February 19, 2016
Interest in organic products has boomed over the last several years, between 2004 and 2016 sales of organic food more than tripled (from $11.1 billion to $39 billion), but farmers are finding it difficult to keep up with demand. Part of this difficulty stems from the time and expense of transitioning farmland from conventional to organic, and the challenges non-traditional farmers can face in securing financing. Thanks to a recent expansion of crop insurance options by the U.S. Department of Agriculture (USDA), however, farmers interested in transitioning to certified organic can now insure their crops for a fairer price.
On Thursday, February 18 Agriculture Secretary Tom Vilsack announced a new option available through the Risk Management Agency (RMA) for farmers transitioning to certified organic production–crop insurance coverage that reflects their product’s actual value. Historically, transitioning farmers have only been able to insure their crops at the conventional rate during the three years in which they are taking the steps to transition their acres from conventional to organic. Under RMA’s new insurance option, these transitional farmers can now use the Contract Price Addendum (CPA) to cover their crops at a higher price.
Through CPA transitioning farmers will now be able to insure crops at their contract price (i.e., the price a buyer is willing to offer them via written contract for their product), rather than RMA’s conventional price. The CPA applies to 73 crops, a complete list of which is available on RMA’s website. There is also an RMA-imposed cap on the amount of the contract price that can be covered. To determine the maximum contract price at which a particular product can be insured, farmers can reference RMA’s Information Browser.
While not many farmers currently have an organic transition contract with premium prices, NSAC applauds USDA for stepping ahead of the market in its recognition of the value of transitioning to organic products. Interest is growing, and some organic certifiers are also helping to boost the visibility of transitional products by offering transitional certifications.
The USDA has gotten the ball rolling by making it easier and more appealing for more farmers to consider organic production–an important step in helping the organic industry meet the growing demand for its products. The next great challenge for transitioning farmers will be in convincing consumers and buyers to recognize the value of their unique products, and to support them with their business.