Ag Risk Management and Crop Insurance

Crop Insurance

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USDA Issues Hemp Crop Insurance

USDA issues new crop insurance program for 2020 hemp production season

USDA officials in December released information covering a new pilot crop insurance program for hemp producers in selected areas.

USDA Risk Management Admnistration Offers Hemp Crop Insurance in 2020 featured article image
USDA Risk Management Administration now Offers Hemp Crop Insurance in 2020

The USDA’s Risk Management Agency is now offering new options for the protection of hemp crops that will provide Actual Production History coverage under 508(h) Multi-Peril Crop Insurance for eligible producers who are producing fiber, grain, and flowers.

According to the RMA, Section 508(h) of the Federal Crop Insurance Act requires that the Federal Crop Insurance Corporation, or FCIC, publish any policies, rates, or provisions of policies that are approved by the agency’s board.  They are also required to make those policies available by other FCIC-reinsured companies.

Contracted insurers that have been approved by the USDA and that have agreed to participate in federally insured crop insurance programs are the typical sellers of Multiple Peril Policies.  The insures then distribute the policies through independent agencies like Ag Risk Management and Insurance of Apache, Ok and Chickasha, OK.  Those agencies collect premiums, issue policies and then pay the claims.

In a statement from the RMA, Administrator Martin Barbre says “We are excited to offer coverage to certain hemp producers in the pilot program.”

Feedback will be vitally important to the agency as this is a pilot program.

“Since this is a pilot program, we look forward to feedback from producers on the program in the coming crop year.”

RMA Admistrator Martin Barbre

Qualifying States

Hemp producers in select counties in the following states have been approved to be offered the Multi-Peril Crop Insurance program:

In addition to Oklahoma there is:

  • Alabama
  • California
  • Colorado
  • Illinois
  • Indiana
  • Kansas
  • Kentucky
  • Maine
  • Michigan
  • Minnesota
  • Montana
  • New Mexico
  • New York
  • North Carolina
  • North Dakota
  • Oklahoma
  • Oregon
  • Pennsylvania
  • Tennessee
  • Virginia
  • Wisconsin

Qualifying For Insurance

Eligibility for the MPCI pilot program and other USDA administered programs will require that the hemp producers are:

  • Compliant with applicable state, tribal or federal regulations for hemp production.
  • Experienced with hemp, having produced the crop for at least one year.
  • Under contract for the sale of the insured hemp crop.
  • Licensed under a state, tribal or federal program approved by the USDA under the interim final rule for federal hemp production, or part of a state or university research pilot program authorized by the 2014 Farm Bill.

The MPCI program will not cover hemp crops that exceed federal acceptable limits of 0.3% total THC.  Therefore, cannabis will not be offered coverage under these hemp insurance programs.

The new pilot crop insurance coverage is offered in addition to the Whole Farm Revenue Protection coverage plan the agency introduced to hemp producers in August for the 2020 season.

More coverage coming for container-grown hemp

In addition to these current federal hemp insurance programs, hemp will also be insurable under the nursery crop insurance program, as well as the Nursery Value Select pilot crop insurance program starting in the 2021 crop year.

Under these two programs, hemp producers growing the crop in containers will be eligible for insurance as long as they are compliant with state, tribal and federal regulations.

https://agrmi.com/hemp-crop-insurance-program-hcip/

More details about the USDA-RMA programs are available here.

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Evaluating Crop Hail Insurance

Hail Damaged Corn Crop makes it important in properly evaluating crop hail insurance.
Hail Damage Reminds Us To Properly Evaluate Crop Hail Insurance

 

Helping You In Evaluating Crop Hail Insurance Needs

Hail is the one catastrophe that is most likely to totally destroy a part of your crop and leave the rest looking fine. The part of the crop that hail takes out may well be less than the deductible of your Multiple Peril Crop Insurance policy.  It may also not lower your yield enough for a revenue insurance policy to kick in.

Crop-Hail  Insurance Fills The Gap

While Multiple Peril Crop Insurance policies protect you against losses severe enough to significantly drop the yield per insured unit, Crop-Hail  Insurance gives you acre-by-acre protection.  This protection  can be up to the actual cash value of the crop. If you buy 65/100 (65 percent of yield and 100 percent of  price) or greater for your MPCI, you can, under many policies, delete the hail coverage and replace it with private hail coverage. Many operators find it more effective to leave MPCI hail coverage in place and get a companion Crop-Hail policy to  cover their MPCI deductible.

Evaluating Crop Hail Insurance is especially important to those with  group policies which leave individuals exposed to spot losses due to hail. You can also buy additional Crop Hail Insurance coverage during the growing season (prior to damage) to protect added profit potential from bumper crop yields or higher-than-normal crop values.

