NSAC's Blog


Inter-Agency Blockages Threaten to Halt Further Progress on Organic Crop Insurance

June 3, 2016


Infographic courtesy of the Organic Trade Association.

Infographic courtesy of the Organic Trade Association.

Editor’s Note: For more information on the state of organic agriculture, see this article’s sister post: “Consumer Sentiment and Supply Scalability Will Determine Future of Organic Price Premiums

In just one year’s time, the U.S. Department of Agriculture’s (USDA) Risk Management Agency (RMA) has more than doubled the number of organic crops that are able to be insured at the organic price (versus the commodity price, which is generally lower) – 57 organic crops are now insurable at the organic price, versus just 27 in 2015. RMA has thus far made steady progress on the 2014 Farm Bill’s mandate – a requirement that the National Sustainable Agriculture Coalition (NSAC) championed ­– that the agency complete organic price elections. However, now that the easiest work has been done (i.e. the organic crops with the most available data have been added), an inter-agency rift threatens to impede further progress.

In order to continue adding organic crops to the price elections list, RMA needs access data held by the National Agricultural Statistics Service (NASS). Unfortunately, due to NASS’ interpretation of privacy law, the agency is unwilling to share the data with their sister agency – despite the fact that data used to produce crop insurance policies does not involve the sharing of any data typically classified as “confidential” or “privileged”.

Recently, RMA released a detailed progress* report on their efforts to date to complete organic price elections. The report details RMA’s good faith efforts to complete the elections, and makes clear that intervention within USDA will be needed if further progress is to be made. With dozens of organic crops still not insurable at the organic rates, we hope that RMA and NASS will find a speedy resolution to the current situation so that all organic farmers can receive appropriate coverage.

Data Challenges

In order to set price elections, RMA needs to access detailed “farm-gate price” information. Traditionally, this information has been derived from publicly available price data that reflects the price at the first point of sale, i.e. the farm gate price. NASS’s Organic Production Survey and the publicly reported sales and market data, such the Agriculture Marketing Services (AMS) Market News, are the gold standard for this type of data production. However, accessing these sources comes with limitations and restrictions, explained below, that make it difficult for RMA to use the data for organic price elections.

RMA’s most recent progress report reveals that due to a change in how NASS interprets the Confidential Information Protection and Statistical Efficiency Act of the 2002 (CIPSEA), NASS is no longer providing individual response level data to RMA. This decision severely limits RMA’s ability to use Organic Production Survey data to develop organic price elections. According to NASS, RMA’s use of Organic Production Survey data is not “statistical” in nature, which is a requirement to access the data at the individual response level. The other main requirement is that any identifiable information be kept confidential, which according to RMA, it is.

Currently, a compromise solution is in place, which allows RMA to use the data in a suppressed and aggregated form – the same form that is available to the public. Access to only suppressed data, in combination with NASS’ other security requirements – including one that requires RMA to travel to a secure Data Lab over 200 miles from their main offices in order to access NASS data- seriously limits the scope of RMA’s work.

The data access restrictions to which RMA is subjected are disturbing for a number of reasons. First, RMA contracts NASS to conduct the surveys and collect the data it needs to develop organic focused products and price elections. Restricting the use of and access to this data limits its usefulness and is contrary to the purpose for which it was collected.

Second, RMA and NASS are both entities within the same federal agency and are subject to the same kinds of personal data protection requirements. RMA uses the data collected by NASS to determine, by crop, type, and region, the appropriate price election, and does not release any information that would reveal the personal information of a survey respondent.

This situation is a symptom of a larger problem USDA currently faces on how to leverage federally-collected data in order to benefit farmers and the public, while at the same time protecting the privacy of farmers. While we acknowledge that USDA has an important responsibility to farmers to protect their personal information, we would also underscore their responsibility to use collected data in a way that benefits farmers and appropriately leverages the public’s investment.

Other Challenges in Developing Organic Price Elections

RMA’s progress report offers revealing insights about their efforts to complete organic price elections, as well as the challenges they face in doing so. NSAC has pushed RMA to explore out-of-the-box approaches to obtain the data it needs and appreciates this report’s forthrightness about the progress of those efforts. Below we outline some of the key challenges, in addition to the struggle to access NASS data, RMA faces as they continue to develop organic price elections.

