The subsidy discussion in the United States most often focuses on the impact of subsidizing certain crops, such as corn, wheat and soybeans, through the direct and counter-cyclical payments program to the exclusion of fruits and vegetables and therefore to the detriment of our national health (see, for example, The Fat of the Land: Do Agricultural Subsidies Foster Poor Health?).
Part of the subsidy discussion that is just as important, but not addressed in the popular press as much, is the fact that receiving those subsidies requires a farmer to be in compliance with certain conservation practices.
Impacts of Conservation: Environment and Food Safety
Under the conservation compliance rules, farmers are required “to meet some minimum standard of environmental protection on environmentally sensitive land as a condition of eligibility for many Federal farm program benefits — including farm commodity program payments.”
The government does not require farmers to comply with these conservation practices. If the farmer wants to receive government payments, however, the farmer has to meet certain requirements, including implementing specified environmentally beneficial practices (i.e. to prevent soil erosion).
There are a number of other government program benefits, besides direct payments, that are linked to conservation compliance. Some of those include farm credit loans, payments made under the Environmental Quality Incentives Program (EQIP), conservation program payments, and disaster payments.
Some examples of conservation practices include conservation tillage (low or no till), the use of ponds and reservoirs, irrigation reuse systems, and noncrop vegetation buffers such as grassed waterways, riparian habitat, buffer strips and trees.
The American Farmland Trust (AFT) lists as benefits of conservation compliance a 40 percent reduction of soil erosion (saving at least 295 million tons of soil per year) and a significant reduction in the conversion of ecologically important wetlands on farms, preserving the critical benefits the wetlands provide for flood protection, nutrient filtering, and wildlife habitat.
Conservation practices also have an interesting relationship to food safety. In a 2007 study, University of California researchers found that 15 percent of 181 growers interviewed removed or discontinued conservation measures, such as irrigation reuse or vegetation buffer, after the E. coli O157:H7 outbreak linked to bagged spinach. The same study found that 8 percent (of 181 growers surveyed) had crops rejected by buyers because of practices to improve water quality and wildlife habitat on the farm.
The study’s authors cautioned against concluding that conservation practices necessarily cause food safety problems. To the contrary, they cited research showing that discouraging or actively removing such conservation practices could, in some cases, actually increase the risk of crop contamination. For example, the use of cover crops or strips of vegetation near open water have been found to greatly reduce the E. coli bacteria count in the water.
Preserving wildlife habitat, thereby allowing animals access to crop fields, is a major concern for food safety advocates and is cited as one source of food contamination. The Wild Farmland Alliance recently released a new brochure, Farming With Food Safety and Conservation in Mind, that provides an overview of how producers can co-manage the goals of food safety and conservation through their farming practices.
Conservation compliance has a number of positive impacts — most clearly for environmental protection and possibly in reducing the risk of foodborne illnesses — so it is understandable why the government would want to encourage the use of conservation practices.
Crop Insurance and Conservation Compliance: To Link or Not to Link?
The fact that conservation compliance is tied to direct payments has some groups worried that should direct payments be eliminated in the next Farm Bill (highly likely), farmers will stop following these environmental practices.
The most likely outcome in the 2012 Farm Bill is that direct payments will be eliminated and replaced with some form of crop insurance program (to provide farmers with a safety net).
As an important side note, crop insurance is highly subsidized by the federal government. A USDA Farm Bill summary lists the ways in which the government subsidizes crop insurance: by providing reinsurance, paying a premium subsidy to reduce the premium charged to producers, reimbursing the insurance companies for administrative and operating costs, and overseeing the financial integrity and operational performance of the delivery system. According to the White House’s 2012 budget for the Department of Agriculture, the government spent $6,387,000,000 on crop insurance in 2011.
If Congress eliminates one form of subsidy (direct payments) and replaces it with a different subsidy (crop insurance), the next question that arises is what will happen to conservation compliance?
Some farm groups, such as the National Farmers Union and American Farmland Trust, advocate linking crop insurance with conservation compliance.
Jon Scholl, President of AFT, said in a press release, “Conservation compliance is nothing more than an incentive for farmers with highly sensitive lands to follow a few basic conservation practices. When I talk to farmers, they recognize that conservation compliance is crucial for the long-term health of our soil.”
Not all agricultural groups believe tying crop insurance with conservation compliance is a good idea. In adopting language from a resolution from the Iowa Farm Bureau Federation, the national organization–the American Farm Bureau Federation–conveyed its opposition to linking crop insurance with conservation compliance.
Iowa Farm Bureau Federation President Craig Hill notes that Iowa farmers lead the nation in conservation, but that linking these two programs could be financially disastrous for Iowa farmers.
Hill said, “Because of torrential weather events like we’ve seen in recent years, we also know that linkage of conservation to crop insurance simply risks too much at a time when the stakes have never been higher for farmers. There are already 15 farm programs that link to the conservation title in the Farm Bill, so to deny crop insurance to farmers because of weather events beyond their control could put a farmer out of business in a single year’s event.”
Anticipating this response, Scholl remarked that “despite what you may have heard, attaching compliance to the crop insurance premium support would have a pretty minimal impact back on the farm. Farmers across the United States would still be able to buy crop insurance and get operating loans from their bank. Anyone out of compliance simply wouldn’t receive the crop insurance premium support until they come back into compliance. NRCS (Natural Resources Conservation Service) and FSA (Farm Service Agency) would still do compliance checks using the same system we have in place now, and crop insurance agents would not have an additional role.”
With these major agricultural players on opposite sides of the issue, it is unclear what the final result will be: crop insurance coupled with conservation compliance, or crop insurance on its own.
Alli Condra is pursuing her LL.M. in Agricultural and Food Law at the University of Arkansas. She is the 2011-12 recipient of the Marler Clark Graduate Assistantship.