Organic Crop Insurance


Expanding safety net options to help organic farmers manage risk

Unlike their conventional counterparts, organic producers have not always had the support of a crop insurance safety net tailored to meet their needs. Fortunately, over the last few years, advocates like the National Sustainable Agriculture Coalition (NSAC) have helped to push through significant advances in risk management products tailored to organic production. USDA’s Risk Management Agency (RMA) has taken several important steps to remove barriers and increase access to crop insurance for organic producers, which has helped the sector to expand and begun the long process of leveling the playing field for organic agriculture.

Learn More About Organic Crop Insurance:

Program Basics

The federal crop insurance program is administered by RMA and delivered through a public-private partnership. RMA establishes the terms of the insurance policies, sets the rates, and approves insurance providers. However, the policies are purchased and delivered through private, for-profit crop insurance companies and their insurance agents. Federal taxpayers subsidize farmers’ participation in federal crop insurance by paying for a majority of farmers’ premiums; taxpayers also pay a substantial share of the insurance companies’ administrative, reinsurance, and operating costs.

The main components of federal crop insurance that benefit organic agriculture are:

  • Crop insurance “price elections” that reflect organic price premiums in the marketplace.
  • Option for organic producers to insure their crop at a specified contract price.
  • The removal of the premium surcharge on organic crop insurance.
  • Whole Farm Revenue Protection (WFRP) policy, which is advantageous for organic, as well as other types of diversified farms and farms without other easily obtainable crop insurance options.

Organic Price Elections

The 2014 Farm Bill required USDA to establish organic price elections for all organic crops by the 2015 crop insurance year. Although RMA did not meet that goal, they did more than double the number of elections from 2014 to 2016. Today, RMA generally offers organic coverage wherever RMA offers conventional coverage for that crop. Since 2011, RMA has established organic price elections for 81 crops out of more than 100 that have individual policies.

A list of approved price elections is available on RMA’s website. There are still some crops without price elections, however, and for those with price elections there are often states and counties where the coverage is not available. Farmers should check with their local crop insurance agent to determine which policies are available in specific states and counties.

USDA-RMA Contract Price Option

UndUnder RMA’s Contract Price Addendum (CPA), organic producers who have a written contract from a buyer by the acreage reporting date can insure their organic crop at the price agreed upon in the contract. There are over 70 crops that are eligible for a contract price addendum, and over a dozen other crops with contract pricing authorized by the Crop Provision or Special Provisions. The full list of crops can be found at this RMA page. The contract price addendum is capped at twice the conventional price, or one and a half times the organic price election. Farmers with contracts above the cap should be aware that they might be underinsured if using this option.

Removal of Organic Surcharge

RMA eliminated the imposition of a five percent surcharge on organic crop insurance premiums beginning in the 2014 crop insurance year. Instead, RMA uses actual transitional yields (also known as “t-yields”) for organic crops to determine premium rates. T-yields are used to calculate payments where the producer does not have at least four years of crop yield history for a particular crop (also known as actual production history or APH). Where actual production history is unavailable, RMA uses county averages of crop yield to determine t-yields.

RMA reduces the county average crop yield by 35 percent when applying it to organic producers, which means that organic producers will still be at a disadvantage until RMA obtains sufficient data on organic prices and organic yields. As more organic producers obtain crop insurance, making more data available on organic crop yields, RMA should be better able to establish county or regional averages of organic crop yields. With these averages in place, RMA would no longer have to rely on a faulty, across-the-board assumption in yield differential between organic and non-organic production systems.

 Whole Farm Revenue Protection for Diversified Farms

Another option that organic producers may wish to consider is insurance through the Whole Farm Revenue Protection policy, particularly if they have a highly diversified operation. Rather than insuring crop-by-crop, this unique crop insurance policy provides an attractive option for both organic and non-organic diversified operations and offers premium discounts for increased diversity up to seven crops. It also offers premium subsidies of up to 80 percent, depending on the level of coverage and the number of crops grown.

