Crop insurance enrollment is prevalent among farmers surveyed in Indiana, Iowa, and Illinois. Through mixed qualitative and quantitative methods, the researcher found that crop insurance does not directly limit conservation practice adoption. Farmers view crop insurance and conservation practices as providing unique and complementary benefits to manage financial and production risks. Some farmers are interested in incentive programs that reimburse conservation practices. Crop insurance subscribers have positive attitudes toward the program and expect subsidy as a norm. Without subsidy, farmers would prioritize reducing coverage levels or adopting drainage or cover crops. Overall, crop insurance was not found to inhibit conservation behaviors.
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July 30-130-Michelle Hemler
1. Understanding how
crop insurance
impacts conservation
adoption
Michelle Hemler
Research Associate, Purdue University
Dept. of Forestry & Natural Resources
mhemler@purdue.edu
2.
3. Crop Insurance
Implemented in 1938 as a campaign promise by President
Roosevelt
1970s: Criticism due to its cost
1980s: Policymakers seek to make crop insurance
mandatory
Subsidy needed to increase participation
1994: Turning point in enrollment
Rising interest in protecting crop insurance
“We have strengthened and preserved the crop insurance program
– the number one priority of virtually every producer that testified
before our Committee.’’ – Senator Pat Roberts on the 2012 Farm Bill
4. Research Questions
Does crop insurance limit the adoption of
conservation practices and, if so, how?
What attitudes, beliefs, and/or norms do crop
insurance enrollers have that perpetuates the
continued use of insurance and impedes
conservation adoption?
6. Methodology
Mixed-Methods Approach
Qualitative Methods: Focus Group and Interviews
Quantitative Methods: Survey
Instrument Sample size Location
Focus Group n=3 Indiana
Interviews n=14 Indiana and Iowa
Survey n=719 Indiana, Iowa, Illinois
7. Qualitative Methods
Interview Development
Reviewed by several researchers
Agency recommendations
Snowball sampling during interviews
Analysis
Interviews recorded and transcribed
Thematic coding and inductive reasoning
using Nvivo 12 software
8. Quantitative Methods
Survey Development
Addresses obtained through
FarmMarket ID
Mail survey using Dillman
2014 5-wave method
Analysis
Quality control in Excel
Stata statistical software
Binary regression on crop
insurance enrollment
9. Crop insurance not limiting
Both behaviors provide unique benefits
Crop insurance: financial risk from uncontrollable
weather
Conservation practices: on-farm risk protection
“I mean, when you get 10-plus inches of rain, you're flooded. You're
going to have issues. So what do you do to try to mitigate those risks?
And that's where we've implemented cover crops into strategic areas to
try to do that.”
10. Interested in incentive program
Multiple farmers interested in applying or already
applied
More awareness needed of program availability
“I have signed up… I feel comfortable making the investment in my cover
crops even if I wouldn't get that reimbursement… There hasn't been a lot of
questions here at our office about it.”
“That's definitely helpful. It came about too late this past year…I haven't
heard much about it though recently. So, hopefully, people are promoting.”
“The only reason I bought crop insurance this year was because Iowa had
the cover crop incentive. And we're using cover crop on every acre…that
allowed us some very cheap insurance.”
11. Positive towards Insurance
Crop insurance enrollment prevalent across farmers
Positive attitudes, with subsidy expected as a norm
Experiences create beliefs of gratitude, as well as fear
“I do like that
they subsidized
crop insurance. I
think it's a nice
way to give
benefit to the
farmer.”
“I do think if you
were to get rid of
the subsidies on
crop insurance, a
lot more people
would opt out of
crop insurance…”
“But the other reason I
believe in crop
insurance is that, as a
general rule of thumb,
my premise is this, if
someone is willing to
pay part of your input
cost, let them
[laughter].”
12. Enrollment in Crop Insurance
90% had enrolled in crop insurance between 2012-2017
61.55% of enrolled using reduced/no-tillage
25.42% of enrolled using cover crops
76.22% of enrolled chose revenue insurance
80% of enrolled chose either 75, 80, or 85% coverage
Most common claims in the last five years were
drought, wind, and excess moisture
38.45% Response Rate
13. Influence of Enrollment
Those enrolled were significantly more likely to
agree with:
Crop insurance will exist next year (p=0.028)
Crop insurance will protect my farm
operation regardless of water-related risks
(p=0.016)
I can’t imagine managing my farm operation
without crop insurance (p=0.003)
14. Behavior Change without Subsidy
Top Priority Percent of Farmers n
Reduce my coverage level on crop insurance 23.08 135
Implement additional drainage 21.71 127
Purchase crop insurance at market value 18.29 107
Implement cover crops 16.41 96
Implement reduced/no-tillage 16.24 95
15. Crop insurance not limiting
No significant difference between groups
Disconnect between adopters and non-adopters
Those who were using the practices were significantly
more likely to indicate that crop insurance wasn’t
limiting
Interest in the incentive program linked to adopters
Significantly more likely to value cover crops
Adopters continue the practice regardless of subsidy
16. Conclusion
Crop insurance was not found to directly limit
adoption
Individuals participate in both behaviors to maximize
revenue and on-farm benefits
Incentive program likely to be used by adopters
Crop insurance use is reinforced through positive
attitudes and beliefs
Behavior changes if the subsidy were removed
17. Acknowledgements
Funding provided by USDA-NIFA
Natural Resources Social Science lab members at Purdue
M.S. committee: L. Prokopy, O. Doering, N. Thompson
Notas del editor
Turning point in 1994 with huge increase in enrollment, over 80% of eligible acres
May still be cost-prohibitive for those not fully “convinced” on crop insurance
Crop insurance was top risk-management strategy, followed by on-farm conservation practices
Half of farmers unaware of their subsidy amount
Fairly confident that crop insurance would exist next year
The financial context within the agricultural landscape reminds us of the importance of minimizing financial losses through crop insurance, which was supported in the interviewed farmers who still used conservation practices. While they were actively aware of and using conservation practices for risk-management, they still found crop insurance valuable for financial risk.
Both interviewed and surveyed farmers expressed deep concern and changing of behavior if the crop insurance subsidy were to go away.
Most notabNorms, attitudes, beliefs
these can undermine the ability to consider adaptive management strategies
which is supported in both the interview (Free money) and survey (what would you do without) results
However, the crop insurance subsidy reinforces enrollment through several behavioral mechanisms
Conclusion – how it’s important for conservation professionals
Conclusion: to stop perputating rhetoric that it is limiting when that’s not what we found, so to be careful of that. Even if articles say that it is limiting, the representative farmer is able to do both
Talk about the focus group guys at the end conclusin
Yes, by providing an automatic “habit” and deterring away other management options
Yes, through the influence of the subsidy farmers decide to take crop insurance, without necessarily thinking about the consequences or other options that could come up
Free money (might as well use it), helps mitigate the two main sources of risk (price and weather), younger farmers are more likely to be using revenue insurance and file claims, even though they’re also more likely to use the practices, they do not know their subsidy level, they think the subsidies should be there, they would reduce their coverage if subsidies went away showing that the subsidy itself does impact behavior
It’s the subsidy that’s really the main issue, not necessarily crop insurance itself. Because it’s the subsidy that influences behavior