Consumers in the US and abroad have taken an interest in sustainable agriculture; fostering greater demand for sustainable practices throughout the food and agriculture value chain that comes in addition to regulatory demand.
Meeting that demand for sustainability practices requires farmers to confront and navigate the risks of making operational changes to their farms and farming practices. These risks can slow adoption of new practices. A robust risk management strategy to account for weather and price fluctuations is a part of many successful farming operations, but changing long-held practices represents an additional level of risk that farmers must navigate.
A recent RaboResesarch report, “US Farmers Need Broader Support to Overcome Barriers to Adopting Sustainable Practices” examines the potential barriers to adoption of more sustainable practices.
US farmers have shown the ability to adapt and change in the past. In fact, total factor productivity (the growth of outputs relative to inputs) has increased annually by nearly 1.5% since the mid 1990’s. In short, US farmers have steadily become more efficient at producing yields.
New sustainability practices, though aimed at long-term productivity and value can involve short-term risks for farmers. These risks can include up-front expenditures or increased production costs or risks to yields caused by increased pest pressures or variability in moisture or nutrient availability.
The paper finds that current programs designed to support agricultural risk management may not align well with the risks and outcomes of sustainability practices. These current programs often favor widely used crops and production methods and leave alternative approaches under protected. In some cases, alternative practices can actually reduce a farmer’s eligibility for key agricultural risk management programs, effectively penalizing farmers for deviating from more common production methods. Some structural shortcomings and considerations include yield reductions, operational diversity, value-added goods, and designations of farming practices.
Whole Farm Revenue Protection (WFRP) policies, which are designed to insure all qualifying farm revenue under one policy, were created to support diverse operations, producers of unique or premium products, and those using less conventional methods. WFRP is especially relevant for highly sustainable operations, including organic, regenerative, or otherwise nontraditional systems. However, of 2.1 million crop insurance policies sold, fewer than 2,000 are WFRP policies. This limited adoption might suggest they are not meeting farmer needs despite their intended aim, perhaps due to their complexity and the cost of the premiums.
Written Agreements allow for customization of individual crop insurance policies but require individual approvals that can be administratively burdensome.
Other programs offer incentives to farmers to adopt different practices. These premiums may not fully offset risks but may be appealing to producers nonetheless.
A combined, concerted effort – including risk support, new market opportunities, and value chain engagement – may be necessary to help farmers meet rising consumer demands, build on decades of sustainability progress, and strengthen resilience for future generations. This combined effort could facilitate continued innovation in American agriculture.
You can read the full report, which includes excerpts from a recent Rabobank survey of US producers on adoption of sustainability practices.
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