September 10, 2015
The US Department of Agriculture’s Risk Management Agency (RMA) has announced 14 new Organic Price Elections to be added to the 28 that are already available, expanding crop insurance options for organic farmers. These new organic price elections will be available for the 2016 crop year. Organic price elections allow organic farmers to insure their crop at the organic market price rather than at the generally much lower conventional market price.
What RMA is Doing
The new elections include: Wheat, barley, rye, dry peas, safflower, cultivated wild rice, cabbage, cranberries, forage production, onions, potatoes, processing clingstone peaches, grass seed, and sugarcane. Additionally, for 2017, there will be elections available in Arizona and California for lemons, oranges, tangelos, mandarins, and grapefruit.
Some of these crops will have policies available in every county or state a conventional policy is currently available, but some will have more limited availability.
Along with the new elections for 2016, RMA also announced an increase in the availability of the Contract Price Addendum, which is being made available to 73 crops, up from 62. This product allows producers to insure a crop at the price for which they contract the production of the crop.
The contract price addendum is an important advance. However, this product still caps the price that can be insured and some farmers have reported that they cannot insure their organic crop at the actual contract price. This has purportedly been done to limit fraud perpetrated by the use of fraudulent contracts for inflated prices. The organic price for some grains can be double or triple the conventional price for the same crop, however, so the cap can still function as a barrier to participation in some instance.
RMA appears to be attempting to address this situation by raising the limit on the premium over the conventional price a producer can insure crops.
RMA also appears to be seeking to support farmers transitioning to organic production by allowing them to access the contract price addendum in 2016.
More information is available on RMA’s organic crops website, and farmers should consult their crop insurance agent for availability. Farmers can also check availability and estimate the cost of a crop insurance policy using RMA’s cost estimator.
Good News for Organic Producers
This announcement is great news for organic producers of these newly added crops, because they will now be able to insure their crops at the full organic price. Without an organic price election organic producers only have the option to insure their crops at the conventional price.
Another solution for organic farmers is to use the Whole Farm Revenue Protection (WFRP) policy, which allows a farmer to insure all of their crops in a single policy. WFRP can be a very good option for diversified farmers in general, including organic farmers, but will not work if you grow only one crop or if you have been farming for less than four years. Find out more about WFRP and the recent improvements made to the policy for the 2016 crop on NSAC’s WFRP page and RMA’s WFRP page.
Through the efforts of NSAC and its members, there are two other options either in place or in the works for organic farmers to be able to ensure their crops at the organic price even if an organic price election does not yet exist for the specific crop and should the farmer choose not to take out a WFRP policy:
What is an Organic Price Election?
An organic price election allows a farmer to insure an organic crop at the organic price for that crop instead of the conventional price. Many organic farmers are currently disadvantaged compared to their conventional counterparts because organic price elections have not been established for all insurable organic crops. This means that, should an organic producer suffer a loss, he or she would receive an indemnity based on the conventional price, which is generally considerably lower than the organic price.
This is a full chart of all the Organic Price Elections currently in place organized by the year they were introduced.
|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|
|Processing Clingstone Peaches|
|Avocadoes, More States|
|Blueberries, More States|
|Pears, More States|
|Tobacco (several types)|
|Fresh Market Sweet Corn|
|Hybrid Sorghum Seed|
Farm Bill Promotes Change
With NSAC’s support, the 2008 and 2014 Farm Bills contained language that directed USDA to complete the series of organic price elections. The 2014 Farm Bill directed USDA to complete the elections by the 2015 crop insurance year. USDA made it clear in reports to Congress released in 2014 and 2015 that it would not be able to complete the organic price elections under that timeline.
A more in-depth analysis of these reports can be found on NSAC’s website.
However, the 2014 Farm bill delivered the message that rapid acceleration is both needed and expected and the 2015 report outlined RMA’s actions to finish the price elections. Today’s announcement, adding 14 new price elections and announcing new elections for 2017, a year in advance, is strong evidence that RMA is committed to expanding access to crop insurance for to organic producers.
These price elections are incredibly important for organic producers, who with limited exception are stuck insuring crops at prices far below the organic premium.