Are You Covered? How Farmers Can Stay a Step Ahead of Disaster
February 1, 2023 Mark your calendar. March 15 remains the widespread deadline for various crop insurance policies.
There are multiple crop insurance/risk management programs applicable to vegetable growers, including:
NAP
The Noninsured Crop Disaster Assistance Program (NAP) provides financial assistance to producers of non-insurable crops when low yields, loss of inventory, or prevented planting occurs due to a natural disaster.
NAP, administered by USDA’s Farm Service Agency, covers a single commodity, much like the Multi-Peril Crop Insurance (MPCI) program. However, MPCI applies primarily to row crops.
“If your crop is not available in MPCI, then you would go with the NAP,” says Dakota Moore, the Grower Outreach Coordinator with the Kentucky Horticulture Council. “And you would need a different policy for each commodity you have.”
NAP is available to individuals and entities, such as an LLC, that have average adjusted gross incomes below $900,000. “This would certainly apply to most family farms or smaller operations,” Moore says.
Growers must report their:
- Name of crop, type, and variety
- Location and acreage of crop (shortly after planting)
- Date of planting
- Intended use of commodity
- Postharvest quantities and quality
Elaborating on intended use, Moore asks, “Do you plan to sell it fresh or frozen? Do you plan to sell direct to consumer? Or are you going to sell to wholesalers, grocery stores, or restaurants?”
As for postharvest quality: “Were you able to sell it the way you had intended? Or did you have to completely not sell it at all?” Moore says. “Was it marketable? Was it unmarketable? Did you have to salvage it into value-added products instead of selling it fresh?”
Smaller farms, limited-resource growers, and growers who have few commodities are ideal candidates for NAP, Moore says. Growers who are either beginners, socially disadvantaged, veterans, or who have limited resources can receive a waiver of service fee and a 50% premium reduction.
Basic vs. Buy-Up Coverage
Growers can choose from several coverage options based on how much coverage they want and how much they want to pay. Basic coverage includes only a service fee — either $325 per crop or $825 per producer per county, whichever is lower — while buy-up coverage has a premium that is calculated based on crop acreage, yield, coverage level, and market price.
“The basic NAP coverage protects 50% of yields at 55% of the price,” Moore says. “So, if you were to lose 100% of your crop, you would have about 27.5% of your crop value returned to you. That might not seem like a lot, but it could be enough money to replant next year.”
Buy-up coverage ranges between 50% and 65% of yield. The percentage chosen as a coverage level is the amount of total crop value that will be returned to the grower. “So, if you chose 55% coverage, and you lost 100% of your crop, you would receive 55% of your crop value,” Moore says.
Notice of Loss
Two forms — Notice of Loss and Application for Payment — must be completed within 15 days of whichever occurs first:
The natural disaster occurrence.
The final planting date if planting was hindered by natural disaster. “Maybe there were heavy storms and flooding and you couldn’t get out there and plant,” Moore says. “You’d have within 15 days after you were finally able to plant.”
The date that damage or loss of the crop is discovered. “Maybe an insect or pathogen was caused by flooding or a different weather event,” Moore says. “Once you notice a loss from that is when you would apply.”
The normal harvest date: “Maybe you didn’t realize you had heavy loss until after you harvested,” he says. “Then you would need to fill out those applications.”
WFRP
Whole-Farm Revenue Protection (WFRP) provides a risk management safety net for all commodities on the farm under one insurance policy. The insurance plan is tailored for any farm with up to $17 million in insured revenue, including farms with specialty or organic commodities or those marketing to local, regional, farm-identity preserved, specialty, or direct markets.
“This policy combines all the sales from your vegetables, from your fruit, from your animals,” Moore says. “So, whether you’ve got tomatoes, pumpkins, and maybe some eggs, you’d need to report expenses and how much you earn from each of those different commodities.”
Changes in 2023 affect WFRP expense and yield reporting. In the instance of prevented planting caused by a natural disaster or weather event that is insurable, any expense reporting that would have been asked of a grower will now be replaced with a 40% reduction in expected revenue for those commodities.
“They’re just going to automatically give you that 40% reduction instead of you having to go through and fill out all the paperwork and do all that reporting,” Moore says. “All the people I’ve talked through or talked to over the past year have mentioned that the Whole-Farm Revenue policies do take a lot to complete. So these changes are meant to kind of reduce the amount of paperwork and the amount of records needed for the application.”
Micro Farm Policy
The Risk Management Agency, offered through WFRP, initiated the Micro Farm policy in 2022, intending to provide additional insurance options for small-scale producers.
“The point of the Micro Farm policy was to get those farms — those growers with lower-approved revenues — used to crop insurance; to get them into the policy without requiring all that paperwork from them,” Moore says. “The difference from Whole-Farm Revenue [Protection] is with Micro Farm, you don’t look at each individual commodity, expense, and yield. You just look at the revenue. It combines all those commodities into one commodity code, and you provide your revenue for that commodity code.”
A change in 2023 sees the maximum approved revenue increase from $100,000 to $350,000 for new applicants and up to $400,000 for returning growers.
“They’re increasing the approved revenue to allow more growers and more farms to participate in this sort of easier-to-apply-for program,” Moore says.
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