Monday, October 27, 2014

RMA (Risk Management Agency) on Premium Subsidies for New Whole Farm Revenue Protection Insurance

On October 3, USDA’s Risk Management Agency (RMA) announced that premium subsidy levels established for the new Whole-Farm Revenue Protection (WFRP) crop insurance policy will be in line with the premium subsidies available to producers selecting whole-farm units under the Revenue Protection plans of insurance.  If a farmer has two or more crops and meets the minimum diversification requirement they will receive the higher premium subsidy.

This is an important step to level the playing field for diversified farmers.  Until now, farmers purchasing the previous AGR and AGR-Lite policies have had the lower basic subsidy rate available, regardless of the number of commodities insured.  Now, with today’s announcement, those purchasing WFRP (the successor to AGR and AGR-Lite) and meeting the diversification requirements for two commodities, will be eligible for the higher whole-farm subsidy levels available on Revenue Protection products.

On coverage options between 50 and 75 percent, the new subsidy rate will be 80 percent.  Like with other individual crop policies, the subsidy level declines at the very highest coverage levels.
NSAC championed Whole Farm in the Farm Bill and has worked hard to help see this product through to completion.  NSAC commends RMA on this announcement and looks forward to the full roll out of WFRP in mid-November.  We concur with RMA Administrator Brandon Willis who, in making the announcement, said: “Whole-Farm Revenue Protection insurance will expand options for specialty crop, organic and diversified crop producers, allowing them to insure all the crops at once instead of one commodity at a time. That gives them the option of promoting crop diversity and helps support the production of a wider variety of healthy foods.”

WFRP Policy Basics
Unlike traditional crop insurance, WFRP allows producers to insure the value of all of their crops, including mixed grain/livestock operations and diversified fruit and vegetable farms, rather than insuring crop-by-crop.  This makes the policy an especially attractive option for diversified farms with resource-conserving crop rotations, integrated grain and livestock systems, specialty crop growers, and organic producers.

In many cases individual crop policies do not exist for the crops these farmers grow and even if one does it is often not be available in the state or county where the farmer is located.
WFRP is intended to improve upon the existing adjusted gross revenue (AGR) protection policies known as AGR and AGR-Lite.  These two products have been lightly used since AGR was first introduced in 1999.

WFRP will have an increased liability limit ($8.5 million, compared to AGR’s $6.5 million and AGR-Lite’s $1 million), will offer higher levels of coverage (up to 85 percent), and will include a premium discount for increased crop diversification.

It is also expected to cover incidental costs that are necessary to make a product ready for market, such as washing, trimming, and packaging.

The 2014 Farm Bill authorized the U.S. Department of Agriculture to develop WFRP in time for the 2015 crop year.  The policy was approved by the Federal Crop Insurance Corporation Board of Directors in May and the full details of the policy are expected to be released in Mid-November.

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