Irregular weather patterns are becoming regular, posing a great risk for crop and livestock production. During the last few years variable weather patterns were observed globally affecting food production. Flooding, droughts, fires, hailstorms, heat waves are becoming a common norm. The current bush fires in Australia and its impact in neighboring New Zealand is a testimony of the risks that farmers and ranchers face irrespective of their geographical location. Crop insurance is a great tool to manage risk and adapt to climate related uncertainties and market price instability.
Crop insurance are broadly two types; one protects the yield and the other provides revenue protection. Crop Yield insurance is also called as multiple peril crop insurance predominantly suits commodity crops and crops that have a well-established yield history in a county or nearby counties. In US, commodity crops have a very well documented yield histories and easily qualify for protection against yield losses. Up to 95% of the crop yield could be insured.
Organic agriculture predominantly is a biodiverse farming system. Whole farm revenue Protection (WFRP) is a perfect match since it’s designed for a diversified cropping system. In WFRP upto 85% of the revenue generated from the farm from crops and livestock can be insured upto a maximum limit of $8.5 million of insured revenue. If the farm is a livestock operation or a greenhouse/nursery the insurable income is $2 million maximum. Farm revenue is the price of the farm produce. For farms to be eligible under WFRP, farmers need to cultivate three or more crops and have a history of farm tax forms (Schedule F) for atleast 5 years. Beginning farmers (having 10 years or less farming experience) or Veteran farmers or ranchers need to have 3 years of farm tax forms. There is a scope for mix and match with WFRP and Crop Yield Insurance. One or two main crops can come under crop yield insurance and the rest in WFRP depending on local situation and farmer’s choice.
I would like to share my experiences of my discussion with organic farmers on crop insurance and what are some of the reasons for not opting them. Large number of farmers are still not fully aware of WFRP and its benefits. Farmers felt the insurance agents are not well equipped with answering questions related to organic agriculture and diverse farming systems when compared to their expertise in commodity crops. They also feel insurance agents promote the most popular crop yield insurance products that are at times more expensive to organic farmers when compared to WFRP. Few organic farmers were still of the opinion that 5% surcharge is charged on organic operations which is not true anymore. There is a need to educate the farmers that no such surcharge is levied on organic farms. In 2014, Risk Management Agency (RMA) has eliminated the surcharge that was charged on organic operations. Creating awareness amongst organic farmers and associations is key to educate farmers on WFRP so that they can take advantage of federal programs and simultaneously mitigate risk.
The growing organic sector has tremendous scope to recover a large portion of the expected income in the advent of crop failure or loss through WFRP. Roughly about 60-65% of the premium is federally funded. In the 2018 Farm bill 24% of the total budget is allocated for crop insurance. Even industrial hemp is covered under insurance protection from the loss of farm revenue. Crop Insurance companies need to train their insurance agents in regenerative organic agriculture practices so that they understand them and confidently interact with farmers. WFRP is a great choice for organic farmers and comparatively less expensive compared to individual crop insurance products. WFRP can not only mitigate risk in diverse cropping systems but also promote regenerative agriculture to conserve soils, produce safe food and nourish our environment.