Recently, the Risk Management Agency released the new Whole-Farm Revenue Protection (WFRP) insurance policy. Farmers now have until late February or early March to sign up, depending on the county they farm in. The 2014 Farm Bill created the new option, aimed at diversified farms, including mixed grain and livestock operations, local food producers, organic farmers, and others for whom single commodity insurance protection is not a good option.
As farmers start to contemplate whether to sign up, we thought it would be a good idea to identify the top six reasons WFRP is better than its predecessor whole-farm policies, known as adjusted gross revenue (AGR and AGR-Lite).
1. An 80 percent premium subsidy when a farmer grows at least three crops and chooses a coverage level of between 50-75 percent. RMA is leveling the playing field between WFRP’s premium subsidies and those provided to traditional single crop whole farm unit revenue policies.This means that diversified farms are eligible for the same level of subsidy as a farm that plants only wheat or only corn and soybeans. This subsidy is well above the 59 percent available under the old AGR and AGR-Lite whole-farm policies. This could save a farmer thousands of dollars in premium costs.
2. A premium discount for increased diversification up to 7 crops. In recognition of the fact diversification is a risk management tool, RMA has included a premium reduction for diversification.
3. Coverage for market readiness activities, the incidental processing expenses necessary to make the crop ready for market. One of the many concerns cited by farmers as a reason for not utilizing AGR and AGR-Lite has been the lack of coverage for market readiness activities.By including these expenses in a farms allowable revenue and expenses, RMA is increasing the policy’s utility for farms that sell directly to the public. The covered activities include washing, trimming, and packaging but not those that add value to the commodity such as canning or freezing
4. Coverage for an expanding operation’s potentially increased revenue, even when the farm does not have a history of expanding revenue. Previously, if you wanted to insure a revenue level above your historic average revenue, i.e. expansion revenue, you had to have several years of history showing an expansion in revenue. Given the growth in local and regional food systems, RMA has recognized that new farmers do not have this history, and that the old method actually discourages new farmers from expanding. The new WFRP policy allows a farm to insure more than their historic average revenue if the farmer can show that the farm has expanded physically with the potential to produce at least 10 percent more revenue than its historic average revenue.
5. Replant coverage for a crop lost early enough for replanting. In order to make the policy more user friendly and attractive to diversified farms, RMA has added replant coverage to help defray the costs of putting in another crop when there is an early season failure. The replanting payment will cover the cost of replanting the damaged crop or crops but cannot exceed 20 percent of the farms expected revenue. Additionally, the loss must be at least 20 percent or 20 acres of the crop.
6. Availability in 45 states, an increase over AGR and AGR-Lite, which have only been available in 36 states combined. This expansion increases access to crop insurance for more farms, especially in the Mid-West where neither AGR nor AGR-Lite have been widely available before now. This also increases the fairness of the federal crop insurance program by giving more farms access to the same subsidies already available to farms in AGR states and those monocropping only crops covered by individual commodity policies. NSAC is continuing to work to have WFRP expanded to the five remaining states where it is not currently available, TX, OK, LA, MS, and AR, plus portions of CA where it is still not being offered.This reduction is on top of the increased premium subsidy a farm can receive under the new WFRP policy.
Honorable Mention: There are two aspects to WFRP that are not new, but are worth noting.
WFRP will continue to offer coverage for livestock, nursery, and greenhouse plants. The revenue generated from these sources cannot exceed 35 percent of the farms total revenue and the coverage for each, is limited to $1 million in revenue from those particular enterprises.
WFRP will also continue to allow farmers the option to insure individual crops under separate crop policies as long as that coverage is above the catastrophic (CAT) coverage level. This allows a farmer that may grow corn along with several other crops to insure their corn crop under a corn revenue policy and the rest of their farm under WFRP.