NSAC's Blog

Improving Risk Management Options for Diversified Farms

May 23, 2014

On May 21, U.S. Secretary of Agriculture Tom Vilsack announced the launch of a pilot revenue insurance product for diversified farming operations — Whole-Farm Revenue Protection (WFRP).  Secretary Vilsack’s announcement contained some details on the policy, but the full policy is not expected to be publicly available until later this summer.

The 2014 Farm Bill authorized the U.S. Department of Agriculture to develop WFRP, and the policy was approved by the Federal Crop Insurance Corporation Board of Directors earlier this month.

NSAC championed Whole Farm in the Farm Bill and has worked hard to help see this product through to completion.  We commend USDA for responding quickly under its new Farm Bill authority to develop WFRP in time for the 2015 crop insurance year.

Policy Basics

Unlike traditional crop insurance, WFRP allows producers to insure the value of all of their crops, including mixed grain/livestock operations, rather than insuring crop-by-crop.  This makes the policy an especially attractive option for diversified farms with resource-conserving crop rotations, specialty crop growers, and organic producers.

WFRP is intended to improve upon the existing adjusted gross revenue (AGR) protection policies known as AGR and AGR-Lite.   WFRP will have an increased liability limit ($8.5 million, compared to AGR’s $6.5 million and AGR-Lite’s $1 million), will offer higher levels of coverage (up to 85 percent), and will include a premium discount for increased crop diversification.  It is also expected to cover incidental costs that are necessary to make a product ready for market, such as washing, trimming, and packaging.  The full range of covered activities is not yet available.

Nationwide Expansion Critical

WFRP is a welcome and long-awaited addition to the risk management toolkit for sustainable and organic diversified farming operations, a segment of American agricultural that has historically been underserved by traditional crop insurance.  However, the key to WFRP’s success will be USDA’s ability to quickly expand its availability nationwide.  As a pilot program, WFRP will initially be available in the places where AGR and AGR-Lite are currently offered, a well as some additional states.

In order to avoid suffering the same under-utilization as AGR and AGR-Lite, and to provide an appropriate and accessible risk management option for all producers in all states, it is critical that USDA develop and swiftly implement a plan to expand WFRP nationwide.

Categories: Commodity, Crop Insurance & Credit Programs

One response to “Improving Risk Management Options for Diversified Farms”

  1. Gina Dahlstrom says:

    I am interested in more details as they become available. My Mother and I work a small farm acreage and produce for Farmers Markets.
    Thank you,