Insuring less to save more

Nov 1, 2013
by WLJ

— New insurance practice seeks to encourage, not punish, water savings

In their increasingly urgent efforts to preserve underground water resources, the semantics of the crop insurance industry could be Kansas farmers’ greatest enemy.

The USDA Risk Management Agency’s inflexible definition of irrigation gives farmers unattractive options if they don’t use their full irrigation allocation every year—allocations that some regions in western Kansas are voluntarily trying to trim.

At the two-day Governor’s Conference on the Future of Water in Kansas, held in Manhattan at the end of October, farmers, ranchers, government agencies, academics and industry representatives gathered to discuss the state’s dwindling water reserves. In one well-attended session, Rebecca Davis, director of the Risk Management Agency’s Topeka office, explained how her staff is working on a new crop insurance option that would give Kansas farmers better coverage for reduced irrigation.

“Our basic definition of irrigation is you have to have enough water to produce the yield which your guarantee is based on—your APH (Actual Production History) yield— throughout the growing season to be applied at the proper times,” Davis explained. “So if you don’t have that, you cannot report your acreage as irrigated.”

As a result, Kansas farmers whose pumps are pulling up less water each year are presented with two equally unattractive options, Davis noted.

They can plant only as many acres as they can fully irrigate and report the others as prevented planting or non-irrigated, or they can plant their full amount of acres, with limited irrigation, and report them all as non-irrigated.

Because non-irrigated acres are risky and average low yields, farmers end up paying high premiums for minimal coverage on acres that are actually getting some, but not full, irrigation.

“Not really an acceptable solution for irrigated producers,” Davis noted. The prevented planting option is equally unhelpful for Kansas farmers, who mostly operate on wells. “Prevented planting for well irrigators is probably not going to be an option because we can’t tie loss of irrigation water to a cause of loss within our insurance premiums,” she said.

These options punish farmers who are cutting back on their irrigation inches, either voluntarily or out of necessity, both of which are in ample supply in Kansas. It also forces farmers to go counter to state efforts to dial back water use.

In the far west central counties of Kansas which make up Groundwater Management District (GMD) No. 1, farmers are working with dwindling underground water supplies.

“We are very highly depleted,” said Greg Graff, a Wichita County farmer and president of the board for the district. “We’re only pumping 25 to 30 percent of our allocated amount—that’s how low our wells have dropped.”

In northwest Kansas, Sheridan County farmers have recently committed to voluntarily cutting their water allocations by 20 percent over the next five years, as part of a “Local Enhanced Management Area” agreement, known as a LEMA.

To encourage efforts like this, Davis and her office are working on a third option for Sheridan County LEMA farmers. Using university research on yield models under various levels of irrigation, a “limited irrigation practice” has been crafted and is available this year for those farmers.

“If you’re willing to take some production off your irrigation water, we don’t want crop insurance to be the reason why you can’t participate in that,” Davis said. “If they’re willing to make the adjustment to participate in this LEMA, we can at least make some adjustments on our crop insurance and give you an irrigated yield at a rate that is commensurate with less water use.”

Because this practice is limited to such a small group of producers in one place, the Topeka office must do individual written agreements for each claim this year, Davis noted. She said RMA is developing a limited irrigation practice option that could be available nationwide by the 2015 crop year. “Kansas is not the only state that wants this limited irrigation practice,” she said, noting that states like Nebraska, Colorado, Oklahoma, Texas and those in the Pacific Northwest are all good candidates.

Jan King, the district manager of Groundwater Management District 1, is working with producers in that district to try and form the state’s second LEMA, which would start in 2015 and cut water use in that area by 20 percent. She and producers like Graff worry that if a limited irrigation insurance practice isn’t available to farmers by then, their LEMA will not move forward.

“I don’t think [farmers] would volunteer to go into it if they can’t insure their corn,” Graff told DTN. “As a farmer, I wouldn’t. As a GMD Manager, I’m still pushing to get [the LEMA]. But from a farmer’s perspective, I don’t think they will.”

King called it a “stumbling block” to implementing the LEMA, which would set a reduced six-year water allocation for farmers in the district, based on their irrigation use from 2008 to 2012. To protect growers who were already using less water in those years, the proposed LEMA would have a baseline of eight annual inches, so no farmer would face less than 48 inches of available water over six years.

Davis said if a nationwide limited irrigation practice isn’t available in 2015, her office would have to do a great deal of extra work to make sure growers had access to it.

“We have limited staff and the written agreement process is a very cumbersome process,” she said. “If that’s our only option, we’ll do it. Our hope is that in 2015, we’ll have something permanent in place, (but) if not, we will go ahead and offer written agreements.” — Emily Garnett, DTN