Eligibility

Crop insurance is available for all organic acreage, transitional acreage, and buffer zone acreage certified through the USDA National Organic Program – either through individual crop policies where they are available, or through WFRP. Farmers enrolled in the program are eligible for indemnities (payments) where crop damage is significant enough to lower a yield below the deductible for the entire insured unit, and the damage is due to an insurable cause of loss. Insurable causes of loss include: drought, excess moisture, freeze, hail, prevented planting, insect damage, disease, and weeds.

To insure an organic crop at a price that reflects the organic premium, there must either be an RMA-established organic price election for that crop or an approved written agreement contracting the production of that crop at a specific price. In the latter instance, the producer can elect the contract price rather than the RMA price election or use the contract price in lieu of the conventional price if there is no RMA-established price election for that crop.

The Program in Action

In 2018, organic crop and revenue insurance covered 1,324,436 acres in the United States. Between 2013 and 2018, policies almost doubled from 5,716 to 9,142. In 2018, the top five states by insured organic acreage were Texas, Montana, California, North Dakota, and Minnesota. The most recent organic producer survey, conducted in 2016 by USDA’s National Agriculture Statistics Service, lists the total number of organic cropland acres at 2,714,498. That number has likely increased in the past two years and will be reflected in next year’s organic survey.

Read more about Organic Crop Insurance on NSAC’s blog:

How to Apply and Program Resources

RMA typically develops crop insurance policies, but private crop insurance agents actually sell and deliver the policies to farmers. The following RMA websites provide additional information, including a tool to help search for an agent:

Program History, Funding, and Farm Bill Changes

Organic production systems were declared “good farming practices” for crop insurance purposes in the Agricultural Risk Protection Act of 2000 (ARPA).

When pursuing claims, farmers must demonstrate they have followed “good farming practices” and that the loss of crop or income was not due to poor practices. This formal recognition of the benefits of organic agriculture was important, because for many years, the use of sustainable or organic practices was used to disqualify farmers from receiving indemnity payments. In ARPA, NSAC successfully challenged this formerly prevailing view and won the inclusion of sustainable and organic agriculture as “good farming practices” for crop insurance purposes.

USDA’s unreasonable assumption that growing organic crops was inherently riskier than conventional, however, continued to disadvantage organic farmers even after the ARPA decision. Prior to the 2014 Farm Bill, organic producers could only insure their crops at conventional prices, and they were charged a five percent surcharge.

NSAC’s 2014 Farm Bill platform put forth several important proposals to level the playing field for organic producers by reforming the federal crop insurance system. NSAC worked hard to eliminate this penalty against organic growers and, in May of 2013, USDA announced the removal of the surcharge starting in the 2014 crop insurance year.

Later that year, NSAC succeeded in convincing USDA to move forward with the contract price addendum option for organic producers, which insure their crops at a price specified in a guaranteed contract. This is particularly important where RMA has not established an organic price for a particular crop, so the producer has an option other than insuring at the conventional price.

The 2014 Farm Bill directed USDA to establish prices for all organic crops by the 2015 crop insurance year, and to rely upon all available data sources to do so. RMA last issued a report to Congress in March 2014 on its progress. As of 2019, USDA has established prices for over 80 crops.

NSAC’s 2018 Farm Bill platform recommended requiring RMA to periodically review the caps placed on the amount a CPA can be above the conventional price for a crop, and to allow the caps to exceed two times the conventional price. Our platform also supported the continual release of organic crop insurance data on a regular schedule, including data by state. Unfortunately, the final 2018 Farm Bill did not contain any new language regarding crop insurance for organic production. RMA has released updated resources to assist producers interested in organic coverage, some of which are linked above.

Authorizing Language

Section 11023 of the Agricultural Act of 2014 amends Section 508(c)(6) of the Federal Crop Insurance Act to add the requirement on price elections for organic crops, to be codified at 7 U.S.C. 1508(c)(6)(D).


Last updated in December 2019.