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USDA Makes Progress on Improving Crop Insurance for Organic Farmers

USDA’s Risk Management Agency this week announced the removal, starting in 2014, of the five percent premium surcharge assessed against all organic farmers seeking federal crop insurance. This penalty against organic farming has been an issue NSAC has campaigned against for nearly a decade and we are delighted to finally report significant progress.

March 1st, 2013

USDA’s Risk Management Agency this week announced the removal, starting in 2014, of the five percent premium surcharge assessed against all organic farmers seeking federal crop insurance.  This penalty against organic farming has been an issue NSAC has campaigned against for nearly a decade and we are delighted to finally report significant progress.

The change came about in part as a response to a just-relased audit of organic crop insurance by USDA’s Office of Inspector General.

The audit found that transitional crop yields for the small but growing percentage of organic farmers in the crop insurance program generally exceeded actual production histories.  Transitional yields, in this instance, does not refer to the yields during the transition to certified organic production.  Rather, transitional yields are county average yields used in the federal crop insurance program when producers do not yet have a long-term production history with a particular crop, and also when a producer has a very bad year due to natural disasters.

Beginning with the 2014 insurance year, RMA will now use actual transitional yields for organic crops.  While this is the appropriate policy, it remains highly problematic because the data being used is RMA’s own data and is based necessarily therefore on very thin evidence.  Only a quarter of organic farmers are enrolled in federal crop insurance and many of them have enrolled relatively recently.  Given the historic surcharge penalty, and given that most crop insurance policies still pay out at conventional rather than organic prices, it is likely that those enrolled, as a general rule, either had higher risks or were more risk averse.  Hence, current transitional yield data may very well be skewed in a way that still disadvantages organic farmers.  Until more organic farmers are enrolled and have accumulated actual production histories that are recorded with USDA, this will be a continuing problem.  However, the removal of the five percent premium surcharge should help considerably in this respect.

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