August 18, 2016

New Study Shows Federal Crop Insurance Program Incentivizes Farming Methods that Lead to Toxic Algal Blooms, Drinking Water Pollution, Other Costly Problems

Instituting Iowa State’s “Prairie Strips” System, in Contrast, Would Achieve Hundreds of Millions in Annual Savings

WASHINGTON (August 18, 2016)—An alternative farming system developed at Iowa State University, in which farmers plant perennial prairie plants in and around crop fields on 10 percent of a farm, is getting the attention of both local farmers and policymakers as far away as Washington, D.C. According to a recent university study, the system reduced nitrogen loss in surface water runoff by 85 percent, phosphorus runoff by 90 percent and soil loss in general by 95 percent.

A Union of Concerned Scientists (UCS) analysis released today found that if the Iowa State “prairie strip” model were adopted across the 12-state Corn Belt, taxpayers, businesses and farmers would save $850 million in annual surface water cleanup and fertilizer costs—a two- to three-fold return on investment.

But instead of investing in sustainable farming methods, such as planting prairie strips, the federal government, in large part driven by policies set by Congress, continues to cling to shortsighted, outdated subsidies. In particular, the USDA’s federal crop insurance program has encouraged an agricultural system centered around a few annual crops, corn in particular, grown on ever-larger farms, using methods that fail to protect soil from erosion and require heavy application of fertilizers. Nitrogen and phosphorus from the fertilizer wash off the fields, polluting local drinking water supplies and coastal fishing and recreational waters, with nearby communities and businesses bearing the costs.

“Current farm policies hit taxpayers twice,” said Kranti Mulik, senior agricultural economist at UCS and author of the “Subsidizing Waste: How Inefficient US Farm Policy Costs Taxpayers, Businesses, and Farmers Billions” released today. “On the front end, Americans pay billions subsidizing farming practices that cause water pollution and public health problems, and we spend billions more on the back end to clean up the mess we’ve created. But groundbreaking work in the heart of the Corn Belt shows there’s a better way to invest public money that can lead to a healthier food supply and clean water, and boost farm economies.”

This year U.S. taxpayers funneled $5 billion into subsidies for the crop insurance program. The report calls on the federal government to reduce crop subsidies, increase funding for sustainable farming practices and provide technical assistance to farmers to adopt the alternative methods. The UCS report is the third in a series making the case for the next president to overhaul an outdated food and farm policy system—involving some 15 federal agencies, often working at cross-purposes—that contributes to costly health and environmental problems.

The UCS study documents:

  • This year farmers increased corn and soybean plantings, despite the fact that the crops are expected to lose money because of dramatic price drops. As a result, the farmers are expected to receive nearly $14 billion in crop insurance payouts—the most since 2006. About 25 percent of the nation’s net farm income in 2016 is expected to come from federal insurance subsidies and insurance payouts.
  • The Federal Crop Insurance Program is anticipated to cost taxpayers a total of $22 billion from 2016 to 2018, and cost estimates keep rising.
  • The cost of removing nitrates from U.S. drinking water exceeds $4.8 billion a year. The agriculture industry covers about $1.7 billion of those costs.
  • The tourism industry loses nearly $1 billion each year, mostly from losses in fishing and boating activities because of nutrient-polluted water bodies.

Fiscal conservative groups agree the crop insurance program must be reformed.

“The federal government is wasting billions of taxpayer dollars being funneled into programs that limit farmers’ choices, encourage farming on unproductive land and promote damaging farming practices,” said Josh Sewell, senior policy analyst with Taxpayers for Common Sense. “Taxpayers must insist lawmakers account for all the costs of providing a financial safety net for agricultural businesses.”

Farmers are increasingly seeing the value of moving away from federally-supported practices and toward more sustainable systems. Seth Watkins, a fourth-generation farmer who raises cattle and grows hay and corn for feed on 3,000 acres in Clarinda, Iowa, has integrated prairie strips on his farm.

“Commodity crop subsidies encourage farmers to plant on land that they know will lose money on every acre because a paycheck is guaranteed no matter the outcome,” said Watkins. “Farmers who’ve been working for generations on the land bring a wealth of experience and insight into producing healthy food and preserving clean water and productive soil, but we need better support from the federal government to do it.”

The Union of Concerned Scientists puts rigorous, independent science to work to solve our planet's most pressing problems. Joining with people across the country, we combine technical analysis and effective advocacy to create innovative, practical solutions for a healthy, safe, and sustainable future.