Ag Policy Blog
Chris Clayton DTN Ag Policy Editor

Wednesday 01/30/13

NYT Looks at Farm Politics and Climate Change

The New York Times had a piece on Tuesday highlighting the farm politics involving climate change.

Pam Johnson, president of the National Corn Growers Association, was interviewed and expressed her deep concern about drought that "cut the harvest at her northern Iowa farm by about 40 bushels an acre." Johnson had to rely on crop insurance to stay afloat.

As the story noted, Johnson's concern is not about how to deal with climate change. It's protecting the federal crop insurance program from budget cuts.

“We are Americans before we are farmers,” Johnson told the Times. “We know we have budget problems.” Still, she added: “For our farmers, crop insurance is the main concern. It helps keep us in business.”

Indemnities as of now for crop insurance are at slightly more than $13 billion. That number will continue to rise. My understanding is that with at least some crop insurance companies the payouts to farmers with $200,000 or more are being delayed by audits.

The Times noted the impact of global warming is expensive. The full cost of the drought could be $35 billion and Hurricane Sandy may be $65 billion. Yet, the costs in the future could be much higher.

The question is, how do you pay for those costs? A carbon tax? As the Times stated, "As things stand, drought is unlikely to change their minds. Farmers are still covered by crop insurance, and they have powerful allies in Congress who will fight to keep the subsidies in place. They may see little reason to support legislation that would make energy or fertilizer more expensive."

In quoting Johnson, “Farmers would be deeply affected by an energy tax."…

I have to add my two cents here.

Farm groups really helped lead us down a pathway of reducing greenhouse-gas emissions in the 2005 and 2007 energy bills that built out the current biofuels industry and started the current boom we are seeing in production agriculture.

Let's not forget the failed 2009 cap-and-trade plan in Congress exempted agriculture from any regulation on greenhouse gases and then would have given them a trading market for conservation practices to sequester carbon in the ground. Farm Bureau erupted with "Don't Cap Our Future." NCGA's president at the time said he can't no-till on his farm so he wouldn't benefit, even though he lived not far from one of the biggest no-till research farms in the country.

So cap-and-trade failed. And then a lot of advocates for biofuels lost their congressional seats shortly after.

Now, farm groups can't understand why Congress is siding more often with the oil companies and attacking biofuels. It's pretty simple. Biofuels are overseen by EPA and were put in place partially to reduce greenhouse-gas emissions. Well, farmers said we don't have to worry about reducing greenhouse gases. So why do we need biofuels?

We could take a look at what agriculture can do to help mitigate and adapt to climate change, but the House and Senate Agriculture Committees would rather pass farm bills scored at over $1 trillion over 10 years in cost without bothering to take a look at what climate change will do to increase the cost of USDA programs over the next decade.

