Crop insurance availability for specific crops can vary widely by state and county, which leaves many producers without risk management coverage through USDA’s Risk Management Agency (RMA). For those producers who are unable to obtain adequate USDA coverage for their crops, the Noninsured Crop Disaster Assistance Program (NAP) has been improved in recent years to serve as a good backstop option. NAP, run by the Farm Service Agency (FSA), helps level the playing field for organic and diversified farmers while providing incentives to beginning, socially disadvantaged, and limited resource farmers to enroll.
Learn More about the Noninsured Crop Disaster Assistance Program:
NAP is a form of USDA-administered financial assistance for producers of non-insurable crops. In the event of a natural disaster that causes crop losses or prevents planting, farmers can enroll in NAP and are eligible to receive payments on their lost crop to help recoup their lost expenses for the year. Despite its similarities to crop insurance, NAP is separate and distinct from the federal crop insurance program run by RMA. NAP is administered by FSA along with other disaster assistance programs.
While NAP is not a new program, recent farm bills have substantially updated and revamped the program to transform it into a more effective safety net for those with uninsurable crops (often diversified and organic producers).
Historically, NAP would only cover 50 percent of a crop and then only pay 55 percent of the crop’s value. NAP now covers 100 percent of the crop’s value and a farmer can buy coverage for up to 65 percent of that value. NAP now also covers the organic, direct market, fresh, and processing crop values when adequate pricing data is available as well as contract prices guaranteed for farmers with a production contract.
NAP’s annual payout limit is $125,000 or $300,000, dependent on the type of coverage.
Annual premiums are calculated based on crop acreage, yield, coverage level, and market price. Beginning (farming less than 10 years), limited resource (earning less than $177,300 per year and having a total household income below the poverty line or below 50 percent of county median income), and socially disadvantaged farmers (women, African American, Native American, Asian, and Hispanic producers) are eligible for a 50 percent discount on their annual NAP premiums.
Examples of the types of farms that can enroll in and benefit from NAP include:
Eligible crops include those grown for food, feed, fiber, seed, biofuels, and bio-based products. Crops eligible for crop-specific RMA insurance products in the county where the farm is located are not eligible for NAP coverage. If you are wondering if your crop is eligible, you can look it up in the NAP Crop Eligibility, Premium, and Payments Estimator tool. Farmers utilizing RMA’s Whole Farm Revenue Protection policy, which is not crop specific, can also enroll in NAP.
Eligible causes of loss include drought, freeze, hail, excessive moisture, excessive wind or hurricanes, earthquakes, floods, excessive heat, plant disease, volcanic smog, or insect infestation. Moreover, these events must occur during the coverage period either before or during a harvest, and the natural disaster must directly affect the eligible crop.
Following a natural disaster, farmers must report it to their FSA office within 15 calendar days of the occurrence. There are some hand-harvested and specific perishable crops losses that must be reported within 72 hours of the loss becoming apparent.
In order to be eligible to receive NAP assistance, farmers must not have an average Adjusted Gross Income greater than $900,000. Farmers are also required to pay a service fee calculated as the lesser of either $325 (per crop, per county) or $825 (per producer per county). The maximum service fee required is capped at $1,950 per farmer.
Beginning and veteran farmers with less than 10 years’ experience, limited resource farmers earning less than $177,300 per year and having a total household income below 50 percent of the county median income, and socially disadvantaged farmers are eligible to have their service fees waived and to receive a 50 percent premium discount.
The changes to NAP in the 2014 Farm Bill expanded the program’s availability and coverage, thereby making it more farmer-friendly and attractive as a risk management option for farmers unable to obtain crop insurance.
In 2017, USDA’s Economic Research Service reported that the changes to NAP led to a doubling of NAP applications, from 66,000 in 2014 to 138,000 in 2015. Participation from limited resource, socially disadvantaged, and beginning farmers and ranchers also more than doubled in 2015. Based on these numbers, the NAP changes seem to be achieving the desired result.
Eligible producers must apply for coverage using form CCC-471, “Application for Coverage,” at their local FSA office. Service fees must be paid at the same time as application submission, and both must be received prior to the application closing date. Closing dates vary by state and crop and may be during the year prior to planting.
Beginning, limited resource, and socially disadvantaged farmers should be prepared to file Form CCC-860 “Socially Disadvantaged, Limited Resource and Beginning Farmer or Rancher Certification” in order to waive the service fee and receive the 50 percent premium reduction at the time of enrollment.
To receive NAP benefits, producers must fill out Form CCC-576 “Notice of Loss and Application for Payment” within 60 days of the end of the coverage period for the particular NAP-covered crop. Individuals must provide evidence of production and note whether the crop was marketable, unmarketable, salvaged, or used differently than intended.
Additional information on NAP from FSA:
Additional information about NAP and other risk management programs:
Read more about other risk management programs on NSAC’s blog!
NAP was established by the 1996 Farm Bill to create a safety net of risk protection for non-insurable crops. However, coverage at the time was limited to very low-level catastrophic protection, only covering 50 percent of the crop loss at up to 55 percent of the value of the crop (27.5 percent of the total loss).
With the passage of the 2014 Farm Bill, NAP became a more farmer friendly program by increasing coverage levels and expanding its reach by providing incentives to beginning, socially disadvantaged, and limited resource farmers to enroll. The 2014 Farm Bill allowed for election of higher coverage rates (55, 60, and 65 percent) based on 100 percent of a crop’s value for crop losses due to disaster that either prevented planting or caused damage during the growing season. The premium for buy-up coverage was set at 5.25 percent times the level of coverage.
The 2018 Farm Bill makes the “buy-up” coverage option permanent, with the payout limit for buy-up coverage increased to $300,000. It also codifies that NAP coverage must include local, organic, contract, or other premium prices. The fee waiver and 50 percent premium discount for beginning and socially disadvantaged farmers are also reauthorized. Additionally, it should now be easier for small, diversified operations with less than $100,000 in liability to use NAP thanks to a farm bill directive for FSA to create a streamlined policy that simplifies the process for submitting farm records and acreage reports. FSA and RMA are also directed to collaborate to collect and share data so that RMA can develop policies that address gaps in coverage for NAP users and so both agencies can help transition crops and counties from NAP to crop insurance. This includes helping beginning farmers use NAP as an on-ramp to federal crop insurance.
Section 196 of the Federal Agriculture Improvement and Reform Act of 1996 permanently authorized the Noninsured Crop Disaster Insurance Program. Section 1601 of the Agriculture Improvement Act of 2018 amends Section 196 of the Federal Agriculture Improvement and Reform Act of 1996 (7 U.S.C 7333) to be codified at 7 U.S.C 7333.
Last updated in March 2022.