Privately Developed Insurance Products

Private companies can develop insurance products and submit them to USDA under a process commonly known as the 508(h) process. These policies, which are fully subsidized, are operated in such a way that RMA does not have the authority to force the companies to create organic price elections. However, RMA indicates in their report that they are providing “training” to the companies about the need to develop organic price elections as part of the products.

Private Data Sources

In response to the limited public data available, RMA has begun to use farm-gate price data from private sources, such as trade associations. These data sources are often spatially limited, only allowing for an organic price election for a specific crop in a specific area.

Specialty Crops with Limited Production

Many organic crops are grown on limited acreage, which means there is only a small data set available for the creation of an organic price election. This is the same problem that plagues most diversified farms – too little data. Without a large data set, it is difficult to create a crop specific policy, since most crop insurance policies are only available in states where there is a critical mass of production. This is a prime example of why the expansion of Whole Farm Revenue (WFRP) insurance is so important – WFRP allows a farmer to insurance all their crops and animals under one policy, even if individual crop policies are not available in their county. WFRP also covers organic premiums.

Tree Insurance Policies

RMA offers at least eleven insurance plans that cover trees, but not the fruits or nuts that they produce. Indemnities are based on the cost of replacement and production value. Currently, organic production budgets – on which these policies are based – are not available. In fact, as RMA notes in their report, even conventional production budgets are becoming increasingly scarce as universities are ceasing to update them.

Specialty Crop Market News 

AMS collects data at several points, with shipping point data being the most useful since it approximates the farm-gate price. RMA has used this information to develop organic price elections for all AMS reported specialty crops with shipping point data in an area where RMA offers insurance. Unfortunately, this amounts to only eight of the 18 organic crops with some AMS shipping point data.

The usefulness of AMS data is limited for several reasons, including that some data is from areas without an existing conventional policy or policies that are privately developed. RMA’s report includes several recommendations to AMS to assist RMA in developing more elections. We sincerely hope both agencies will review these recommendations and implement solutions expediently.

Livestock, Poultry, and Grain Market News

Grain Market News reports farm-gate information on a variety of organic grains, but many are not regularly reported, which means the data does not meet RMA’s quality standards. RMA has developed organic price elections for 12 of 18 grains reported by Market News.

Terminal Markets

In their attempts to access the data needed to complete price elections, RMA has gone so far as to visit Terminal Markets with Market News Reporters to see if those prices could be used to determine the farm gate price – an out-of-the-box solution NSAC has supported RMA exploring. Unfortunately, RMA has not found the Terminal Markets helpful in this regard, as the shipping point price is highly variable due to the presence of intermediary sellers and the inclusion of other costs in prices.

Despite these significant challenges, NSAC encourages RMA to continue developing crop insurance options for organic producers, through organic price elections and also via WFRP or Contract Price Addendums.

Organic Production Surveys to Continue, for Now

Despite the current standoff between RMA and NASS, our understanding is that both agencies’ are committed to the continued collection of organic data through at least 2019. The below table, taken from the RMA report, outlines the five-year planned schedule.

Untitled

RMS and NASS joint-organic production survey schedule

Reflections on the Future of Organic Price Elections

NSAC applauds RMA’s efforts to complete organic price elections, and appreciate the clarity of this progress report on those efforts to-date. It is clear that RMA has utilized many available options, including a variety of creative solutions, to obtain the data needed for their work – and some of those efforts have in fact born fruit.

Organic price elections are one of several tools that are needed to ensure that organic and diversified producers are able to fully participate in the federal crop insurance program, just like their counterparts in commodity crop production have enjoyed. Whole Farm Revenue Protection, Organic Price Elections, and the Contract Price Addendum are all currently being used by organic producers with success, and we hope that all three will continue to be expanded.

However, there is much more that needs to be done to level the playing field for organic and diversified producers.

RMA’s inability to fully access NASS data needs to be addressed as the highest priority. It is inconceivable that one USDA agency would not be able to share data with a sister agency, particularly when there is no risk of identifiable information being revealed to the public.

RMA needs to commit to working with private 508(h) policy owners to ensure access for organic producers. These policies are fully federally backed and subsidized, and owners should not be able to shut organic producers out.

We also suggest that AMS’s Market News work with RMA to implement all possible data collection methods to allow RMA to produce new organic price elections.

 

*This is the third organic price election progress report to Congress by RMA. NSAC has produced blogs on both the 2014 and 2015 reports.


Categories: Commodity, Crop Insurance & Credit Programs, Organic


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