As temperatures rise, the US Corn Belt could see insurance claims soar todayheadline

In the United States, farmers have access to federally subsidized crop insurance — a backstop that affords them some peace of mind in the face of extreme weather. When droughts, floods, or other natural disasters ruin a season’s harvest, farmers can rely on insurance policies that will pay out a certain percentage of the expected market value of the food, saving them from financial ruin. 

But that insurance program could become strained as global warming worsens, bringing more uncertainty to the agricultural sector.

A new study models how harvests in the U.S. Corn Belt — the swath of Midwestern states including Indiana, Illinois, and Iowa that produce the vast majority of the nation’s corn — could fluctuate over the next few decades under a warming scenario projected by United Nations climate scientists. The researchers compared these results to a scenario with no warming, in which tomorrow’s growing conditions are the same as today’s. They found that, as temperatures continue to rise, the nation’s corn growers are likely to see more years with lower yields — and the losses they incur during those years will also be greater. 

The study projects that the likelihood of corn growers’ yields falling low enough to trigger insurance payouts could double by 2050, creating financial strain for both farmers and the government. 

The findings demonstrate how growing climate impacts like unprecedented heat could destabilize the business of growing food and the nation’s food supply. Reduced corn yields would be felt widely, as the crop is used to feed cattle, converted into fuel, and refined into ingredients used in processed foods, among other applications. 

“Corn is so essential to the U.S. food system,” said Sam Pottinger, a data scientist at University of California, Berkeley and the lead researcher of the study. “There’s the corn we eat, but we also feed it to the livestock. It’s just an absolute cornerstone to how we feed everyone in the country.”

In recent years, climate change has strained the U.S. property insurance market, as insurance companies have raised homeowners’ premiums and in some cases pulled out of risky areas altogether. Pottinger’s study seems to reflect similar cracks in the federal crop insurance system, which wasn’t designed to account for the kind of yield volatility farmers are likely to experience if the rise in global temperatures continues unmitigated. 

First established in the 1930s as an agricultural support in the wake of the Great Depression, the Federal Crop Insurance Program, or FCIP, got permanent authorization from Congress in 1980. Not all farms can afford these policies or choose to enroll in them: The program covered about 13 percent of U.S. farms in 2022, according to the U.S. Department of Agriculture’s Economic Research Service. 

Data suggests that the way federal crop insurance is currently set up is most attractive to the nation’s largest farmers — for example, as the number of farms insured under FCIP decreased from 2017 to 2022, but the number of acres insured went up. Meanwhile, smaller farms and those that focus on specialty crops such as fruits and vegetables are less likely to have federal coverage. Farmers who go without insurance are on their own when extreme weather strikes, forced to rely on savings to make up for lost income or reach out to other USDA subagencies for support. 

Rising temperatures have already taken a major toll on the FCIP. Climate change drove up federal crop insurance payouts by $27 billion in the period between 1991 and 2017, according to a Stanford University study. A separate 2023 report by the Environmental Working Group, an activist group focused on pollutants, found that federal crop insurance costs grew more than 500 percent over a roughly two-decade period ending in 2022. 

Given this astronomical jump, Pottinger was not sure if he and his colleagues would see another significant increase in costs in their projections for the future. The team used a machine learning model to simulate growing conditions under one of the more moderate warming scenarios laid out by the Intergovernmental Panel on Climate Change, the U.N.’s top body of climate scientists. 

The team’s results were “eye-popping,” said Pottinger, who at one point worried they’d made a mistake in the calculations. To contextualize the results, he mentioned the 2012 to 2013 growing season, which was especially bad for corn farmers, with yields around 23 percent lower than expected. “What our simulations are saying is: That year was bad, but that kind of a bad year is going to happen a lot more often.”

Eunchun Park, an assistant professor focused on agricultural risk at the University of Arkansas, said the paper’s methodology was sound and its findings are “well aligned” with his previous research on crop insurance. (Park did not participate in the study; he is, however, engaged in similar research with one of the study’s co-authors.) 

Stephen Wood, an associate research professor at the Yale School of the Environment, agreed about the methodology but noted that the study’s loss estimates may be on the high end — since the algorithm used by the researchers didn’t account for farmers planting different crops or changing planting strategies after a bad harvest. “It’s a good analysis, but it’s probably a maximum impact, because there are adaptation measures that could mitigate some of that,” he said.

Park noted, as the paper does, that the FCIP isn’t prepared for the kind of yield volatility that climate change is creating. Under the program’s Yield Protection plan, for example, farmers can insure their crops up to a certain percentage of their actual production history, or the average of a grower’s output over recent years. If a farmer’s yield falls below that average, say, due to extreme heat or a hail storm, then the plan will make up the difference. 

But averages do not reflect dramatic dips or spikes in yield very well. If a farmer’s yield is 180 bushels of corn per acre one year and then 220 the next, they have the same average yield as a farmer who harvests 150 bushels per acre and 250 bushels per acre over the same time period. However, the latter scenario costs the insurance provider — in this case, the federal government — a lot more money. 

Pottinger and his team say lawmakers could ease the financial burden on farmers and the FCIP by tweaking the nation’s farm bill, which governs U.S. agricultural policy roughly every five years, so that the FCIP rewards growers for using regenerative agriculture methods. These practices, like planting cover crops alongside commercial crops and rotating crops from field to field, help boost soil health and crop resilience. 

Wood’s previous research has found that agricultural lands with more organic matter in the soil fare better in extreme weather events and see lower crop insurance claims. And other research has shown cover crops confer some resilience benefits against droughts and excessive heat. 

Regenerative agriculture techniques may, however, cause lower yields in the early stages of implementation. “Crop insurance doesn’t have a good way to recognize that right now,” said Pottinger. 

Both Park and Wood predicted that the Risk Management Agency, the part of the USDA that regulates crop insurance policies, may be reluctant to change its approach to regenerative agriculture. “There’s some resistance there,” said Wood. 

Pottinger emphasized that while his team recommends making crop insurance more inclusive to regenerative agriculture practices, his report does not try to “dictate practice” for farmers. He thinks growers should decide for themselves whether to try cover cropping, for instance. “Farmers know their land better than anyone else,” he said. “And they should really be empowered to make some of those decisions and just be rewarded for those outcomes.”