May 21, 2014

New insurance policy covers specialty crops

USDA has announced a new risk management option that will be available for fruit and vegetable growers and producers with diversified farms. The policy, called Whole-Farm Revenue Protection, will provide flexible coverage options for specialty crop, organic and diversified crop producers. The program will be implemented in counties across the country and will expand in availability over the next several years.

Whole-farm insurance allows farmers to insure all crops on their farm at once, rather than insuring commodity by commodity. Traditionally, many fruit and vegetable crops have not had crop insurance programs designed for them – making it less attractive for a farmer that primarily planted a commodity crop like wheat or corn to use another part of his or her land for growing fruits and vegetables or other specialty crops. This allows farmers greater flexibility to make planting decisions on their land, according to USDA.

The 2014 Farm Bill requires a whole-farm crop insurance policy option, and paves the way for USDA’s Risk Management Agency (RMA) to make it broadly available to specialty crop, organic and diversified growers. The whole-farm crop insurance policy provides flexibility to meet the needs of specialty crop growers, organic producers, those with diversified farms and those who have farm production and revenue history, including five years of historic farm tax records, according to USDA.

The policy offers coverage levels from 50 percent to 85 percent. It recognizes farm diversification through qualification for the highest coverage levels, along with premium rate discounts for multiple crop diversification. The Market Readiness Feature simplifies insurance coverage for producers under the Whole-Farm Revenue Protection pilot policy by allowing costs such as washing, trimming and packaging to be left in the insured revenue instead of having to adjust those amounts out of the insured amount.

The new Whole-Farm Revenue Protection policy combines Adjusted Gross Revenue (AGR) and AGR-Lite, along with several improvements, to target diversified farms and farms selling two to five commodities.

As part of the pilot, Whole-Farm Revenue Protection will be available where AGR and AGR-Lite are currently offered, and will expand to other counties as data are available for underwriting and actuarial ratemaking, according to USDA.

RMA will release information on the policy later this summer, when it becomes available. The information will be announced on RMA’s website.