Organic Crop Insurance


Expanding safety net options to help organic farmers manage risk

Unlike conventional agriculture, organic agriculture has not always had the support of a crop insurance safety net tailored to meet its needs.  There has been significant headway in recent years to develop risk management products that are accessible to organic producers.  USDA’s Risk Management Agency (RMA) has taken several important steps to remove barriers and increase access to crop insurance for organic producers, allowing the organic sector to expand and begin to level the playing field for organic agriculture.

Learn More About Organic Crop Insurance!

Program Basics

The federal crop insurance program is a USDA program administered through a public-private partnership. USDA establishes the terms of the insurance policies, sets the rates, and approves insurance providers, but the policies are purchased and delivered through private crop insurance companies and their insurance agents. USDA subsidizes farmers’ participation in federal crop insurance by way of subsidized premiums for farmers and financial support for the insurance providers’ administrative, reinsurance, and operating costs.

The main components of federal crop insurance that benefit organic agriculture are:

  • the development of crop insurance price elections that reflect organic price premiums;
  • the option for organic producers to insure their crop at a specified contract price;
  • the removal of the premium surcharge on organic crop insurance; and
  • the new Whole Farm Revenue Protection policy for diversified farms.

Organic Price Elections

The 2014 Farm Bill required USDA to establish organic price elections for all organic crops by the 2015 crop insurance year. While RMA has not met that goal they have made great progress, more than doubling the number of elections since 2014.

A list of currently-approved price elections by year added is included below.  Farmers should check with their local crop insurance agent to determine which policies are available in specific states and counties

Since 2011 RMA has established organic price elections for 57 crops out more that 100 that have individual policies.  Several have geographical limitations in availability, as noted below.

2011 2013 2014 2015 2016 2017
Corn Avocadoes, CA Almonds, CA Millet Wheat Grapefruit: AZ, CA
Cotton Fresh Freestone Peaches, CA Blueberries, CA, OR, WA Flax Barley Lemons: AZ, CA
Soybeans Fresh Nectarines, CA Peppermint Hybrid Corn Seed Cabbage Mandarins: AZ, CA
Processing Tomatoes, CA Fresh Plums, CA Juice Grapes, WA Grain Sorghum Cultivated Wild Rice Oranges: AZ, CA
Oats Silage Sorghum Dry Peas Tangelos: AZ, CA
Apples, Fresh & Processing, WA Figs Forage Production (including Alfalfa in some states)
Pears, WA, OR Walnuts Grass Seed
Fresh Apricots: CA, ID, OR, WA Flax Onions
Fresh Nectarines: ID, OR, WA Popcorn Potatoes
Fresh Plums: ID, OR, WA Corn Silage Rye
Freestone Peaches: ID, OR, WA Raisins Sugarcane
Almonds, CA Cranberries
Processing Clingstone Peaches
Safflower
Avocadoes, More States
Blueberries, More States
Pears, More States
Tobacco (several types)
Fresh Market Sweet Corn
Hybrid Sorghum Seed
Pinto Beans
Sunflowers
Table Grapes

 

USDA-RMA Contract Price Option

Under RMA’s Contract Price Addendum (CPA), organic producers who have a written contract from a buyer by the acreage reporting date can insure the organic crop at the price agreed upon in the contract.  The CPA applies to 73 crops, which are listed on the last page of the RMA CPA Fact Sheet. 

Removal of Organic Surcharge

RMA has now eliminated the imposition of a surcharge on organic crop insurance premiums.  Beginning in the 2014 crop insurance year, organic producers will no longer be subject to the previously incurred 5 percent organic surcharge.  Instead, RMA will use actual transitional yields (also known as “t-yields”) for organic crops to determine premium rates.  T-yields are used to calculate payments where the producer does not have at least four years of crop yield history for a particular crop (also known as actual production history or APH). Where actual production history is unavailable, RMA uses county averages of crop yield to determine t-yield.

RMA has decided to reduce the county average crop yield by 35 percent when applying it to organic producers, which means that organic producers are still at a disadvantage, at least until RMA obtains sufficient data on organic prices and organic yields.  As more organic producers obtain crop insurance, making more data available on organic crop yields, RMA should be able to establish county or regional averages of organic crop yields, rather than relying on a faulty across-the-board assumption in yield differential between organic and non-organic production systems.

