Skip to main content

Crop Insurance Continues to Strengthen Rural Communities

Posted by Brandon Willis, Risk Management Agency Administrator in Conservation
Jul 14, 2016
The sweet potatoes harvest at Kirby Farms in Mechanicsville, VA
The sweet potatoes harvest at Kirby Farms in Mechanicsville, VA.

America’s farmers and ranchers work hard to provide food for the world, contributing to the nation’s economy, as well as to the strength of our rural communities. To support our nation’s hardworking producers, we’ve developed programs designed to help them stay at the forefront of global production, to adapt to market changes and protect their operations even after bad years.

Although many farm programs have come and gone, one program has continued to grow and become even more critical to the farm safety net. Federal crop insurance has become the preeminent risk management tool for our nation’s agricultural producers, and has adapted to meet the diverse needs now more than ever. In fact, even Congress recognized the importance of the federal crop insurance program in the 2014 Farm Bill. As other programs were eliminated or reduced, new requirements and expansions were mandated for the program as a cost-efficient and proven way to keep agriculture strong.

New policies like the Supplemental Coverage Option (SCO) and APH Yield Exclusion (APH YE) were implemented by the Risk Management Agency as a result of the Farm Bill, providing new options for producers suffering from years of drought or other severe weather conditions. The Whole-Farm Revenue Protection policy (Whole-Farm), also outlined in the Farm Bill, was developed by USDA’s Risk Management Agency (RMA) in concert with producer groups, to provide an innovative and effective tool for smaller farms, diverse farms, and those growing specialty and organic crops. Whole-Farm was first offered in 2015, and by 2016 it was available in every county in the nation – a first for federal crop insurance.

Even as the crop insurance program expanded, RMA took steps to strengthen program integrity. It reduced its error rate for improper payments by more than half; and at 2.2 percent, it is well below the government-wide average of 4.39 percent. The agency also improved its compliance methodology to include additional layers of data analysis, to continue to have better oversight of program dollars.

These expansions and the efficient delivery of the program have helped keep the rural economy going, even after severe weather has ruined fields and lowered prices for crops. When crop prices are low, access to credit is critical for farmers to manage risk. Producers who purchase federal crop insurance have better access to credit and are often able to receive lower loan interest rates.

The program continues to grow for the 2016 crop year and into the future. More crops than ever will be eligible for organic price elections, offering organic producers the ability to insure their products closer to market value than the conventionally-grown equivalent. Expansion in the availability of SCO for certain crops will continue, just as more crops will be eligible under the APH YE program, meaning more producers hit with years of drought will be able to find some relief. Even the Whole-Farm Revenue Protection program has expanded. It provides coverage under one policy for all revenue from a farm, up to $8.5 million. This now can include greenhouse and nursery products up to $1 million and animals and animal products up to $1 million as well.

However farming and farm products change to meet the market need, crop insurance will continue to adapt and strengthen its programs to meet the needs of our producers.

Category/Topic: Conservation