term, negative consequences if this scenario comes to pass. Much of the nation’s remaining native prairie lands could be converted to crop lands that, in most years, will produce marginal yields at best. As these marginal yields are factored into the cost of insurance, rates are bound to go up. Given the current need to address federal budget deficits, there is little tolerance from lawmakers and taxpayers for expensive programs that provide little added value. So a poorly implemented crop insurance subsidy program not only has the potential to drive major damage to native wildlife habitats, but also has negative economic implications for the entire agricultural community, including those that are good stewards of their lands

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