RMA Drops Surcharge on Some Organic Crops
August 31st, 2010
On Tuesday, August 31, USDA’s Risk Management Agency announced that it would eliminate the 5 percent surcharge imposed on organic producers for certain tree crops and would offer an organic price election for cotton, corn, soybeans and processing tomatoes.
NSAC members and allies fought hard to remove unjustified barriers to participation in crop insurance programs for organic producers in the 2008 Farm Bill. USDA’s Risk Management Agency has required all organic farmers participating in crop insurance programs to pay a 5 percent surcharge. Adding insult to injury, organic producers are only reimbursed for the conventional rather than organic crop price when they suffer a loss.
In the 2008 Farm Bill Congress directed RMA to evaluate available data on risk of loss between organic and conventional systems and to determine whether the surcharge was justified. The Farm Bill also directed RMA to offer producers of organic crops an additional price election that reflects actual prices received by organic producers for crops.
The crops for which the surcharge is now being removed are figs, pears, peppers, prunes, macadamia trees, Florida citrus fruit, Texas citrus fruit, Florida fruit trees, and Texas citrus trees. The surcharge will continue for now on all other crops.
Also on Tuesday, USDA released three reports here, here and here which evaluate available data on risk assessment and organic prices. In its release USDA promises to continue to accumulate and evaluate data necessary to eliminate the surcharge and offer an organic price election on a wider range of crops.
This is a good first step but it would appear that USDA has yet to justify the surcharge as the 2008 Farm Bill requires and more progress needs to be made in providing appropriate risk management options to organic producers. Hopefully additional announcements will be forthcoming soon.