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Agricultural Finance Must Be Modified for Climate Resilience, Says Report

A new report from the Institute for Agriculture and Trade Policy says that payments to compensate for damages from climate change cost taxpayers more than subsidizing good agricultural practices that would make farms more resilient. Agricultural Finance for Climate Resilience surveys policies and instruments in five segments of U.S. agricultural and agribusiness finance: taxpayer subsidized private crop and livestock insurance; federally regulated public and private agricultural loans; bond issuance to finance those loans; commodity futures markets whose prices should serve as reliable benchmarks for farmers’ pre-harvest forwarding contracts of grains and oilseed crops; and the disclosure of corporate climate financial risks, particularly of agribusiness, to investors, lenders, credit rating agencies and other interested parties. The report concludes that each of these segments of agricultural finance must modify their policies and instruments, e.g., insurance premiums and indemnification rates, to internalize climate-related financial risks into pricing.