USDA Organic Insurance Grows

Organic and Transitional Farmers Have More Options to Protect Higher Prices

Chris Clayton
By  Chris Clayton , DTN Ag Policy Editor
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Growers of organic crops, such as this corn, or those transitioning to organic production will have more insurance options. (DTN file photo by Elaine Shein)

OMAHA (DTN) -- USDA has boosted the crop-insurance safety net for organic farmers and producers who are transitioning to organic certification.

Agriculture Secretary Tom Vilsack announced expansion of premium price elections for organic farmers as well as the chance for farmers who are transitioning to organic to lock in a higher crop-insurance protection level.

Vilsack noted organic production continues to increase and now makes up more than $39 billion in retail sales. Offering those producers better crop-insurance options will create more incentives for farmers to consider transitioning to organic, he said.

Under new policy options, farmers in the three-year transition it takes to be certified as organic can now use a Contract Price Addendum to their insurance policies to get a higher price than commodity crops. The price addendum allows farmers to insure crops at as much as twice the conventional commodity price if the farmers have a contract to deliver at a higher price. Contract Price Addendum is available for 73 different crops, according to the Risk Management Agency.

"This should make it easier, a little bit easier, for people to make that transition; so if they are interested in transitioning to organic they are able to do so a little bit easier than they have in the past," Vilsack said in an interview.

USDA provided an example under Contract Price Addendum showing a farmer in Nebraska can use a contract price for millet up to a maximum of $7.34 per bushel (for transitional) or $8.44 (for certified organic production), as opposed to using the existing RMA price elections of $3.67 (for transitional) or $4.22 (for certified organic production).

For organic producers, RMA also expanded premium price elections on 57 crops for this spring, up from just four crops in 2011. This will allow those farmers to cover their crops closer to the market value. Crops such as barley, rice and wheat are now available for premium price elections.

"Organic producers often enter into a contract for a higher price than they would get in the general market, so now they are able to buy protection for that higher price based on the contract," Vilsack said.

Policies for organic acres were just a small sliver of the overall crop-insurance market. In 2015, organic and transitional farmers bought policies covering nearly 870,000 acres, an 11% increase over 2014. The value of organic crops covered in 2015 was $644 million, a 20% increase over 2014.

Vilsack said the number of acres covered under individual crops may not tell the whole picture. A lot of organic producers who buy insurance are now using whole-farm revenue policies. "That's a very popular policy for those folks who are in the specialty crop area in particular," he said.

Crops available for organic premium price election: http://www.rma.usda.gov/…

Chris Clayton can be reached at Chris.Clayton@dtn.com

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(CZ/AG)

Chris Clayton