Farmers in Michigan have a new tool: a crop insurance pilot aiming to prove soil-health practices can change a farm’s risk profile — lowering risk, increasing resilience and improving profitability over time.
The Michigan Department of Agriculture and Rural Development has launched its NextGen Crop Insurance Pilot. The program is focused on corn and soybean growers in four Thumb-area counties — Saginaw, Tuscola, Huron and Sanilac — for the 2027 crop year.
The pilot is designed to test whether farmers using soil-health practices can be priced differently for crop insurance based on lower production risk. Rather than relying only on backward-looking production history, the model aims to incorporate soil-health data, field-level practices and actuarial analysis to better reflect a farm’s current resilience. USDA-ERS data shows crop insurance indemnities have risen 109% between 2015 and 2024.
For MDARD Director Tim Boring, the reason for the pilot comes down to two words: farm economics.
“We’ve been working for quite a while here at the Michigan Department of Agriculture and Rural Development standing up regenerative ag programming, continuing to accentuate the role of soil health and production systems here in the state,” Boring says. “We know that improved soil health can oftentimes lower input costs for farmers.”
But Boring says the state also sees a connection between soil health and weather risk.
“We know that improved soil health on farms here in Michigan also improves weather resiliency and has some correlations to decreased weather risk,” he says. “If it costs less to insure high soil-health-quality ground, then there’s certainly some margin there on decreased insurance premiums.”
The pilot is built around a simple but potentially disruptive question: If healthier soils reduce risk, should crop insurance pricing recognize that?
Why Michigan, and Why the Thumb?
The first phase of the pilot focuses on four counties in Michigan’s Thumb region that represent roughly 12% of Michigan’s agricultural production land, with a large share planted to corn and soybeans.
Boring says the region also has the grower networks and conservation history needed to test a new model.
“We’ve got some really diverse cropping systems here in the state, and particularly this effort is focused up in the Thumb region of Michigan,” he says. “We’ve got really extensive grower networks up in that part of the world. There’s some really far-reaching conservation efforts that have been taking place.”
Boring says the department sees the model as scalable beyond the initial counties.
“There are a lot of elements on the ground here that uniquely poise this kind of work for success,” he says. “But ultimately, we see this really scalable across the state and across the region.”
A Private-Market Add-On, Not a Replacement
The pilot is not meant to replace federal crop insurance. Instead, it is designed as a private-market add-on that can work alongside a farmer’s existing coverage.
Tina Owens, with Transformational Investing in Food Systems, says that distinction matters.
“This is outside of the existing federal crop insurance scheme. This is a private market lever,” Owens says. “We’re not asking farmers to abandon anything in their current system. We’re giving them a new lane.”
Owens says farmers can keep their current crop insurance agent and may still choose to carry federal or catastrophic coverage for risks such as hail, tornadoes, flooding or drought.
“We would prefer that farmers actually keep catastrophic insurance, because there are still the tornadoes, hail, other disruptive events that happen,” she says.
The pilot is focused first on corn and soybeans because that is where the initial actuarial and soil-health data work has been completed.
“If you’re not dealing with corn and soy, you’re not actually dealing with the system at scale,” Owens says.
How the Pilot Works
Phase 1 of the program was funded through a $480,900 grant from the state of Michigan. Owens says roughly half of that funding went toward actuarial data development and setting up the insurance structure, while the rest supported partner outreach and farmer engagement.
The model uses what Owens describes as a farmer membership-based captive insurance structure. In simple terms, participating farmers join a private risk pool designed around growers using practices associated with lower risk.
For an individual farmer, Owens says setting up a private captive arrangement could cost tens of thousands of dollars. Under this pilot, participating farmers pay a $35 membership fee.
That structure, she says, “dramatically democratizes the ability of farmers to engage in a private risk pool.”
The long-term goal is that as lower-risk farmers participate and losses are reduced, some of the financial benefit could be returned to growers through dividends.
“In year four, instead of the profitability going into an insurance agent’s pocket, it actually gets shared with the farmer,” Owens says.
That possibility is one of the more novel pieces of the pilot. The farmer is not only purchasing a policy; the farmer may eventually participate in the upside if the risk pool performs well.
What Farmers Need to Qualify
For the 2027 crop year, eligible farmers must be growing corn or soybeans in one of the four pilot counties: Saginaw, Tuscola, Huron or Sanilac.
Owens says farmers are being asked to go through a pre-enrollment review. That review compares what their costs would have looked like under the new model against their 2026 crop insurance costs, since 2027 pricing cannot be finalized yet.
