THE LAND — APRIL 30/MAY 7, 2021
www.thelandonline.com — “Where Farm and Family Meet”
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Managing climate risk is good business, good for the future With the wave of a wand, you’re the In fact, all have been fumbling for boss of the Farm Credit System (FCS). years, notes Dr. Steve Suppan, a senior You manage a portfolio of 592,000 agpolicy analyst at the Institute of related customers holding 946,119 loans Agriculture and Trade Policy. Suppan’s totaling $315 billion — $113 billion in comments can be found in a detailed real estate debt alone, according to Dec. report titled “Agricultural Finance for 2020 FCS data. Climate Resilience,” published last fall. Those numbers keep most people up at Worse, the best answers so far, “…largnight; but you sleep like a baby because er and increasingly frequent ad hoc FARM & FOOD FILE your staff understands risk and how to disaster payments and increasing subBy Alan Guebert “price” loans based on the Five Cs of sides for private crop insurance from taxlending: collateral, capital, character, payers funds,” clearly are “not sustaincapacity and conditions. able — fiscally, economically or environmentally.” Recently, though, a sixth and seventh “C” have made your days longer and your nights Still, a reformed federal crop insurance program sweatier: climate change. How do you factor into could be a key element in a new, climate-flexible your loans the unknown damage bigger, more frelending program. The reason is obvious: the need is quent hurricanes, floods, droughts, harsher winters, so big — there was $83.5 billion in “weather and cliand hotter growing seasons will have on agriculture? mate-related (losses)” from 2001 to 2016 — that only government can handle the risk. The only solace you’ve found so far is that you’re not alone. Other ag lenders like commercial banks, More importantly, Suppan explains, “Crop and insurance companies, and the U.S. Department of livestock insurance policies could be written … to Agriculture’s Farm Service Agency are fumbling for reduce premiums and increase indemnification payanswers, too. outs for farmers and ranchers complying with practices … to reduce sources of greenhouse gas emis-
sions.” The inverse could become law, too. Insurance premiums will increase and coverage decrease for farm operations which add to climate woe. That’s smart government; much smarter, in fact, than underwriting questionable carbon sequestration schemes Big Ag groups are pushing now. Lenders have other ways to encourage climatefriendly (and, in turn, loan friendly) agriculture. For example, explains a recent report titled “Financing Resilient Agriculture” from the Environmental Defense Fund, “ Lenders can establish differential interest rates” (meaning lower rates) “for loans … to farmers with positive attributes” like climate-friendly practices. Right now, however, “Lenders have a blind spot when it comes to understanding the connections between conservation adoption and farm finances,” especially with Big Ag’s gassy livestock production methods. That is something Congress can fix fast if it’s committed to underwriting climate-resiliency in the coming decade. For example, since the Farm Credit System is a GSE, or a government-sponsored enterprise, it receives market benefits because of its special status. As such, Congress could require it to make climate-friendly lending the standard for all loans to Americans are the planet’s champion consumers. farmers, ranchers, cooperatives and rural communiA 2018 article in Business Insider by Andrew D. Hwang states the average American uses about 9.7 ties. hectares. This data suggests the Earth can support Congress could require USDA to do the same in its at most one-fifth of the present population, 1.5 bildirect ag lending — estimated at $17 billion in 2018. lion people, at an American standard of living. If commercial lenders were added in, Congress could influence another $170 billion in ag loans. “The Earth supports industrialized standards of living only because we are drawing down the ‘savTo get an even bigger climate-change bang for ings account’ of non-renewable resources, including their dollars, Congress (and lenders) might offer fertile topsoil, drinkable water, forests, fisheries and even larger loan and larger federal crop and livepetroleum,” Hwang said. stock insurance subsidies to farmers who add (or add to) a complementary crop/pasture/livestock It took 127 years for the world population to double from one billion to two. By contrast, it took only enterprise to their farms or ranchers to maximize 47 years, from 1927 to 1974, to double from two bil- climate mitigation. lion to four. Since 1960, world population has grown There are other climate-affecting actions lenders by about one billion every 13 years. could take to make agriculture more climate friendly and more sustainable: make soil health a meaEnvironmental experts are quick to say we are sure in loan appraisal, write clean water incentives killing our planet. I don’t believe this is so. Yes, I believe we are harming our planet — perhaps irrep- into loans, and steer borrowers into longer-term arable harm. But Earth will survive. It’s the human “relationship” loans. race that’s going to take the pounding. And it’s Whatever action is taken, it needs to happen fast. going to make Covid-19 look like a trip to the denThere’s no time to waste on phony solutions to real tist. problems. And farmers and ranchers should flock to We can enjoy our avacados and Florida vacations; join if, that is, they really hope to live their creed as the “first environmentalists.” but Earth will have its day. Besides, it’s good business now and decades from Paul Malchow is the managing editor of The Land. now. He may be reached at editor@TheLandOnline.com. The Farm and Food File is published weekly The views expressed in this column are not necesthrough the United States and Canada. Past colsarily the opinion or policy of The Land. v umns, events and contact information are posted at www.farmandfoodfile.com. v
OPINION
Killing the planet? We’re killing ourselves LAND MINDS, from pg. 2 Will farmers take land out of production in the name of sustainability in spite of the sirens’ call of $15 soybeans? Is the USDA turning a deaf ear to warnings of low grain carry-overs and even possible shortages in 2022? “Under the Biden-Harris Administration, USDA is engaged in a whole-of-government effort to combat the climate crisis and conserve and protect our nation’s lands, biodiversity, and natural resources including our soil, air and water,” The April 21 announcement stated. “Through conservation practices and partnerships, USDA aims to enhance economic growth and create new streams of income for farmers, ranchers, producers and private foresters. Successfully meeting these challenges will require USDA and our agencies to pursue a coordinated approach alongside USDA stakeholders, including state, local, and tribal governments.” Sounds about right. Carbon footprints, an increase in extreme weather events, melting ice fields and safe supplies of potable water all lead me to a question I don’t hear asked very often: Can the planet Earth sustain 8 billion people? Scholars have discussed this topic with (again) a wide spectrum of opinions. A United Nations report from 2012 stated Earth can easily sustain about 2 billion people. More recent studies have that number at 8 billion, providing those 8 billion are judicious in their use of resources.
