Smart Insurance Helps Farmers Face Climate Risks

Jun 27, 2025
By Farms.com

Modern Crop Coverage Prepares Growers for Extreme Weather Impacts

Extreme weather caused over $20 billion in agricultural losses in the U.S. last year. To support farmers, modernizing crop insurance is now critical.

The Federal Crop Insurance Program, a public-private partnership, covered more than 50% of these disaster losses in 2024, according to the American Farm Bureau.

This program protects farms from financial risk, but it depends heavily on outdated historical data. As weather patterns shift, it limits farmers from adopting more climate-resilient strategies like water conservation or crop changes.

Private sector innovations offer smarter options. New parametric insurance models use data and predictive tools to pay farmers quickly after events like heatwaves.

For instance, Praedictus Climate Solutions and Descartes are developing insurance based on real-time weather models. These help farmers recover faster while adjusting to changing growing conditions.

Nature X is creating insurance to reduce pollution from fertilizer runoff, helping protect water bodies like the Gulf of Mexico. Such tools support both the environment and farming resilience.

Public-private partnerships are also making progress. EDF is working with Kansas farmers and using OpenET evapotranspiration data to improve insurance coverage for irrigated fields.

Meanwhile, the University of Illinois and Illinois Corn Growers Association are testing insurance rate adjustments for conservation practices like cover cropping.

New ventures are growing too. The MBOLD Coalition backs crop insurance for winter camelina, a cover crop used for renewable fuel and soil protection. Growers Edge partners with food companies to support farmers adopting conservation plans through crop warranties.

"Crop insurance plays a critical role in supporting the financial health of U.S. farms and ranches through the ups and downs of weather conditions."

Modern insurance gives farmers flexibility to face today’s climate, protect natural resources, and strengthen rural economies.

Video: Wheat Yields in USA and China Threatened by Heat Waves Breaking Enzymes

A new peer reviewed study looks at the generally unrecognized risk of heat waves surpassing the threshold for enzyme damage in wheat.

Most studies that look at crop failure in the main food growing regions (breadbaskets of the planet) look at temperatures and droughts in the historical records to assess present day risk. Since the climate system has changed, these historical based risk analysis studies underestimate the present-day risks.

What this new research study does is generate an ensemble of plausible scenarios for the present climate in terms of temperatures and precipitation, and looks at how many of these plausible scenarios exceed the enzyme-breaking temperature of 32.8 C for wheat, and exceed the high stress yield reducing temperature of 27.8 C for wheat. Also, the study considers the possibility of a compounded failure with heat waves in both regions simultaneously, this greatly reducing global wheat supply and causing severe shortages.

Results show that the likelihood (risk) of wheat crop failure with a one-in-hundred likelihood in 1981 has in today’s climate become increased by 16x in the USA winter wheat crop (to one-in-six) and by 6x in northeast China (to one-in-sixteen).

The risks determined in this new paper are much greater than that obtained in previous work that determines risk by analyzing historical climate patterns.

Clearly, since the climate system is rapidly changing, we cannot assume stationarity and calculate risk probabilities like we did traditionally before.

We are essentially on a new planet, with a new climate regime, and have to understand that everything is different now.