• Farm Bill,  Marketplace Equity

    Don’t Harm Crop Insurance, Improve It!

    This post originally appeared on the National Sustainable Agriculture Coalition (NSAC) blog.

    “Do no harm” to crop insurance has become a common refrain in Washington DC as we gear up for a new farm bill this year. NSAC agrees that a top priority should be to not harm crop insurance as the 2023 Farm Bill debate heats up. In fact, we aim to improve it. Barriers in program design and implementation leave small to mid-sized, beginning, specialty crop, and organic farmers without access to this pivotal safety net program, and Congress has the opportunity to address these shortfalls.

    Background

    A federally subsidized farm safety net is a necessary tool to help protect farmers from the many risks of farming. Yet NSAC members have long supported and worked with farmers for whom crop insurance is inaccessible. Limited resource, small, beginning, diverse, and organic farmers find themselves choosing between either purchasing crop insurance each year, if a relevant policy is even available and advertised to them, or adopting on-farm conservation practices and diversifying production and markets to mitigate risk and improve long-term resilience against disasters. Almost invariably, they choose the latter.

    If a farmer chooses to adopt conservation measures and diversification but then does not have enough remaining resources to be able to enroll in support of the farm safety net, it suggests that the program as it currently stands is not an effective tool that meets the needs of all farmers. No farmer should be forced to choose, and in fact, both strategies should be incentivized to help farmers manage risk.

    While more than 85 percent of planted acres for commodity crops (e.g., corn, soybeans, cotton, and wheat) are insured under the federal crop insurance program (FCIP), the chart below illustrates most farms are not served at all by the program. Most farms above 500 acres hold insurance policies, yet very few farms under 260 acres are enrolled in the FCIP relative to the total number of operations.

    All Farms and Farms Purchasing FCIP Policies, by Acres Operated

    federal crop insurance program participation by farmers

    The reason for this disparity in access is not because these farmers do not want a safety net to protect against the once-in-a-generation weather event or market pitfall that have become regular features of the farm economy. Rather, the FCIP was not designed to meet the needs of small, beginning, specialty crop, and organic farmers.

    Why Is Crop Insurance Not Working for Everyone?

    federal crop insurance 2023 farm bill

    First, because it is not accessible to farmers looking to diversify their income streams or differentiate themselves in the marketplace.

    The federal crop insurance program is a public-private partnership. Farmers purchase insurance policies from private sector insurers, known as Approved Insurance Providers (AIPs). USDA, specifically the Risk Management Agency (RMA), regulates the policies sold by AIPs, uses taxpayer dollars to subsidize farmer premiums (the cost of purchasing a policy), and subsidizes AIPs for the cost of selling and servicing crop insurance policies.

    Farmers may file a claim to receive an indemnity payment when they experience an insurable event, either a natural peril or revenue losses (depending on the type of insurance policy purchased: yield, revenue, or area-based policies, and more). Insurable commodities vary by location and depend on whether data exists to verify the projected value of a farmer’s product confidently and appropriately.

    This variability in whether a crop is insurable already places small, beginning, and specialty crop growers at a structural disadvantage. For example, a beginning farmer who wishes to grow strawberries in a Montana county where no other producer grows that crop will almost certainly not have the option to purchase an insurance policy that insures strawberries. If they desire the security of a safety net, the farmer will be incentivized to instead grow a commodity that is already widely grown in the county – such as wheat – which is unlikely to unlock market opportunity and allow the beginning farmer to differentiate themselves, but for which an insurance product is readily available.

    Second, because it promotes monoculture commodity production over specialty crops and on-farm conservation.

    Several rules and guidelines that determine how the FCIP is administered challenge the ability of nonconventional farmers to remain eligible for full crop insurance protections. For example, farmers must adhere to “Good Farming Practices” as defined by RMA to qualify for indemnity payments in the aftermath of an insurable event. RMA currently maintains that a practice which reduces yields may not be considered a Good Farming Practice. This is a serious deterrent against adoption of many conservation practices because temporary yield drags are common on farms transitioning to climate-friendly, regenerative, and organic systems before yields can stabilize and even rise.

    Additional guidance on when and how cover crops may be terminated creates a similar disincentive. What should be a farm-specific decision is applied to a broad region wherein conditions may vary wildly from farm to farm.

    Likewise, RMA determines regionally appropriate final planting dates, wherein acres planted on or before this date receive the full yield or revenue guarantee that a farmer selected when purchasing their insurance policy. Organic and conventional operations are currently held to the same final planting date, even though certified organic farmers sometimes plant crops such as corn later than their conventional counterparts to avoid cross-contamination with neighboring genetically engineered seed. The value of a yield or revenue guarantee is reduced each day for farmers who plant after the final planting date.

    This structure to incentivize monoculture commodity production over specialty crops and diverse rotations is mirrored in eligibility considerations to receive agriculture loans as well as other public and commercial resources. The Whole-Farm Revenue Protection (WFRP) program is an exception to this paradigm and the dominant insurance model where the availability of policies is determined by crop and county. WFRP is the only insurance product designed to protect a farmer’s entire operation, not just one crop, and it is available nationwide. It also includes a built-in insurance premium discount for crop and enterprise diversification that considers the inherent risk reduction impacts of diversification. However, significant red tape has made it difficult for farmers to purchase WFRP. Recent changes announced by RMA are expected to improve farmers’ ability to access the product, and additional changes can and should be made.

    How Can Insurance Be Improved to Expand Access?

    There are many reasons why small, beginning, organic, diversified, and specialty crop farmers rarely purchase crop insurance. Historical barriers include limited policy availability, bureaucratic red tape (including burdensome paperwork), and insufficient outreach and education. While Congress and USDA in recent years have taken steps to address these challenges and expand insurance coverage for nonconventional producers, additional reforms are needed.

