Date: Jul 10, 2013
Magazine:
July 2013: 2013 Comp and HR Practices Survey

With organic production anticipated to keep growing in future years, and more than 78 percent of producers indicating that they plan to maintain or increase organic production levels, the USDA recently announced significant changes to the organic crop insurance program.  On May 14, 2013, Agriculture Secretary Tom Vilsack announced the changes in an effort to support the continued growth of organic agriculture.  Price elections, organic transitional yield (T-Yields), and removal of the 5 percent surcharge are the most significant changes.

“Organic agriculture is one of the fastest growing segments of American agriculture and helps farmers receive a higher price for their product as they strive to meet growing consumer demand,” said Vilsack.  “These new options will extend the safety net provided by crop insurance and provide fair and flexible solutions to organic producers.  Coupled with the new guidance for agencies to support this growing sector, USDA recognizes that organics are gaining market share and is helping boost this emerging segment.”

Crop insurance is available for a wide variety of crops that are organically produced.  Crop insurance is available for certified organic acreage, transitional acreage being converted to organic acreage, and buffer zone acreage.  In addition, crop insurance is available for pasture, rangeland and forage and on a whole farm basis for many crops that do not distinguish between organic and conventional production practices.

Multiple Peril Crop Insurance covered perils include losses due to the following causes if the damage is significant enough to lower the yield below the deductible for the entire insured unit:

  • Drought
  • Excess Heat and/or Moisture
  • Freeze
  • Storm damage
  • Hail
  • Insect damage, disease and weeds that cannot be controlled by recognized organic farming practices.

Organic policyholders are required to maintain separate Actual Production History (APH) databases for conventional, transitional, and certified organic acreage.

With nearly 83 percent of U.S. organic sales to wholesale markets — primarily processors, millers or packers and distributors — new contract price options will be available to organic growers who grow crops under a guaranteed contract.  As a grower you will have the option to choose the price established in the contract as your “price election” instead of the RMA-issued price.  This will allow an organic farming practice to insure at a rate that is more reflective of the actual value of the crop.  The contract price option is available for 60 to 70 crops.

Beyond the contract price options, all crops are being assessed for establishing organic prices for the 2014 crop year.  Current pricing options only allow farmers to insure at the conventional price with the exception of eight crops (corn, soybeans, cotton, processing tomatoes, avocados, and several fresh stone fruit crops).  Apricots, apples, blueberries, oats, mint, and millet are the most promising for establishing the new price election.  This is exciting news for the organic industry, which incurs higher production expenditures for organic farming practices.

In addition to the price changes, starting in crop year 2014, organic T-yields are being changed to be more reflective of actual organic farming experience.  Transitional yields are county average yields used in the federal crop insurance program when growers do not yet have a long-term production history with a particular crop, and also when a grower has an adverse year due to natural disasters.

Finally, the last change to the organic crop insurance program is removal of the 5 percent organic rate surcharge to all future crop insurance policies.

These changes should make it more enticing for an organic grower to enroll in the crop insurance program.  With more organic producers enrolled and accumulated actual production histories recorded with USDA, the program will be another viable economic safety net for the organic farming industry.

California is leading the way in organic production with total gross value of sales of organically produced commodities, at $1.39 billion dollars, and 39.3 percent of the total gross value of U.S. sales.  Nearly 20 percent of the nation’s certified and exempt organic farms are located in California and their participation in crop insurance will aid in further expanding the program with accuracy for all organic growers.

 

(If you have further questions regarding the organic crop insurance program or crop insurance for any other crops, you may contact Western Growers Insurance Services, Gretchen Rooney-Adan, Crop Insurance Sales Specialist at (530) 305-7800 or grooneyadan@wga.com to further discuss all your crop insurance needs.)

 

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