Project 2025: Leaving Farmers (and Disaster Victims) High and Dry Amid Climate Chaos

As Climate Threats Intensify, Proposed Cuts to Disaster Aid and Crop Insurance Could Leave Farmers Struggling to Survive

Project 2025: A Conservative Approach to Disaster Response, Recovery, and Federal Crop Insurance

As the conversation around the role of the federal government in disaster response and agricultural support intensifies, Project 2025 has laid out a series of reforms aimed at redefining federal involvement in these areas. Backed by The Heritage Foundation and other conservative groups, Project 2025 proposes significant changes to FEMA's disaster response, recovery efforts, and the federal crop insurance program. These reforms emphasize federalism, encouraging state and local preparedness while reducing the federal financial footprint.

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Reforming the Federal Crop Insurance Program

Reducing Subsidies
Project 2025 proposes changes to the federal crop insurance program, focusing on reducing the burden on taxpayers. Currently, taxpayers cover about 60% of the premium cost for crop insurance policies. The project suggests reducing this subsidy rate so that taxpayers do not pay more than 50% of the premium. According to the Congressional Budget Office (CBO), reducing the premium subsidy to 47% would save an estimated $8.1 billion over ten years, with minimal impact on crop insurance participation. This change would make the program more sustainable and encourage farmers to take on more responsibility for their insurance costs. The project states, "Reducing the federal government’s involvement in crop insurance will encourage farmers to be more mindful of risk and to make more market-based decisions."

Eliminating Overlapping Payments
Another key proposal is to eliminate the overlap between the federal crop insurance program and other agricultural support programs like the Agriculture Risk Coverage (ARC) and Price Loss Coverage (PLC). Currently, farmers can receive payments from both programs in the same year, effectively doubling the support they receive for the same loss. Project 2025 recommends prohibiting farmers from receiving ARC or PLC payments in the same year they receive a crop insurance indemnity. By eliminating this duplication, the project aims to streamline federal support and ensure that farmers rely on the crop insurance program as their primary safety net. "Farmers should not receive duplicative payments for the same loss. Doing so encourages riskier behavior and undermines the role of insurance."

Repealing ARC and PLC Programs
Project 2025 goes further by recommending the repeal of the ARC and PLC programs altogether. It argues that these programs provide overlapping benefits with the federal crop insurance program and protect farmers from minor revenue dips, which is inconsistent with the concept of providing a safety net. By focusing on crop insurance as the primary form of federal agricultural support, the project aims to simplify the system and reduce federal expenditure. "By repealing these programs, the federal government can focus on ensuring the crop insurance program remains a viable safety net for farmers facing genuine disasters."

What This Means for a Farmer in Iowa Facing Significant Crop Losses

For a farmer in Iowa facing significant crop losses under Project 2025's proposed changes, the landscape of support would look different. Here's a narrative of what this farmer might experience:

Imagine an Iowa farmer, John, who has just endured a severe drought, leading to substantial crop losses. In the past, John relied on a combination of federal crop insurance, the Agriculture Risk Coverage (ARC) program, and Price Loss Coverage (PLC) to cushion the financial blow. However, under Project 2025’s reforms, his safety net would undergo significant changes.

First, John would notice that the federal crop insurance program’s subsidies have been reduced. In previous years, taxpayers covered about 60% of his premium costs, but now this rate has dropped to no more than 50%. This means John's out-of-pocket expenses for insurance premiums have increased, pushing him to reassess his risk management strategies. Although the change makes the program more sustainable for taxpayers, it adds a financial strain on John, forcing him to carefully consider the level of insurance coverage he can afford.

Should he file a claim due to the drought, John would also be affected by the elimination of overlapping payments. In the past, he could have received payments from both the crop insurance program and the ARC or PLC programs. Now, if he collects an indemnity from his crop insurance, he won't receive additional funds from ARC or PLC for the same year. This streamlined support means John has to rely solely on his crop insurance policy to recover from his losses, emphasizing the need for him to select the right insurance coverage.

