Risk Management and Crop Insurance for New England Vegetable Growers

United States Department of Agriculture Risk Management Agency 15 April 2017

The USDA Risk Management Agency (RMA) helps farmers manage their business risks through effective, market-based risk management solutions. As part of its mission, RMA provides crop insurance to producers through the Federal Crop Insurance Corporation (FCIC). While private-sector insurance companies sell and service the policies, RMA approves and supports products, develops and approves premium rates, administers premium and expense subsidies, and reinsures the private companies. RMA also supports educational and outreach programs on managing farming risks.

Crop and revenue insurance are important risk management tools available to America’s farmers, however, the New England states are considered “underserved states” by RMA because insurance enrollment by farmers in this region continues to be less than the national average. Since its creation in 1996, RMA, 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 insurance policies. The results of these efforts have steadily improved farmer understanding and use of crop insurance in the region.

Since 2000, existing insurance policies have been significantly modified and new products introduced to better suit the unique needs of the region’s growers. New England farmers who grow sweet corn, potatoes and green peas know the value of crop insurance coverage for those crops when production losses occur due to adverse weather and other insured causes. For other vegetable crops, a grower may submit a written request for crop insurance coverage by completing and submitting appropriate forms through their crop insurance agent. Alternatively, protection for these other vegetable crops, not covered by crop insurance, is available from the USDA Farm Service Agency (FSA) through the Noninsured Crop Disaster Assistance Program (NAP). New as of 2015, NAP coverage goes beyond the catastrophic level, allowing farmers to insure up to 65% of their actual production at 100% of the average market price.

For the overall business, Whole-Farm Revenue Protection (WFRP) provides coverage for all crops grown on a farm under one policy by insuring farm revenue losses due to unavoidable natural causes. WFRP coverage was first available for the 2015 season, replacing the Adjusted Gross Revenue (AGR) pilot program.

For more information about RMA, crop insurance policies and risk management strategies go to the RMA website at http://www.rma.usda.gov/. Specific information about polices for each New England State can be found under the Raleigh, NC Regional Office listed at “Popular Topics >Field Offices: ROs| COs”. The Raleigh, NC Regional Office serves all the New England states.

You can locate a crop insurance agent online at http:// www.rma.usda.gov/tools/agent.htm” [2]. Keep in mind that crop insurance agents are not employees of RMA or FCIC, rather, they or their company are under contract with USDA to service crop insurance policies. More importantly, crop insurance agents are the professionals with on-the-ground experience and knowledge of what works and what doesn’t for a particular situation. Spending time with an agent can help you decide if and how crop or revenue insurance might best fit your needs.

Is now the time to be covered by crop insurance? Let’s consider a few important factors which may help you decide:

  •  The volatility of farm income has increased significantly over the past few decades. Environmental and economic conditions have let to greater variability and uncertainty in farm sales and profits.
  •  There has been a trend away from USDA funding the common “disaster based programs” that have sometimes provided “free insurance” in areas where losses are catastrophic. Congress is under increasing pressure to encourage growers to share in the management of farming risks. For some Federal programs offered by FSA, farmers are required to carry crop insurance coverage in order to participate and receive benefits.
  •  Lenders see crop insurance as a means to reduce their risk exposure, improving a farmer’s eligibility, as well as an opportunity, to secure better loan terms.
  •  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 do not pay for the full cost of coverage. For the Fresh Market 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. For the Potatoes and Green Peas policies, subsidies range from 55 to 67 percent.     

The sooner you look into purchasing 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 for a natural disaster. If coverage makes sense for your upcoming growing season, find out more information as soon as possible. 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. Developed by Michael Sciabarrasi, Extension Professor (Retired), UNH Cooperative Extension and updated by Paul Russell and Thomas Smiarowski, Agricultural Risk Management Consultants, UMass Extension.