The program is looking for farmers using soil-health practices including:
- Cover crops
- Crop rotation
- No-till or low-till systems
Farmers also need to have completed some level of technical assistance or soil sampling within the past four years. They will be asked to share geotagged soil sampling data and their 10-year actual production history, or APH, so pricing can be evaluated at the farm and field level.
Enrollment for the 2027 crop year will take place ahead of the March 15 federal crop insurance deadline.
Owens says her personal goal is to see at least 20 farmers from each of the four counties participate in the early review process — about 80 farmers total.
Why Crop Insurance Is the Lever
Boring says farmers have repeatedly raised crop insurance as a barrier when they discuss adopting more advanced soil-health or regenerative practices.
“Crop insurance keeps coming up from farmers,” he says. “There are certainly barriers, oftentimes around implementing some of these more cutting-edge regenerative ag practices — cover crop termination timelines, things like this.”
He also says the current system often relies heavily on historical production records, while farmers are trying to make decisions based on what their fields can do going forward.
“We’ve heard it surface time and again — some frustrations of the fact that current crop insurance systems really have a rearward-looking production history,” Boring says. “As we know that we can improve some of the resiliency on ground looking forward, how can we be taking a look at getting a better handle on what that production risk is?”
Owens frames the challenge similarly. If a farmer changes practices to improve soil health but those practices are not fully recognized by crop insurance or lenders, the farmer can face a financial gap during transition.
“If I can’t get my crop insurance to cover the practices that my ag lender is lending to, then there’s a gap in what I as an individual farmer can do,” Owens says.
She says insurance has to move early because actuarial science influences not only insurance pricing, but also lending, risk measurement and eventually broader farm finance.
“Insurance actually has to kind of go first in order to prove this actuarial outcome in a way that can then be embedded in the rest of the system,” she says.
Partners Behind the Pilot
Boring says the program depends on a broad partnership network.
“A program like this really only works if you’ve got really strong partnerships,” he says.
MDARD is working with groups including The Nature Conservancy, Michigan Corn, MSU Extension and conservation partners. The program is also designed to move through existing crop insurance networks.
“The crop insurance agent you’re working with today is the crop insurance agent you can work with tomorrow to work within a program like this,” Boring says.
Owens says additional training for crop insurance agents and adjusters will be important so farmers are not left to explain the new model on their own.
“If a farmer enrolls in insurance, but their crop insurance agent and their insurance adjuster weren’t also trained on what these new metrics mean, it kind of still leaves the farmer in the space that they’re in right now,” she says. “We don’t want to leave them there.”
Bigger Than Insurance
Both Boring and Owens say the pilot could eventually reach beyond crop insurance.
Boring says the goal is to better connect soil-health investments to economic returns.
“We understand all the time that there’s a lot of value in soil health, there’s value in driving more management per acre,” he says. “The trick to that is then correlating that to economic returns.”
Owens says if the pilot demonstrates that soil-health practices reduce risk and improve profitability, it could eventually affect other parts of farm finance, including operating loans, cost of capital and even land valuation.
“This is about a lot more than just crop insurance,” she says. “When you start proving the new actuarial science related to soil health and ag risk, then you look at all the places that those sciences are already used.”
She also points to future market opportunities such as sustainable aviation fuel and 45Z tax credits, where practices tied to carbon intensity scoring may overlap with soil-health systems.
Boring says Michigan is watching those connections closely.
“We continue to see the development of market-rewarding programs for the value of soil health and production practices, things like 45Z,” he says.
Could the Model Scale?
The pilot starts in four Michigan counties, but the ambitions are larger. Owens says the long-term goal is to expand across Michigan and eventually to other corn and soybean states.
Boring says state-level pilots often help shape larger agricultural policy.
“A lot of the creative ideas that tend to manifest themselves in the Farm Bill started off as individual state ventures or smaller regional efforts that are working, that have some scalability potential,” he says.
For now, the first test is whether farmers see enough value to enroll, compare costs and pressure-test the model.
Owens says farmer information will remain private, although aggregate results will be reported. She wants growers in the four counties to sit down for what she calls a “kitchen table level conversation” about whether the model works for their farm.
Five years from now, Owens says she hopes farmers say the program gave them more stability with lenders, helped remove roadblocks to adopting soil-health practices and improved profitability per acre.
Boring’s hope is similar: that the pilot creates a crop insurance system that better reflects modern production risk and gives farmers a stronger economic reason to invest in resilience.
“I hope that we’ve got a system here that is going to make it more affordable for farmers to be participating in crop insurance products,” he says. “We’ve got a system here that is going to be better meeting farmer needs out there today.”