    NSAC’s 2023 Farm Bill Platform proposes recommendations that will be key to improving crop insurance access for small and diversified farmers. In summary, these needed reforms include:

    • Expanding insurance options and further streamlining the WFRP program;
    • Directing RMA to provide continued education to insurance agents about agronomic practices and coverage options for nonconventional producers;
    • Reforming barriers to conservation practice adoption perpetuated by insurance rules, including the RMA definition of Good Farming Practices and cover crop termination guidelines; and
    • Establishing a secure data service to collect, link, and analyze data on conservation practices so this information can be integrated into crop insurance actuarial tables, as proposed in the Agriculture Innovation Act of 2021.

    Remember: low enrollment in federal crop insurance policies among small and diversified farms does not reflect disinterest in participation. Overwhelmingly, these farmers desire a safety net to protect themselves from the worst impacts of unpredictable weather events and market variability, just as any other farmer does. It is the responsibility of Congress to ensure these historically underserved farmers can purchase an insurance policy as easily as their conventional counterparts.

  • Climate Change

    Two Things You Can Do NOW to Support Climate Solutions in the Next Farm Bill

    The 2023 Farm Bill presents an important opportunity to increase support for sustainable, ecological, and organic farming practices.

    OEFFA members know this kind of farming is a real solution to the climate crisis. We know that good farming respects and enhances the health of the land, people, and the natural world—and we need policies that reflect that knowledge.

    We have a choice. We can continue the status quo and hope things don’t get worse. Or we can act now to address the threat, including the more frequent extreme weather events farmers are facing. We can each be champions of organic, sustainable, and regenerative solutions to the climate crisis.

    Here’s the TWO things you can do right NOW to make sure climate solutions are in the next Farm Bill:

    Climate Solutions in the Next Farm Bill Letter

    Sign the National Farmer Letter on Climate Change!

    Please add your name to this farmer letter on climate change and send Congress this message: the next farm bill must be a climate bill.

    Farmers need funding, research, and risk management tools to implement climate-friendly farming practices. The Agriculture Resilience Act is a comprehensive plan to implement these solutions in the next Farm Bill. Sign on to show your support now.

    Not a farmer yourself? Share this page with someone in your network.

    Climate Solutions in the Next Farm Bill Rally for Resilience

    Save the Date for the Rally for Resilience!

    Farmers, farm workers, and farmer allies—including OEFFA—will be converging on Washington D.C. March 6-8 to urge Congress to make climate change policy a priority in the 2023 Farm Bill.

    The three-day event will include a rally and march, as well as an opening ceremony, grazing demonstration, press events, and a lobby day.

    Save the date! Opportunities to participate and register are coming soon. Contact OEFFA Grassroots Organizer Heather Dean to learn more.

  • State Policy

    Beginning Farmer Tax Credit Now Available

    Farmland Access is the Biggest Challenge Young Farmers Face

    The cost of buying or leasing land, combined with other significant start-up costs, puts a farming career out of reach for many. Farmers of color, in particular, have been historically disenfranchised from the land and unable to access USDA credit programs.

    But, we need these next generation farmers on the land. Secure land tenure allows farmers to invest in practices and management systems that are sustainable, provide resilience, and strengthen the viability of our food system. It also helps protect Ohio’s disappearing farmland from development.

    OEFFA Members Celebrate Statehouse Win

    Beginning January 1, 2023, early career farmers can get some extra help accessing land and equipment through the Beginning Farmer Tax Credit, which is administered by the Ohio Department of Agriculture (ODA).

    The Beginning Farmer Tax Credit program was created through the Family Farm ReGeneration Act (House Bill 95) and signed into law by Governor Mike DeWine in April 2022. This OEFFA-backed, bipartisan bill received near unanimous support and was co-sponsored by Representatives Susan Manchester (R-84) and Mary Lightbody (D-19).

    Over the course of more than two years, more than 600 OEFFA members signed a petition, met with legislators, testified during hearings, and participated in lobby days to convey the importance of land access for Ohio’s 33,000 beginning farmers. Read more about OEFFA’s grassroots work that led to this victory, and see the photos of OEFFA’s members throughout this page.

    OEFFA members meet at Ohio Statehouse about beginning farmer tax credits

    What Beginning Farmers Need to Know

    The tax credit is available to Ohio residents who have farmed for less than 10 years and who farm or intend to farm on land in Ohio. Beginning farmers also have to demonstrate financial eligibility, submit projected earnings statements, participate in a financial management program approved by the ODA, and meet other eligibility requirements.

    In addition to receiving help accessing land or equipment from a participating asset owner, the beginning farmer receives a tax credit for the cost of the financial management program.

    Apply for the Beginning Farmer Tax Credit here.

    OEFFA members meet at Ohio Statehouse about beginning farmer tax credits

    What Asset Owners Need to Know

    Asset owners, or people or businesses that sell or rent farmland, livestock, buildings, or equipment to a qualifying beginning farmer may apply as well.

    In order for land to qualify as an asset, it must either total at least 10 acres or produce an average annual farm income of at least $2,500.

    Equipment dealers and similar businesses that sell agricultural assets for profit are not eligible for the credit. 

    Asset owners can receive a 3.99% tax credit on the sale price or three-year gross rental income.

    Apply for the Beginning Farmer Tax Credit here.

    OEFFA members meet at Ohio Statehouse about beginning farmer tax credits
    OEFFA members testify at Ohio Statehouse about beginning farmer tax credits
    OEFFA members held Ohio Statehouse lobby day about the Family Farm ReGeneration Act