 Whole Farm Revenue Protection for Diversified Farms

Another option that organic producers may wish to consider is insurance through the new Whole Farm Revenue Protection policy, particularly if you have a highly diversified farming operation.  Rather than insuring crop-by-crop, this new crop insurance option provides an attractive option for both organic and non-organic diversified operations and offers premium discounts for increased diversity up to 7 crops.  It also offers premium subsidies of up to 80 percent, depending on the level of coverage and the number of crops grown.

Eligibility

Organic crop insurance is available for all organic acreage, transitional acreage, and buffer zone acreage certified through the USDA National Organic Program.  Farmers enrolled in the program are eligible for indemnities (payments) where crop damage is significant enough to lower a yield below the deductible for the entire insured unit, and the damage is due to an insurable cause of loss. Insurable causes of loss include drought, excess moisture, freeze, hail, prevented planting, insect damage, disease, and weeds.

To insure an organic crop at a price that reflects the organic premium, there must either be an RMA-established organic price election for that crop, or an approved written agreement contracting the production of that crop at a specific price.  In the latter instance, the producer can elect the contract price rather than the RMA price election, or use the contract price in lieu of the conventional price, if there is no RMA-established price election for that crop.

The Program in Action

In 2013, organic crop and revenue insurance covered 704,006 acres in the United States.  Between 2003 and 2013, insured acreage more than tripled, from 210,306 to 704,006 acres.  This translates to 2,167 covered farms.  However, only 35 percent of total acres in organic cropland (2,027,212 acres) are covered by organic crop insurance. The top five states by insured organic acreage are California, Missouri, Montana, Nebraska, and North Dakota.

Read the latest about Organic Crop Insurance on our blog! 

How to Apply and Program Resources

The Risk Management Agency (RMA) typically develops crop insurance policies, but private crop insurance agents actually sell and deliver the policies to farmers. See RMA’s website for more information, including a tool to help search for an agent near you:

Program History, Funding, and Farm Bill Changes

Organic producers have been able to obtain crop insurance since the passage of the Agricultural Risk Protection Act of 2000 (ARPA).  However, organic producers could only insure their crops at conventional prices and were charged a five percent surcharge, based on USDA’s unreasonable assumption that growing organic crops was inherently riskier.

In addition, when pursuing claims, farmers must demonstrate they have followed “good farming practices” and that the loss of crop or income was not due to poor practices.  For many years, the use of sustainable or organic practices was at times used to disqualify farmers from receiving indemnity payments.  In ARPA, NSAC successfully challenged this conventionally prevailing view and won specific inclusion of sustainable and organic agriculture as “good farming practices” for crop insurance purposes.

Heading into the multi-year process that eventually resulted in the 2014 Farm Bill, NSAC’s farm bill platform put forth several important proposals to level the playing field for organic producers through changes and improvements to organic crop insurance.  At the time NSAC issued our platform, USDA was still imposing the discriminatory five percent surcharge for coverage on organic crops.  NSAC worked hard to eliminate this penalty against organic growers and, in May of 2013, USDA announced the removal of the surcharge starting in the 2014 crop insurance year.

Later that year, USDA also announced an option, called the contract price addendum, for organic producers to ensure their crops at a price specified in a guaranteed contract.  As long as producers have the contract price by the acreage report date, they can elect to insure their crop at the contract price, rather than the RMA-established price election.  This is particularly important where RMA has not established an organic price for a particular crop, so the producer has an option other than insuring at the conventional price.

Organic producers have faced a disadvantage because RMA has not established organic price elections for all insurable organic crops.  This means that should an organic producer suffer a loss, he or she would receive a payout rate at the conventional price, which is generally considerably lower than the organic price.  In 2008, and again in 2014, NSAC worked to include language in the farm bill directing USDA to establish price elections for all organic crops. So far, USDA has established prices for over 50 crops.  The 2014 Farm Bill directs USDA to establish prices for all organic crops by the 2015 crop insurance year, and to rely upon all available data sources to do so.  RMA issued a report to Congress in March 2014 on its progress.

Authorizing Language

Section 11023 of the Agricultural Act of 2014 amends Section 508(c)(6) of the Federal Crop Insurance Act to add the requirement on price elections for organic crops, to be codified at 7 U.S.C. 1508(c)(6)(D).


Last updated in June 2016.