Crop insurance works well for some farmers and a few key crops, but OEFFA farmers “farm outside the box” and find much of their risk unprotected in the face of a changing climate.
Promised as a safety net for producers and rural communities, the reality is that federally-subsidized crop insurance doesn’t work for most farmers and communities. While acres planted for commodity crops (i.e., soybeans, corn, cotton, wheat) are insured under the federal crop insurance program (FCIP), most farms aren’t served by the program—especially those using diversified production systems and on-farm conservation practices.
Crop insurance does a great job of meeting the needs of the few—and the big. The largest 15 percent of farms receive 90 percent of crop insurance subsidies, while 78 percent of US farms have no crop insurance coverage at all. In other words, crop insurance is structured in a way that provides the most support to those who need it the least.
Like other diversified, organic, small, beginning, and specialty crop farmers, OEFFA farmers rarely purchase crop insurance. Those who do often face planting date requirements that don’t align with their management practices or agents and Risk Management Agency (RMA) staff who lack a critical understanding of organic management systems.
Envisioning Crop Insurance that Could Work For Everyone
It’s a topic that makes most people’s eyes glaze over. Fortunately, OEFFA farmers aren’t “most people.” They have been taking time out of their busy schedules to envision a crop insurance program that works for everyone.
Over the span of several meetings and several months, they’ve developed Member Proposals to Make Crop Insurance Fair, Functional, and Informed.
Make Crop Insurance FAIR
- Each operation should receive one subsidy and no more. The Farm Bill should include a strong “actively engaged in farming rule” to set this limit. No double-dipping.
- Crop insurance should only apply to land that is suitable to be farmed. The Farm Bill should prohibit crop insurance premium subsidies on unsuitable land.
- The Farm Bill can better support beginning farmers with less costly crop insurance policies, continue to support the majority of farmers with policies valued between $10k-$100,000, and reduce the rate of support for the largest farms who hold policies totaling more than $100,000.
Make Crop Insurance FUNCTIONAL
- Organic producers often plant later than their non-organic counterparts, due to strategic organic systems management. RMA must establish a unique final planting date for certified organic crops in each region with a non-penalizing grace period so that organic producers can maintain productivity and organic status.
- Organic producers should use the transition period to develop an organic management system and write their Organic System Plan in conjunction with their application for organic certification. RMA should provide organic insurance to producers transitioning to certified organic status without requiring an Organic Systems Plan.
- A clear, transparent, consistent path for organic transition and crop insurance must be established. As USDA invests $300 million in organic transition, transitioning operators must be supported through a streamlined farm safety net.
- Create an Enterprise Unit (EU) by Practice Type option for organic status. This would enable operators to group land separately so that each type could be managed and insured appropriately.
- Whole Farm Revenue Protection is intended to serve small and diversified producers but has limited utilization. It must be improved to better support these growers through lower premium costs associated with higher levels of diversity, and true revenue protection for operations already mitigating risk through diverse production systems.
Make Crop Insurance INFORMED
- NASS and RMA should work together to regularly conduct an organic production survey.
- Expand NRCS technical capacity and cooperative agreements to support adoption of soil health plans.
- Require organic literacy within RMA to help employees and agents be informed about organic insurance in order to better serve organic clients and grow the benefits of the organic industry.
Crop Insurance SUBSIDY RATE BRACKET Proposal
3 brackets based on annual premium, functioning like marginal tax rates:
- $0 to $10,000: 50% increase to subsidy rate
- $10,000 to $100,000: No change, accrues identically to current system
- $100,000+: 50% reduction to subsidy rate
- Save an estimated $5 billion over 10 years, derived from NSAC (Belasco) report and accounting for increased utilization by small policy holders
- Addresses current disparity in both crop insurance benefits and utilization rate across operation scales
- Greatly improves incentive for small to medium scale operations to seek crop insurance risk management
- Easily implemented, no additional data collection (AGI/tax return)
- Increased or no change in subsidy for vast majority of operations
- No hard thresholds to inadvertently encourage skirting rules (paper farming)
- No reduction or elimination of subsidy at scale thresholds (as AGI limit would do), helps with political
feasibility and paper farming issue
- Minimal administrative burden, simple calculations, marginal rate brackets already used by accountants
- No change to existing complex actuarial system
- Provides producers freedom of choice in how they reach or avoid rate thresholds with current insurance
- Flexible for future modifications (could change bracket levels, new brackets, rate factors)
OEFFA farmers and members are a united force working to make the federal crop insurance program more fair, functional, and informed. While it may not seem like it, their efforts have the potential to impact you, too!
As reported by our colleagues at NSAC, the FCIP is the farm bill’s most expensive authorized program (excluding nutrition spending). Our taxpayer dollars are being funneled into monoculture commodity production and into the hands of agricultural producers who generally have some of the highest levels of income and wealth.
Addressing consolidation and supporting diverse food systems with a level playing field is one of our five 2023 Farm Bill priorities. It’s also the focus of one of our seven workgroups. Ready to stand together and build the power we need to make crop insurance fair, functional, and informed?
Join us today by getting in touch with our organic policy specialist at email@example.com.