I can be found on Twitter @ChrisClaytonDTN

Posted at 7:06AM CST 01/30/13 by Chris Clayton
Comments (22)
"The Times noted the impact of global warming is expensive. The full cost of the drought could be $35 billion and Hurricane Sandy may be $65 billion. Yet, the costs in the future could be much higher." Spare me! Are we to be duped into believing that there were no droughts or hurricanes before our planet warmed 1.7 degrees Celsius and accept more taxation from people who think farms should be a quack quack here and an oink oink there?! Of course weather will be more expensive in the future - more development to be damaged and inflated costs of development. New Orleans built below sea level, Cedar Rapids built on 15.2 square miles of 100 year flood plain, New Jersey cities allowed construction on beaches just feet away from the ocean, and their destruction was due to global warming and farm policy?! Our biggest concern should be the intellectual climate!
Posted by Curt Zingula at 9:30AM CST 01/30/13
There is so much more that US agriculture could do on top of biofuel production that could have multiple benefits in the face of increased droughts and floods. Putting carbon in the soil, utilizing cover crops, increasing the water absorption capacity of the ground, becoming more flexible in cropping decisions -- all of these have the capacity to make our agriculture more resilient and profitable, as well as saving taxpayers money in payouts to increased insurance and disaster claims. I think most practicing farmers know how to innovate and improvise -- it is leadership representing single commodities or status quo thinking that seems to be contributing to our inertia.
Posted by Jim French at 9:36AM CST 01/30/13
Mild changes in Soil conservation by Farmers would no doubt help-but we don't need to PAY the Government to tell them that. If a flood carried away some top soil, most Farmers-as that soil makes them money, will take steps to deal with that. On the other hand, any City that has had the same areas destroyed more than once in 50 years, needs to get proactive about this, again, without Government prompting. How does this sound? If your house and lot is among those that suffered, the USDA turns it into "wetlands", and you're given a plot AWAY from the flood source-all paid for by your flood insurance. (If you own a home in a flood plain and don't get flood insurance, let's face it, you're an idiot.) If you refuse to move after the second flood-NO MORE FLOOD INSURANCE or "Bailout" Public Money of any kind for your home or property. You're on your own and out of the Taxpayer's pockets. Does than sound fair?
Posted by Ric Ohge at 9:49AM CST 01/30/13
Although threats abound, climate change presents numerous revenue opportunities for the American farmer. Many have already taken advantage. For example, forty years ago there 300k acres of corn in ND. Now there are over three million. We're groing corn in Northern Minnesota. Farmers have a great opportunity to sequester carbon through a variety of easily-implemented practices. Clearly this will be a future revenue opportunity, much like wind is now. Unfortunately, for many of them to embrace this means admitting their world view on climate change has been discredited. This evidently is a painful process. It is quite a paradox that many react to production data rationally but environmental data emotionally.
Posted by chris jones at 9:57AM CST 01/30/13
Take a look at the label on the seed bag Chris. 75 day corn does not take as many GDU.s to mature as 90 day corn. Just a few years ago there was a killing frost in August thru out much of the Northen end of the corn belt. Keep your crop ins. up, it will happen again. Another recent year there was not enough sunlight to mature corn well into October. I think it is all the weather mans fault.
Posted by Bonnie Dukowitz at 12:31PM CST 01/30/13
Bonnie, Are you a global warming/climate change denier?
Posted by Don Thompson at 1:01PM CST 01/30/13
Chris, anyone who thinks "cap and trade" would be good for farmers in the long run has no understanding of basic economics. I applaud Farm Bureau for leading the charge against it. It would have devastating effects on our nation's economy with absolutely no guarantee of any benefit, but would just lower the standard of living in the US to that of developing countries. Greenhouse gas has been decreasing in the US over the last decade while greatly increasing in nations like China and India. Climate has always changed, the area where I live has been covered with glacial ice and tropical rain forests. Man cannot control the climate, and anyone who thinks they can is a fool.
Posted by CARLYLE CURRIER at 2:11PM CST 01/30/13
I think ,Don, the Mighty Mississippi is a result of ice melting and run-off. It has been around a while. One can be responsible and do what we can do for our surroundings and also be a realist. Ten years ago, 75 day corn was still a dream in a cranial cavity somewhere. Climate change is real, Always has been, always will be. With out it, we would be hunting dinosaurs instead of living here with the turkeys.
Posted by Bonnie Dukowitz at 3:31PM CST 01/30/13
Cap and trade is a joke. We will have to pay more for our energy than other countries and put us at an even bigger disadvantage in the world economy than we are already. I dont think it would do any thing to change the weather, it is interesting how global warming became climate change when the figures did not come out to the expectations of the folks who were planning what to do with our money. Our little banana republic dicator has big plans for it. We can now maybe take a good look at Al Gore who made a fortune in the global warming B s while having a carbon footprint only 2nd to Oboma and his constant campaigning . Al made a fortune chasing around the globe telling every failing socialist gvt. in the world how their situation was our fault for using to much of the worlds resources and oil. In true liberal elitist fasion sold his ultra liberal TV station Current TV to big oil Quatar and it will now be run by AL JAZEERA. A real inconvient truth for Al is that all massause women you call in the early AM are not prostitutes. Know why Tipper tossed him out. Lisa jackson is leaving EPA she was caught using fake Email accounts to hide her real intentions You just cant have the people second guessing the genious elite .
