Feds Improve Whole-Farm Revenue Protection (WFRP) Crop Insurance for 2016

Organic Farmer Rob Faux, of Tripoli, Iowa, and guests at a field day to discuss WFRP and other risk management strategies for vegetable growers.
Organic Farmer Rob Faux, of Tripoli, Iowa, and guests at a 2015 field day to discuss WFRP and other risk management strategies for vegetable growers.

As Whole-Farm Revenue Program (WFRP) crop insurance rolls out nationwide for its second year, farmers will find that the USDA Risk Management Agency (RMA) has made some significant improvements. The changes, which help address some of WFRP’s early shortcomings, are likely to make the program more popular with its target audience of diversified, specialty crop, and organic producers.

WFRP is intended to cover a mix of crops and livestock grown or raised on a farm rather than to insure a specific crop, unlike traditional crop insurance policies. The program protects against the loss of insured revenue due to unavoidable natural causes and market price declines.

Modifications for 2016 include:

  • streamlining some aspects of the program, especially recordkeeping requirements for direct marketers. RMA will also provide recordkeeping aids tailored to assist such producers.
  • reducing tax history requirements for qualifying Beginning Farmers and Ranchers (BFR) to three years of prior farm tax returns, as long as they also farmed the (lag) year before the insured year. BFR producers may also qualify for an extra 10% premium subsidy.
  • offering higher coverage for expanding operations, increasing their insurance guarantee up to 35% of their average revenue history.
  • eliminating a 35% limit on expected revenue from animals and animal products, and nursery and greenhouse products — while retaining the overall insurance cap of $1 million on revenue from these products.

Producers Early Interest

Though signups were slow in the program’s first year, interest appears to be growing. Preliminary data showed that 581 producers enrolled in WFRP for 2015, most of them in the Northwest, where growers had experience with earlier whole-farm products. In the Midwest, Indiana farmers were the most enthusiastic, taking out 25 policies. Michigan had 22, Illinois had 14, and Wisconsin, six. Only two producers enrolled in each of the states of Iowa, Minnesota, and Missouri.

Farmers indicate they want to learn more about the program, based on an informal evaluation that the National Center for Appropriate Technology (NCAT) conducted with producers and others who attended webinars, presentations, and field days on WFRP during the program’s first season. Many of the 50 respondents said they had never participated in crop insurance programs. Most felt they did not have enough information, but based on their early knowledge, many characterized WFRP as a “good concept.” Positive views included the following:

  • “Coverage can reflect the higher values of organic and specialty crop practices.”
  • “You can insure vegetables.”
  • “It’s a good thing to have a program that provides an economic safety net for more diversified farmers.”

The list of concerns centered on WFRP’s complexity and paperwork requirements, exemplified by one producer’s comment: “The whole-farm basket approach means you may have a loss on one crop, but the other crops have a high-enough revenue that it offsets the loss. With this in mind, will it be worth the paperwork to enroll?” Several expressed the view that premiums would be too costly for small farms. And a few opposed the whole idea of crop insurance and/or thought it would always favor large farms.

A more extensive survey of farmers’ views of WFRP by the Rural Advancement Foundation International (RAFI) found that respondents cited similar barriers and benefits. In addition, RAFI’s findings highlighted crop insurance agents’ critical role in educating farmers. According to the authors, “Perceived barriers to WFRP, such as the cost of the policy, paperwork and recordkeeping can be overcome through education about and further experience with crop insurance.”

Program basics and changes

In 2015, USDA’s Risk Management Agency (RMA) introduced WFRP as a pilot program, available in 45 states. It replaced previously existing whole-farm policies that offered lower coverage and were available in much more limited areas.

As in its pilot year, WFRPs unique premium discount for diversification increases for up to seven commodities, though more can be included in the policy. The main exceptions are forest and forest products, and animals for sport, show, or pets. The policy can account for higher-value specialty crops, and covers basic market readiness activities and expanding operations. Producers can insure up to $8.5 million of revenue at coverage levels from 50% to 85%. The policy is significantly subsidized up to 80% for all but the two highest levels of coverage (80% and 85%), similar to conventional crop insurance programs.

One change that will attract diversified producers is the greatly expanded list of approved commodities for counties, compared to the program’s initial lists. Another important revision will allow “contemporaneous” marketing records to be used to calculate revenue. Initially, farmers needed third-party verified records, which were impractical for those that market directly to the public. RMA will also provide recordkeeping aids to assist direct marketers.

Interested producers should contact a crop insurance agent to explore the program’s potential for their operation. Signups started in early September and the last date to purchase will be the same as other crop insurance closing dates for a county. Agents working for RMA-endorsed Approved Insurance Providers (AIPs) are required to offer the WFRP program to all eligible persons. However, agents themselves are still learning about the program — and their interest is likely to be influenced by demand.

That demand is likely to keep growing, as a result of changes to WFRP for 2016. By helping to level the risk-management playing field for diversified and organic producers, WFRP is starting to look like a tool that could change the landscape.

More information about the WFRP program is available on the USDA Risk Management Agency website at http://www.rma.usda.gov/policies/wfrp.html.

You can also find more details in NCAT’s “Primer on Whole-Farm Revenue Protection (WFRP) Crop Insurance: Updates for Producers in 2016” at https://attra.ncat.org/attra-pub/download.php?id=501

NCAT’s Midwest Regional Office in Iowa was awarded a Risk Management Education Partnership cooperative agreement through the RMA. The parties involved are equal opportunity providers.

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