Texas farmers face mounting expenses as droughts worsen

The financial costs of drought in Texas have risen rapidly over recent decades, according to a new analysis of federal crop insurance data.

The nonprofit Environmental Working Group, a longtime critic of the federal crop insurance program based in Washington, analyzed data from the U.S. Department of Agriculture and showed that drought accounts for more crop insurance payouts than any other weather phenomenon and that Texas draws more crop insurance payouts than any other state.

Payouts due to drought in Texas rose from an average $251 million per year in the 2000s to $516 million per year in the 2010s and $1.1 billion per year in the first four years of the 2020s, the data showed, rising at more than twice the rate of inflation.

Those numbers represent farmers’ lost harvests as well as the publicly-funded premium subsidies that keep them in business through disasters. As temperatures rise, so will costs.

“Drought and heat are expected to get worse in Texas,” Anne Schechinger, author of the EWG analysis, said.

“Climate change is going to increase costs for both taxpayers and farmers.”

Drivers of the growth in payouts include inflation, expanding insurance coverage and immensely damaging droughts in 2011 and 2022. The federal crop insurance program, which provides highly subsidized coverage to

American farmers, is one of several insurance sectors facing financial headwinds from increased exposure to increasingly severe weather, driven in part by carbon emissions from fossil fuels.

As costs keep climbing, Schechinger said, the crop insurance program requires reform that encourages adaptation to long-term changes in temperature and rainfall. In 2022, the program’s most expensive year on record, it subsidized 62 percent of policyholder premiums at a cost of $12 billion, according to a review by the

U.S. Government Accountability Office.

“You don’t want crop insurance to insulate farmers from market signals,” Joseph Glauber, a former chair of the Federal Crop Insurance Program and former chief economist of the U.S. Department of Agriculture, said. “You don’t want to encourage risky behavior. You don’t want to encourage growing crops on marginal land by virtue of the fact that you can insure it.”

SOURCE The Texas Tribune