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Climate Change Sows Seeds of Multi-Peril Crop Insurance Denials

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By Alex Beeman

June 18, 2019

The increased variability of weather patterns and the frequency and severity of severe weather events will have a significant effect on agricultural crop production.  The impact of climate change will have a corresponding effect on the multi-peril crop insurance industry, including increased payouts due to decreased crop yields, droughts, floods, temperature changes, pests, and weeds.  By way of example, Indiana corn yields have decreased due to warmer overnight temperatures over the past decade and these yields will continue to decrease as heat stress and water deficits increase.

For agricultural producers, these changes will require a shift in crop varieties, the introduction of certain crops into new areas, and the use of non-traditional and less familiar production practices, such irrigation techniques and weed prevention.  Yet the present crop insurance scheme disincentives the use of innovative, sustainable, and resilient production practices that could decrease short-term crop yield but increase long-term yield and decrease vulnerability to climate change-related risks.  This is best illustrated by the strict application of the “good farming practices” standard to obtain crop insurance coverage.   

Under the Federal Crop Insurance Act, crop insurance coverage “shall not cover losses due to . . . the failure of the producer to follow good farming practices….” 7 U.S.C. § 1508(a)(3)(A)(iii).  In Hobbiebrunken v. Vilsack, No. 11-1385-MLB, 2013 U.S. Dist. LEXIS 2313 (D. Kan. Jan. 8, 2013), a family of farmers was denied crop insurance coverage after a failed 2009 corn crop on the grounds that they had used an inadequate seed, had not determined soil fertility, failed to have an adequate fertility plan, and did not implement appropriate weed control.  With respect to ameliorating weeds, their fields had a bindweed problem.  Herbicide was purchased and applied but the herbicide did not target bindweed.

In Singh v. Fed. Crop Ins. Corp., No. 1:17-cv-01373-SAB, 2018 U.S. Dist. LEXIS 217559 (E.D. Cal. Dec. 27, 2018), a farmer was denied crop insurance coverage for a disappointing 2015 almond crop during drought-like conditions.  While the farmer had a deficit irrigation strategy, the farmer was denied coverage when it was found that there had been inadequate irrigation of the crop.

These cases illustrate the risks that agricultural producers will increasingly face as climate continues to change.  Until the current MPCI scheme adjusts to the realities and effects of climate change and producers become more familiar with these challenges, there will likely be a spike in crop insurance disputes and litigation, like that in Hobbiebrunken and Singh.

If you have any questions about insurance coverage, please call one of our Insurance Coverage/Bad Faith Group members.

This has been prepared for informational purposes only. It does not contain legal advice or legal opinion and should not be relied upon for individual situations. Nothing herein creates an attorney-client relationship between the Reader and Reminger. The information in this document is subject to change and the Reader should not rely on the statements in this document without first consulting legal counsel.
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