Moreover, with Project 2025 proposing the repeal of the ARC and PLC programs altogether, John’s options for federal support are further narrowed. The changes push John toward greater self-reliance and perhaps a stronger partnership with private insurers. The intention behind this move is to simplify federal agricultural support and encourage farmers like John to engage more actively with risk management tools beyond government programs.

In the broader context, if the drought were part of a larger disaster impacting a significant portion of Iowa, John might find that federal disaster assistance through FEMA has become harder to access. With Project 2025 raising the threshold for federal aid, smaller-scale disasters that previously qualified for federal support might now fall under the responsibility of state and local governments. John would need to look more towards state programs or local disaster relief efforts rather than expecting federal intervention.

While these changes aim to reduce federal expenditure and promote sustainability, they shift more risk management responsibility to farmers. For John, this means navigating a more complex insurance landscape, budgeting for higher premiums, and possibly facing more financial uncertainty in the wake of crop failures.

Reimagining FEMA’s Role in Disaster Response and Recovery

FEMA's Overextension
Project 2025 argues that FEMA has become overtasked due to the increasing shift of disaster costs from state and local governments to the federal government, a trend exacerbated by the 1988 Stafford Act. As FEMA takes on more responsibilities, the agency has been stretched thin, often acting as a backstop for insufficient state and local preparedness. The project suggests that FEMA should refocus on large-scale, catastrophic disasters, urging states and localities to take on a more proactive role in managing smaller-scale events. According to the document, "FEMA’s ever-expanding footprint has left it overstretched and often unprepared to respond to the very large-scale disasters it was designed to handle."

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Adjusting Funding and Thresholds
A key recommendation involves raising the per capita indicator threshold for damages, which currently determines eligibility for federal disaster aid. Project 2025 argues that this threshold has not kept up with inflation, effectively lowering the bar for federal assistance and straining FEMA's resources. By increasing the threshold, the project aims to ensure that only more severe disasters trigger federal support. An alternative approach includes introducing a deductible system, incentivizing states to enhance their disaster preparedness and response capabilities. Additionally, Project 2025 proposes adjusting the cost-share arrangement, with the federal government covering a smaller percentage for less severe disasters while reserving larger support for truly catastrophic events. The document emphasizes that "by requiring states and localities to shoulder more of the cost of smaller disasters, we will incentivize them to invest in greater preparedness."

National Flood Insurance Program (NFIP) Reforms
The project also calls for a significant overhaul of the National Flood Insurance Program (NFIP). It argues that the NFIP, heavily subsidized by the federal government, has led to increased development in flood-prone areas while accruing significant debt. Project 2025 proposes a gradual transition to private insurance, starting with areas classified as less risky under the current program. As stated in the document, "Federal subsidies for flood insurance have encouraged development in flood-prone areas, with the associated costs eventually being borne by taxpayers."

Terminating FEMA’s Preparedness Grants
Since 2002, FEMA has provided over $56 billion in preparedness grants to state and local governments. Project 2025 contends that these funds have not resulted in measurable gains in preparedness or resilience. By terminating these grant programs, the project advocates for a return to federalism principles, with states taking full responsibility for funding their own preparedness efforts. It notes that "states should be responsible for funding their own preparedness efforts without relying on the federal government as a backstop."

Conclusion

Project 2025 presents a conservative vision for disaster response, recovery, and agricultural support, advocating for a shift in responsibilities from the federal government to states and localities. By refocusing FEMA on large-scale disasters and reforming the federal crop insurance program, the project aims to create a more sustainable, efficient, and fiscally responsible approach to managing risks and supporting recovery efforts. While these changes would mark a significant departure from current practices, proponents argue that they are necessary to ensure long-term resilience and fiscal health. For farmers like John in Iowa, this means adapting to a new reality where government support is more limited, demanding a greater emphasis on self-reliance and strategic planning.

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