The Implications of Natural Disasters on US Agriculture
Farmers, foresters, and ranchers are unfortunately familiar with the devastation and loss of life and property accompanying a natural disaster caused by an extreme weather event such as a hurricane, drought, or flooding. Although natural disasters have been a threat since 1900, they have become more severe and frequent due to recent climatic changes affecting winds, ocean temperatures, and precipitation patterns. These changes facilitate more destructive and impactful weather events. To this end, current U.S. federal farm policy focuses on risk management. The projected spending for the Federal Crop Insurance Program exceeds all other farm-related programs authorized in the 2018 farm bill.
This webinar discusses the effect of these extreme weather events on agriculture and the challenges for policymakers in ensuring federal programs assist farmers with their demanding risk management needs while also facilitating adaptation to a changing climate.
Mark Brusberg – USDA World Agricultural Outlook Board
Adaptation in a Changing Climate
Potential catastrophic weather and climate disasters range from:
Drought/heat waves
Flooding
Hail
Hurricanes
Severe weather
Tornado outbreak
Wildfire
Winter storm/cold wave
With short-term disasters like floods or hurricanes, there can be agricultural damage and catastrophic impact (I.e., loss of life, loss of infrastructure). There can also be longer-term effects. For example, as of August 30, 2022, approximately 56 percent of the cattle inventory and 41 percent of hay acreage was within an area experiencing drought. Farmers often have to rely on other producers for feed to sustain their cattle populations. One tool USDA uses to assess drought severity is the Drought Monitor (USDM). The USDA uses the USDM map as a trigger for programs that help agricultural producers recover from drought and other natural disasters. USDA also has mitigation and resilience programs that promote different mechanisms and procedures to help the land become more resilient.
Over the last 20 years, the United States has been in the midst of a drought in the West. Over the mid-21st century, there will be a general warming trend. There is an expected increase in frequency and intensity of days with high temperatures (over 90 degrees). On the other hand, the days with temperatures below 32 degrees is decreasing. There is an opportunity to take advantage of a possible longer growing season, but producers will likely have to deal with the increase in heat, precipitation, and excessive rainfall. In addition, the impact of warmer weather is disrupting flow at the polar region, also known as the polar vortex. Essentially, warming in polar regions has led to more weather instability.
Bruce McCarl – Texas A&M University
Climate Change, Disasters and Agriculture: Developments, Prospects and Sensitivity
Climate change is having a major effect now. There’s been a significant rise in billion-dollar events. More climate change is inevitable. In agriculture, climate change is impacting actions now. Following the trends from the last 100 years, about 1 degree Celsius of additional climate change appears inevitable and regardless of carbon control.
Climate change and disasters impact on agriculture:
Hotter conditions
For example, at 30 degrees Celsius (86 degrees Fahrenheit), corn yields drop off dramatically.
More drought
For example, up until 1990, the Edwards Aquifer, a notable water source in Texas, was increasing in recharge amount. Since 1990, its recharge amount has had a general decreasing trend in recharge and increased variability in recharge amount.
A shift in La Niña and El Niño events leads to approximately $323-414 million in agricultural losses. With increased frequency and strength, these events could lead to upwards of $1 billion in losses. Global warming increases the probability of La Niña and El Niño years and increases the severity of the events.
Another example is the avian influenza outbreak risk, which increased because of climatic conditions, as are expected economic losses. Risk increases in areas with higher temperature and lower humidity. Under climate change to date, the associated expected economic loss of avian influenza outbreaks may have caused upwards of an additional $684 million across countries and about $16.05 million in TX. Under future climate change until 2030, the expected economic loss is approximately $1.8 billion in China and $5 million in the United States.
Xuan Hong Pham – USDA Risk Management Agency
Federal Crop Insurance Program
Objectives of FCIP:
Provide effective risk management products to farmers and ranchers
Increase program participation by expanding commodity programs and geographic availability
Actuarial soundness
FCIP is a public/private partnership managed by a board of directors that delegates tasks to the Risk Management Agency (RMA). The agency has oversight over compliance, risk management, education and outreach, and product management. However, the RMA does not sell nor service individual insurance policy; such services are outsourced to authorized insurance providers. The relationship between RMA, FCIP, and insurance companies are outlined in Standard Re-Insurance Agreement. FCIP is designed to be dynamic in light of changes in agricultural technology, risk, and practices. Proposed changes can be made via legislation passed through Congress, RMA initiatives, and the 508(h) process (a private submission process by which private sector stakeholders can propose changes).
Multiple peril coverage insurance (MCPI) is designed for producers to choose different coverage levels including catastrophic and 50%-85%. Producers can increase coverage in 5 percent increments. Coverage includes yield protection (ensures that yield produces historic averages), revenue protection, and revenue protection – harvest price exclusion (similar to yield protection but with added price protection components).
In 2022, 604 crop varieties were insurable. Additionally, 87 percent of planted acres were insured for major field crops, 81 percent of planted acres were insured for vegetables, 65 percent of planted acres were insured for fruit and tree nuts, 33 percent were insured for pasture, rangeland, forage, and hay. Drought and flood are the highest cause for covered losses in the agricultural industry. Of the covered losses, 43 percent were due to drought, and 31 percent were due to floods, excess precipitation, and storms. Another 27 percent was due to cold weather, hail, insects, etc.
Finding additional information – https://rma.usda.gov/
This program is supported in part by the Agricultural and Applied Economics Association and the US Department of Agriculture’s Economic Research Service, and the National Agricultural Statistics Service.
Those who register but cannot attend our webinar can always view a recording of it later at the council’s YouTube channel.