Even if your frequency of hail damage is low, remember that Crop-Hail coverage is rated for your area. The premiums may be much smaller than you think.  And, unlike Multiple Peril Crop Insurance, Crop Hail Insurance can be purchased at any time during the growing season. It is an inexpensive way to protect against hail damage.

Crop Hail Insurance Overview

In short Crop Hail Insurance:

  • is a Private Coverage and not part of the Federal Program.
  • is usually an acre-by-acre coverage
  • does not require production reports
  • liability is expressed in a dollar amount, not a production guarantee.
  • the dollar amount insured per acre may not exceed the cash value of the crop
  • many plans allow coverage of specific acres within a county
  • coverage is rated for individual areas
  • losses are paid damage by the specified peril occurs to the crop

Adding Crop Hail Insurance to your Multiple Peril Insurance Coverage plan makes good financial sense with today’s very unpredictable patterns.  

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Why Crop Insurance Matters

Hail Damaged Corn Shows Why Crop Insurance Matters at Ag Risk Management & Insurance of Apache Oklahoma image
Hail Damaged Corn Shows Why Crop Insurance Matters

We’ve all heard the term “Insurance Poor”.  Now there is crop insurance to consider.  Why can’t I just take my chances?  Tell me some reasons why crop insurance matters.

Here are some very good reasons Why Crop Insurance Matters:

Economic Security

We all want healthy, fresh food for our families. America’s farmers and ranchers provide that and more. You provide that for your own family and families all over the world. Crop insurance provides the access to capital and security farmers need to increase crop yields, improve operating efficiencies and stay competitive in world markets. A financially healthy farm economy is essential to the stability of America’s economy.  If you fail, we all fail.

American Made Materials

Farmers and ranchers don’t just grow food; they grow the plants that provide the fiber for our softest cotton baby blankets, big cozy sweat shirts for Friday Night Football, beautiful wedding gowns, and all the other things that make life great.  The feed for livestock comes from you.  All that you do provides the raw materials for hundreds of essential products.  You help reduce our national dependency on foreign manufacturing.  Crop insurance helps you to stay financially solid and in the game.

Assurance Through Insurance

In 2012, the crop insurance program paid out more than $17 billion in indemnities to producers across the U.S. who purchased crop insurance. Crop insurance provides a safety net against perils such as frost, drought, flooding and hail. Without a strong crop insurance program, uncontrollable changes in weather could undermine the financial security of individual farmers and place the entire farm economy in jeopardy.  Again if you fail we all may fail.

Ensuring Affordability

Every day we all depend on the goods and products made by America’s farmers and ranchers. America’s farmers and ranchers, in turn, depend on crop insurance as an essential business tool in today’s difficult agricultural economy. In an increasingly volatile business environment, crop insurance provides an important measure of stability for America’s agricultural producers. Access to affordable crop insurance allows American farmers to continue to provide affordable food for America and the world.

But, you probably knew all these things, and just need to be reminded now and then.  Crop Insurance Matters!

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Multiple Peril Crop Insurance

Multiple Peril Crop Insurance (MPCI)

Some Short Facts

wheat-field2500x1500-blurMultiple Peril Crop Insurance (MPCI) policies must be purchased before you plant. They cover loss of crop yields from all types of natural causes including drought, excessive moisture, freeze, and disease. Newer coverage options combine yield protection and price protection to guard farmers against potential loss in revenue.  That way is doesn’t matter whether it is due to low yields or changes in market price.

Under the Federal Crop Insurance Program’s unique public-private partnership, there are currently 19 private companies authorized by the United States Department of Agriculture Risk Management Agency (USDA RMA) to write MPCI policies. The service delivery side of the program, such as:

  • writing and re-insuring the policies
  • marketing
  • adjusting and processing claims
  • training
  • record-keeping, etc.

is handled by each private company.

The Risk Management Agency (RMA) oversees and regulates the program. The RMA sets the rates that can be charged and determines which crops can be insured in different parts of the country. The private companies are obligated to sell insurance to every eligible farmer who requests it The private companies also retain a large portion of the risk on over 80 percent of the policies written.

The federal government also subsidizes the farmer-paid premiums to reduce the cost that is paid by farmers. In addition, it reimburses the private insurance companies to offset operating and administrative costs that would otherwise be paid by farmers as part of their premium. Through this federal support, crop insurance remains affordable to a majority of America’s farmers and ranchers.

By combining the regulatory authority and financial support of the federal government with the efficiencies of the private sector, the crop insurance program has succeeded in meeting and even surpassing the goals set forth by Congress for broad participation, diversity and inclusion. By using the private sector, risk is shared among the private companies as well as the government.