Introduction to Risk Management and Crop Insurance Options for New England Vegetable Growers

United States Department of Agriculture Risk Management Agency July 2009

The USDA Risk Management Agency (RMA) and its partners help farmers to develop strategies to lessen and mitigate business production and marketing risks. Crop and revenue insurance are important risk management tools available to farmers. The New England states have been identified as among several “underserved states” by RMA, primarily because our farmers have not been significant users of the insurance products developed by the Federal Crop Insurance Corporation (FCIC).

The Risk Management Agency, in collaboration with New England Land Grant Universities, State Departments of Agriculture and private industry, have been reaching out to growers and agricultural professionals to make them aware of the opportunities, as well as the limitations, of crop and revenue insurance policies. The results of these efforts have been increased farmer understanding and more effective use of crop and revenue insurance products. Those farmers who grow sweet corn and potatoes have experienced the value of coverage for a specific crop. Other vegetable crops can be covered either as components of whole farm revenue policies, such as Adjusted Gross Revenue (AGR) or Adjusted Gross Revenue-Lite (AGR-Lite), or under specific individual agreements written by you and your crop insurance sales agent.

Specific insurance policies have been modified to better suit the particular needs of the region’s growers and more changes are on the horizon. In addition, there are existing options that might make sense for your operation if you fully understand them. Coverage under AGR and AGR-Lite are based on farm revenue, not production levels of specific crops. In areas where an established crop policy is unavailable, farmers may contact their crop insurance agent to see if a written agreement is available for the current crop year. There is also insurance coverage available for vegetable crops grown using organic practices.

We encourage you to review the following pages, check out the RMA website, http://www.rma.usda.gov/and go to the programs listed under the Raleigh Regional Office which services the New England states.  To find crop insurance agents on this website, click on agent/company locator at the right hand side of the screen under “Quick Links.” Crop insurance agents are not employees of RMA or FCIC. Rather, crop insurance agents are employed by private firms and are the professionals with on-the-ground experience and knowledge of what works and what doesn’t for a particular situation. Part of the effort to improve service in New England includes increased communications with well informed agents. Your unique scenarios will help this to happen, whether or not you actually buy coverage.

Crop and revenue insurance can be a very good value if the coverage fits your needs. Due to significant ongoing subsidies from the Federal Government, farmers are not expected to pay for the full cost of coverage.  Under the current sweet corn policy, the Federal Government subsidizes from 55 to 100 percent of the premium cost depending on the coverage level selected by the grower.

We anticipate a trend away from funding the common “disaster based programs” that have sometimes provided free “insurance” in areas where losses are catastrophic. Congress appears to be under increasing pressure to share the management of risk with the farmer. For some Federal programs offered by USDA Farm Service Agency, such as the Supplemental Revenue Assistance Payments program (SURE), farmers will be required to carry crop insurance coverage in order to participate and receive benefits.  

Lenders also see crop insurance as a means to reduce their risk exposure (and increase your eligibility for better terms). The sooner you look into purchasing specific crop and revenue insurance policies, the more likely it is that you will be ready when having this type of coverage is the primary protection in a disaster situation.

Due to the lead time on many policies, we encourage you to find out more information as soon as possible. If coverage makes sense for you in the upcoming growing season, keep in mind that many applications must be completed in the fall or winter prior to planting.

This information is provided by The United States Department of Agriculture’s Risk Management Agency (RMA), in cooperation with the Extension programs of the New England states.