Crop Insurance for the Organic Farmer

The federal crop insurance program was designed to help farmers recover some portion of expected income in the advent of a crop loss or failure. Crop insurance helps even out annual income and can reduce the stress of worrying about possible losses.

Risk Management Agency announces new organic crop insurance option

RMA will now allow farmers to insure their organic crops at their contracted price.  If the farmer has a signed contract in place by the RMA acreage reporting date, they can choose to buy crop insurance on that contracted price or on the organic price election, as applicable for that crop. This provides a more realistic return to organic farmers when there is a loss, since it reflects the actual price they would have received under their contract.  Sixty two crops now have either an organic price election or an organic contract price addendum offered, a great increase over what has been available to organic producers in the past.  For more information, see your crop insurance agent or this RMA fact sheet.

Crop Insurance for 2014

Federal crop insurance provides the risk management tools necessary for American farmers to protect themselves against unexpected difficult years.

To better support the growing organic agriculture sector, USDA’s Risk Management Agency has taken steps to offer more options for organic producers under the Federal crop insurance program for the 2014 crop year:

  • Elimination of 5 percent surcharge for all crops insured under organic farming practices.
  • Organic price elections for 8 additional crops (now 16 total): oats, peppermint, apricots, apples, blueberries, almonds, pears, and grapes for juice.
  • New contract price option for organic producers who grow crops under guaranteed contracts (available for 62 organic crops).
  • Phased in changes to organic transitional yields (t-yields) to better reflect the actual organic farming experience.

Learn More + Apply
Deadline for Most Programs is March 15, 2014*

View USDA Press Release

*The sales closing date is the last day to buy a new policy or change an existing policy’s coverage level. For most crops, the sales closing date is March 15, 2014.
View Deadlines in Your State

Changes to Organic Crop Insurance

Read “Changes Improve Organic Crop Insurance,” by MOSES Organic Specialist Harriet Behar from the May | June 2013 Organic Broadcaster.

Read USDA makes changes to crop insurance by MOSES Organic Specialist Harriet Behar from the March | April 2014 Organic Broadcaster.

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Secretary Vilsack’s vision (May 2013)
In remarks to the Organic Trade Association, Agriculture Secretary Tom Vilsack said the USDA’s Risk Management Agency’s (RMA) federal crop insurance program will increase coverage options for organic producers this year and provide even more options in 2014, including a contract price addendum as well as new premium price elections for organic crops. Additionally, RMA will remove the current five-percent organic rate surcharge on all future crop insurance policies beginning in 2014.

March 7, 2013: The RMA just released a fact sheet outlining the changes to its crop insurance coverage.

March 6, 2013: Changes to Organic Crop Insurance announced by Risk Management Agency

The 5% premium surcharge previously assessed against organic farmers who purchase federally subsidized crop insurance has been removed. Organic farmers will continue to receive conventional prices for some organic crops, although the USDA is working to add special “organic price selections” in the next two years for organic wheat, barley, oats, almonds, blueberries, and a few other fruits. RMA currently offers organic price selection for corn, cotton, and soybeans, as well as processing tomatoes, avocadoes, and fresh freestone peaches, fresh nectarines and plums in California. The farmer pays a higher insurance premium to receive these higher organic prices in case of crop failure. Organic farmers currently are required to share the organic inspection report with their insurance providers, so the provider can assess if good organic practices were used to grow the insured organic crop.

Crop yields for 2014 will be figured differently for organic farmers than for conventional farmers, with yields of up to 35% less than conventional used for some organic crops, depending on current USDA data for regional or national yield averages for a specific organic crop. The insurance premiums paid by the organic farmer would be less than conventional if they are insured at those lower yield projections. If an organic farmer has 10 years of crop yield histories for their own organic production, those actual figures can be used. Organic farmers insurance premiums paid and any payment by the insurer could be tied to the farmers’ historical organic yields but at conventional prices, unless they choose to pay extra if there is an organic price selection available for that organic crop.

Feb. 2013 RMA Audit Report (PDF)

Feb. 2013 Organic Crop Insurance Audit Questions and Answers (PDF)

From the National Sustainable Agriculture Coalition blog:

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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AGR-Lite Insurance

In the past few years farmers in WI, MN and several other states (see list below) have gained access to a new type of insurance coverage that can be very beneficial for their organic systems. Adjusted Gross Revenue- Lite (AGR-Lite) insurance takes into account a five-year history of farm production and sales to determine potential loss values. This “whole farm” insurance system allows organic producers to include the value of any organic premium gained for their products. AGR-Lite insurance was developed in Pennsylvania several years ago, and is slowly spreading into other states.

Other Kinds of Federal Crop Insurance

Organic farmers may choose to insure their crops using one of the other Federal Crop Insurance offerings. However, as of now, indemnities (compensations) are based on conventional rather than organic prices. Hopefully at some point in the future organic premiums will be recognized. The USDA Agricultural Marketing Service (AMS) has for the past year been collecting data on organic prices, yield and loss experience in a move to eventually develop an actuarially sound crop insurance system for organic production. As with AGR-Lite, insurable damage caused by insects, disease or weeds is covered if recognized organic farming practices fail to provide effective control. Premiums for crop insurance on organic lands are an average of 5% higher than those for conventional crops due to a presumption of additional risks involved with organic production.

Currently RMA provides crop insurance coverage for:

1. Certified organic acreage,
2. Transitional acreage being converted to organic in accordance with an organic plan and,
3. Buffer zone acreage.

Contamination on certified, transitional or buffer land due to drift or application of prohibited substances is not considered an insured loss. Any loss due to failure to comply with the organic standards is considered an uninsured cause of loss.

A few key points to using Federal Crop Insurance

Sign up is generally by March 15th each year. A few crops have other sign up dates (ie: cranberries, apples, forage, winter and spring wheat, etc., so please check with your Agent for the exact deadline for your crop.)

Insurance is sold though private insurance agents. Contact your area Farm Service Agency for a listing of local agents that carry crop insurance. You may also find a listing of agents on the USDA Risk Management Agency website at www3.rma.usda.gov/apps/agents/.

Insurable damage caused by insects, disease or weeds is covered if recognized organic farming practices fail to provide effective control.

Other perils such as excess moisture, drought, freeze, storm damage and significant hail damage are also covered.

AGR-Lite Premiums are calculated based on your previous five years of IRS Schedule F forms. You will need to have these with you in order to sign up for a policy.

Resources for Crop Insurance for organic systems:

Updated May 2013: Organic Farming Practices: Insurance Fact Sheet (PDF)
(USDA- Risk Management Agency)

Adjusted Gross Revenue-Lite: Fact Sheet (PDF)
(USDA- Risk Management Agency)

The Center for Agricultural and Rural Development at Iowa State University has released a paper on organic crop insurance, including finding from analyses conducted on organic crop prices, yields, and revenues.  The full report is available here.

The Adjusted Gross Revenue (AGR) Program: Crop Insurance for Diversified Agriculture
A fact sheet by the University of Vermont Extension

List of Independent Insurance Agents selling Federal Crop Insurance policies

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