Climate change may worsen crop losses
By FBC Tax Consultants
December 4, 2014 - Canada shares the North American continent with the United States, so the climate and ecological effects there have the potential to be felt here at home. It's with this in mind that a new government forecast from the U.S. may be concerning for Canada's farmers.
According to the U.S. Government Accountability Office (GAO), the long-term effects of climate change have the potential to substantially increase losses to crop insurance programs over the next several decades.
GAO revealed that losses for the programs tracing back to 2008 increased by 8 per cent due in part to population growth and appreciation in property prices for regions at risk of flooding. Furthermore, come 2040, climate change has the potential to increases losses even more, perhaps over 100 per cent by 2100.
Colorado Sen. Michael Bennet, chairman of the U.S. Agriculture Subcommittee on Conservation, Forestry and Natural Resources, requested the analysis to be done and remarked how the world can no longer tolerate dithering on climate change's devastating effects.
"It is yet another example of the expense that's caused by our failing to deal with climate change," said Bennett, according to USA Today.
Additionally, after analyzing 20 scientific studies on climate change, the report revealed there could be an uptick in hurricane losses of between 14 per cent and 47 per cent from 2000 to 2040. Losses could be even more significant further out, rising to as much as between 54 per cent and 110 per cent between 2040 and 2100.
Odds of Flooding May Rise
The GAO study also referenced how climate change could lead to an increased prevalence of flooding, which is the No. 1 natural disaster in the U.S.
Flooding has proven to be problematic over the last couple of years in Canada. Manitoba and Saskatchewan both saw severe flood damage this year. Many farmlands were destroyed and an estimated 100,000 people were displaced, according to provincial data records.
Crop insurance is an important protection farmers should have to provide financial cover for themselves when weather doesn't cooperate. With the appropriate documentation, farmers can make a claim if sales numbers are adversely affected by crop damage. Growers who receive insurance proceeds need to remember that this is considered earnings, so during tax season, it should be reported as farm income.
FBC is Canada’s Farm & Small Business Tax Specialist, providing tax accounting and bookkeeping services to over 20,000 farms and small businesses from Ontario to British Columbia. Our complete financial planning for farm and small business owners takes a long-term approach to address your specific needs at all stages of life and business, minimizing your taxes year after year. Year-round services include tax planning, tax optimization, business consulting and audit protection.
For more information, visit www.fbc.ca