Crop Insurance - Oregon Tilth

CROP INSURANCE

The oldest and most common form of crop insurance, MPCI is available both as revenue protection (losses related to below-average revenue) and yield protection (losses related to below-average yields).

  • Multi-peril crop insurance is for farmers and ranchers hoping to insure crops against natural perils. 
  • It works by allowing producers to insure a historical amount of documented crop production.
  • The reliance on annual production history (APH) can be tricky for beginning, transitioning to organic, and organic producers because the APH starts over each time a farmer engages in a new practice. 
  • It’s also hard for organic producers to access the full benefits of a system based on APH because of their diverse crop rotations.
  • Available for major commodities
  • Protects against crop yield losses by insuring a percentage of historical crop production
Contract Price Option

  • Allows the farmer to insure specific crops based on the contracted price rather than the organic premium price election set by RMA
  • This works for both organic producers and transitional producers who have secured a higher price for crops through a contract
  • Useful when the contract price is higher than the organic price election
  • Useful when there is no organic price election for a specific crop
Other Options or Endorsements

  • Depending on the type of policy, a producer can choose an additional option or endorsement, to strengthen coverage.
  • Example: Malting Barley Endorsement (MBE)
    • If barley for grain is included as a crop as part of a rotation, and the farmer has a contract for malting barley, it can be insured to the higher price listed in the contract.
Written Agreement

If coverage for a specific crop is not available in a given county, the farmer can work with their crop insurance agent to apply for a written agreement.

  • This is a special request for a case-by-case agreement with RMA for coverage
  • Farmers must supply information like:
    • Planting and harvest dates
    • 3 years of the producer’s production history of that crop or a similar crop
    • Information about a county where this crop is covered
  • Coverage begins at the later of two dates
    • When RMA accepts the farmer’s application
    • Crop planting date
Crop Insurance for Specialty Crop Producers

Specialty Crops Include: A full list of currently covered specialty crops

  • This coverage is ideal for an individual crop (produced in quantity)
  • Whole Farm Revenue Protection (for diversified operations)
  • Written agreements (special request to cover a crop not otherwise covered in a state)
  • Example of farmers utilizing this program.
Whole Farm Revenue Protection (WFRP)

WFRP was an idea hatched by the sustainable agriculture community as a way to provide crop insurance for diversified operations.

  • This coverage plan is ideal for diversified operations
  • For a farm with up to $17 million in insured revenue
  • Covers multiple crops and livestock under one policy
  • Available in all counties
  • Insures based on the whole revenue of the operation rather than on yield history
  • Includes re-plant coverage for annual crops (except Industrial Hemp or those covered by another policy)
  • Offers a range of coverage levels from 50-85%
  • WFRP Agent Locator: Use this tool to find a crop insurance agent who has experience working with WFRP.
  • How it works:
    • Gather the following information:
      • 5 years of Schedule F Tax Records
      • Farm Plan for the year, including what will be produced and anticipated yields (your Organic System Plan)
      • Organic certificate for organic items
      • Sales records, including direct market sales records
      • Summaries of coverage for any other insurance policies
      • Inventory information for commodities
      • Accounts receivable and payable
    • Find an agent. Use the WFRP Agent Locator 
    • Purchase the policy
    • Submit a notice of loss:  If the revenue for the policy year is below the insured revenue, farmers must submit a notice of loss within 72 hours
    • Make a claim: Farmers must file a claim within 60 days after submitting farm tax forms to the IRS
    • For more information, consult the WFRP Handbook for the policy year in question.
MicroFarm Program:

Micro Farm is a sub-program of Whole Farm Revenue Protection oriented towards farms with up to $350,000 in insured revenue. It works pretty similarly.

  • This subprogram of WFRP is designed for diversified operations. 
  • MicroFarm minimizes underwriting and recordkeeping requirements, and producers do not have to report expenses on individual commodities.
  • The farm cannot have more than 50% of total revenue from commodities purchased for resale.
  • Producers can include post-production activities as revenue, such as washing and packaging commodities or value-added products.
  • Example:
    • Jill and her family run a small CSA.  In addition to the CSA, they raise pastured poultry and make jam out of a ¼ acre raspberry patch.  MicroFarm would enable Jill to insure the revenue from all of these enterprises in one policy.

Pasture, Rangeland, Forage (PRF) Insurance
  • This program is based on a rainfall index, rather than actual losses, since moisture will be a predictor of yield.
  • The National Oceanic and Atmospheric Administration Climate Prediction Center (NOAA CPC) has a grid system which the Rainfall Index uses to determine precipitation amounts within an area.
  • Insured acres are assigned to one or more grid areas based on location
  • Producers do not need to file a claim or submit documentation for a loss.  
  • Payments are made after rainfall data is collected and shared with RMA for each 2-month index interval.
Enterprise Units by Practice Type
  • Eligibility is based on location and crop
  • Organic premium price elections available by commodity
  • Yield Protection: covers the operation in case of low yields due to weather, pests, disease issues
  • Revenue Protection: covers the operation when low yields or market changes result in revenue below the expected amount
Non-Insured Crop Disaster Assistance Program (NAP)
  • NAP provides financial assistance to producers of non-insurable crops when low yields, inventory loss, or prevented planting occurs due to natural disasters.
  • Farmers can participate in WFRP and Micro Farm, and still participate in the NAP program.
    • If the NAP payment exceeds the WFRP or Micro Farm deductible, the amount over the deductible will be considered revenue-to-count for WFRP or Micro Farm indemnity determinations.
  • Beginning, limited resource, socially disadvantaged, and qualifying veteran farmers are eligible for a waiver of the service fee and a 50% NAP premium reduction.
  • Examples:
    • Sal’s strawberry field is damaged by a severe drought.  NAP will cover the loss of income to Sal due to the drought, but it won’t cover the damage to the plants themselves.  Re-planting cost will be Sal’s cost to bear.
    • Rhea experienced a loss to her honeybee colony due to a hurricane.  NAP covers the loss of income to Rhea, but does not cover the loss of the bees.

This material is based upon work supported by the U.S. Department of Agriculture, under agreement number RMA24CPT0013921. 

Any opinions, findings, conclusions, or recommendations expressed in this publication are those of the author(s) and do not necessarily reflect the views of the U.S. Department of Agriculture. In addition, any reference to specific brands or types of products or services does not constitute or imply an endorsement by the U.S. Department of Agriculture for those products or services.

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