As Temperatures Rise, the US Corn Belt Could See Insurance Claims Soar

By Frida Garza

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.”