Are Your Citrus Nursery Assets Covered in Case of Disaster?
Unfortunately, many of us have been witness to the devastation that can befall a Florida citrus nursery in the path of a hurricane. Such storms inflict structural damage, regulatory response (phytosanitary compliance), loss of valuable inventory, and business disruption.
For citrus nurseries, the crop is the nursery tree, so insurance is available under the federal Nursery Crop Insurance Policy, which is a different and separate insurance policy from the Florida Citrus Fruit Tree Insurance Policy. There has been interest and confusion surrounding the types of coverage available to citrus nurseries.
I reached out to the Florida Nursery, Growers, and Landscape Association (FNGLA) and members of its Citrus Nursery Division for information on coverage and application to various stages of nursery production. Here is what we learned.
Q. What types of coverage options are available to Florida citrus nurseries with citrus trees in various stages of the propagation process
Federal nursery crop insurance is available to nurseries under the Nursery Crop Insurance Policy. This program is administered by the USDA Risk Management Agency (RMA) and is offered through independent agents.
Q. What does the coverage protect you against? (Causes of loss)
• Adverse weather conditions, including wind, hurricane, and freeze. If cold protection is required by the Eligible Plant List and Plant Price Schedule (EPLPPS), adequate and operational cold protection measures must be in place
• Failure of irrigation water supply, if due to an insurable cause of loss, such as drought
• Fire — provided weeds and undergrowth are controlled
Q. What is not covered?
Plant damage resulting in loss of value as a result of the following situations are not covered:
• Collapse or failure of buildings/structures, unless caused by an insurable cause of loss
• Disease or insect infestation, unless effective control measures for the infestation do not exist
• Failure of plants to grow to an expected size
• Inadequate power supply, unless such inadequacy is a result of an insurable cause of loss
• Inability to market nursery products due to a stop sales order, quarantine, boycott, phytosanitary restriction on sales, or buyer refusal
Q. Using terms common to Florida citrus nurseries, does coverage include liners, budded liners, and trees ready for sale?
Q. Are seed sources covered?
RMA does not cover packaged seed stored for use as liners.
Q. Are seed source trees in the field from which seed is extracted for use as citrus nursery liners covered?
Yes, however they are only covered under the Florida Citrus Fruit Tree Insurance Policy.
Q. Is an inspection of the citrus nursery required?
Yes, an inspection is required before coverage will attach.
Q. Are trees covered from the moment the seed is planted until the tree is ready?
No, such are not covered by the Nursery Crop Insurance Policy until the tree is considered to be viable, which generally is when the tree breaks through the soil and there are roots.
Q. Are there standard values assigned to each stage of the tree’s development, or is it the responsibility of the nursery to assign costs associated with trees involved in a claim?
The values are determined by the value at which the citrus nursery grower sells the tree or by the value contained in USDA’s DataScape system — whichever is less. However, the citrus nursery can elect to add a nursery price endorsement to the policy, so the citrus nursery grower’s value is used without regard to the DataScape value.
Q. Is a 1-gallon, two-month-old citrus liner worth the same as one that is six months old?
Yes, they will be the same value provided the two citrus liners are in the same container sizes (because value is determined by actual container volumetric size) and provided the citrus liner has grown to a proper size for the container.
Q. Is there any distinction between liners grown by a citrus nursery for use in its own company-owned groves vs. liners grown for the purpose of budding for a customer?
Yes, there is a big distinction. If the citrus nursery and the citrus fruit groves are owned by the same entity, the Nursery Crop Insurance Policy does not provide coverage.
If the citrus nursery and the grove operation are legally separate entities, and the citrus nursery sells its trees to the grove, then the trees in the citrus nursery are insurable, provided sales records are available.
If the citrus nursery and the grove operation are owned by the same entity, yet the citrus nursery sells some of its trees to other customers, then the trees in the citrus nursery are insurable, provided sales records are available.
Q. Are trees grown in larger containers, and held in a citrus nursery longer for dooryards valued higher than trees for commercial fruit production?
Yes, trees grown and held longer for dooryards can have higher values determined by container size and variety.
Q. Is the nursery required to have been in business for a certain period of time before coverage is available?
There is no such time constraint.
There are certainly discussions about changing products and methods of citrus nursery tree production, which may need to be reflected in crop insurance coverage. Some of these scenarios include:
- Mother stock used exclusively for in-house propagation is not insurable.
- While there is inherently more cost in citrus liners from tissue culture (TC) than from seed, the Nursery Crop Insurance Policy does not recognize this in its coverage. But, it should be noted if some TC citrus liners are actually sold as one-gallon citrus liners before being budded, then they may be insurable.
- It is critical for new varieties grown by citrus nurseries to be covered. There are many rootstock and scion varieties in various stages of evaluation by academia and the industry. The same or similar costs are associated with growing a newly released variety as a mainstream variety, so citrus nurseries need coverage for the new varieties to be incentivized to produce them. While new varieties can be added to the Nursery Crop Insurance Policy upon request to USDA-RMA, new varieties will be added automatically under USDA-RMA’s soon-to-be released newly named Nursery Value Select Policy, which represents an overhauled improvement to the Nursery Crop Insurance Policy proposed by FNGLA.
Talk with your crop insurance agent for the latest developments to take full advantage of the available coverage and be as prepared as you can. More information also is available at rma.usda.gov.