Posted by GORDON KEYES at 6:41PM CST 01/30/13
With Al Gore making all that money how can there be any left for big oil??? Whats a corporation to do???? but youre right Gordon, the US only uses 25% of the 90 million barrels a day the world consumes so why should we care even if that changes the climate? and just think we convinced those communist Chinese to throw away their socialist European bicycles to jump in the all American SUV's and Hummers to burn more oil and make more carbon!
Posted by Jay Mcginnis at 9:37PM CST 01/30/13
At the Copenhagen Climate Change Conference in 2009, Venezuela's revolutionary leftist leader declared that capitalism, not fossil fuels, was the leading contributor of global warming. To which the audience cheered their approval. Of course Venezuela survives on fossil fuel sales so we now know that socialists, such as the NYT, can and probably will distort the truth to their own economic advantage.
Posted by Curt Zingula at 8:05AM CST 01/31/13
Just for comparison, federal spending on welfare (Temporary Assistance for Needy Families) is about $17 billion/year. Crop insurance at below-market rates is a handout. Don't get me wrong--I think people should take handouts when they are offered. The question is why the federal government should be offering handouts to wealthy farmers.
Posted by THOMAS FARLEY at 8:50AM CST 01/31/13
Chris as a good reporter you should have asked why he couldn't no-till and listen to his reasons and what the possible solution could be. I can't speak for him but I would be willing to bet that is because of lack of improved drainage in which the current wetlands policies block. So in order to actually find real world solutions we need to go back and review some of the flawed policies we have adopted.
Posted by Young Farmer at 10:28AM CST 01/31/13
Of course every left leaning country loves Oboma they know what he really is because that is how they got to where they are. You tell fools that everything that goes wrong in there lives is someone else fault and they will flock to you. You will notice that nothing is Obomas fault it is always the fault of anything that happen to pop into his head. Each and every leftist socialist scheme tried has failed miserably. This guy thinks he can perfect it. New YorkTimes is broke it became nothing but the mouthpiece of the Democratic left, it was so bad even they could not defend it.
Posted by GORDON KEYES at 11:30AM CST 01/31/13
Thomas, I think you are forgetting that there are years when the Federal Government actually makes money off crop insurance. They are just partnering with the private sector to provide lower cost for the farmer. As such they are also getting part of the profit share in the good years. Professor Art Barnaby has some really good articles you should read if you have a chance.
Posted by Aaron Cross at 2:22PM CST 01/31/13
Aaron please try and be a little bit honest. Don't believe every thing you read written by those on the government gravy train. See Any studies indicating revenue positive results to taxpayers with federal crop insurance do not reflect the billions spent annually by taxpayers for this program. Any discussion of federal crop insurance should reveal the vast differences in taxpayer subsidies paid per policy holders as well as differences between investment/profit guarantee amounts per policy holders. In other words the huge differences in benefits per policy holder need to be revealed. Also when government assumes production risks and guarantees profits to policy holders the extent of profitability margin manipulations should also be explored as well as just what is the extent of land valuation manipulations due to these profitability guarantees.
Posted by Lon Truly at 4:36PM CST 01/31/13
Aaron, thanks for the thoughtful comment. I was trying to put some perspective on the scale of federal spending on different "safety net" programs. I didn't find any articles by Prof Barnaby with a quick search, can you give me a link to one?
Posted by THOMAS FARLEY at 9:13AM CST 02/01/13 --This was the first one that came up when I googled him, but there are quite a few out there. Prof. Barnaby was the original designer of the old crop insurance program and is very insightful when it comes to the way it works today.
Posted by Aaron Cross at 1:09PM CST 02/04/13 --Thomas, this is another article that explains crop insurance underwriting pretty well, although a long read (16 pages) Barnaby goes into a lot more detail.
Posted by Aaron Cross at 1:23PM CST 02/04/13
Thomas, I forgot to mention page 4 of the 2nd link show what happens when the Insurance Company has an underwriting gain and how the profits are split between the Government and the AIP's.
Posted by Aaron Cross at 1:35PM CST 02/04/13
USDA RMA projects cost to government for last 10 years for federal crop insurance to be approx. 60 billion. Hardly a gain to the government. See
Posted by Lon Truly at 4:13PM CST 02/04/13
There are several other obvious and relevant facts that need to be part of this discussion. At the beginning of the past decade the government was guaranteeing a minimal amount of gross revenue per corn acre grown. Now many farmers receive a revenue guarantee of close to $1000 per acre of corn grown. Also the government was paying a minimal amount of insurance premium per acre. Now it is many billions per year. Some farmers now receive over a million dollars every year as a benefit towards the cost of their government crop insurance premium. Also the national debt has nearly tripled since the beginning of the last decade.
Posted by Lon Truly at 8:29AM CST 02/05/13
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