Farming is full of risks and uncertainties. Between natural disasters, extreme weather, pest infestation, disease, high input costs, or low commodity prices, risks abound that can swiftly tank farming operations.
That’s where the U.S. farm support programs come in. Yet, these insurance programs have insidious effects on the greater food and agriculture system. Crop insurance — which is heavily subsidized by taxpayers — is a major driver of consolidation in our food system.
These insurance programs are structured to encourage monocropping a large number of acres by a single farmer within a region. Over the last two decades, the largest and wealthiest farms have received the lion’s share of subsidies — 78 percent of annual commodity payments go to the top 10 percent of recipients (as measured by farm sales), and the top one percent alone receive 27 percent of the payments. This imbalanced payment dispersal exacerbates the plight smaller farms have been facing for decades: They have to get big or get out. As many are forced to abandon farming and the larger operations snatch up farmland, the ripple effects of consolidation have catastrophic impacts across rural communities and the environment.
One way that Farm Action is fighting to reform this abusive system is by calling for a requirement to be added to the 2023 Farm Bill for farmers to meet certain conservation standards in order to participate in federal farm support programs. Now, in a new report , the Government Accountability Office (GAO) is echoing our call by recommending the USDA require producer adoption of conservation practices to claim crop insurance premium subsidies.
The government’s farm support programs include commodity support programs, disaster assistance programs, and the federal crop insurance program (FCIP). FCIP’s subsidized insurance programs offer revenue protection in the case of low market prices or crop failure at a favorable rate for farmers — taxpayers cover about 60 percent of the total insurance premiums, while farmers only pay 40 percent.
FCIP policies primarily cover conventionally grown commodity crops like corn, soybeans, cotton, sugar, and wheat. There are fewer and less accessible insurance options available for specialty crop farmers who produce nutritious fruits, vegetables, and tree nuts. This leaves many of these farmers unable to leverage the same taxpayer support that those growing commodity crops — which are primarily used for livestock feed and unhealthy processed foods — receive year after year.
Farmers have to play the hands they’re dealt, so many are driven to grow commodity crops thanks to the accessibility of these lucrative insurance coverage options. As more farmers are driven to farm exclusively for these subsidies, the supply of these select crops increases and drives down market prices. But never fear, because that’s precisely what insurance covers: Farmers are guaranteed to get paid most of the expected revenue of those crops even if market prices are low. As a result, heavily-subsidized farmers no longer have to make market-driven decisions to ensure their operations are profitable. When that risk is removed, it drives the consolidation of farmland.
Farmers can make big bucks on insurance payouts when they’ve got large commodity farming operations. For every dollar farmers pay in premiums, they get back more than $2.20 in claims on average — an annual return of 120 percent. Since there’s no limit on these payments or acreage, farmers can enroll unlimited acres, motivating them to convert as much land as they can into row crops.
Even land that’s clearly become ill-suited for farming can be insured and turn a profit, like the farmland around the Mississippi River that faces frequent, predictable floods. Insurance payments to farmers in this area totaled $1.5 billion over the last two decades. Crop insurance enables this otherwise highly risky land to turn a profit year after year, flood after flood.
Large farm operations flush with cash from these programs can then use that money to outbid cash-strapped farmers without access to these programs, or farmers who receive smaller payments because of their smaller operation sizes, on land purchases and rental rates.
These remaining farmers, while they may do well financially, are still trapped on the Big Ag treadmill, farming exclusively for subsidies. The only way to stay afloat appears to be by squeezing as many bushels out of their soil as possible with the use of synthetic inputs and farming every inch of land they can. It means applying more pesticides, herbicides, and fertilizer, to the detriment of their land and the environment.
These programs incentivize excessive fertilizer use in particular because payouts for many programs can be greater with higher established yield averages. Farmers with access to more acreage are able to manipulate this further by moving their records around so that they can make insurance claims on some fields while using others to establish higher Actual Production History (APH) values.
The result is ultimately fewer, larger consolidated farming operations that degrade the land and hollow out rural communities.
The farms that don’t get big must get out: Many farmers move away from the communities where their families thrived for generations — leaving a hollowed-out shell of what these communities once were. As more families leave, the schools, independent shops, and locally-owned agriculture businesses fail as well. The spirit of these rural communities is eroded as large-scale, intensive monocropping operations take over. “It becomes more important to have your neighbor’s land than it is to have your neighbor,” as Farm Action Local Leader Kevin Fulton explained in his op-ed.
