Crop Insurance to Ensure Diversity

Tom Nuessmeier has a 200-acre organic farm in Le Sueur, Minn. He grows corn, soybeans, oats, alfalfa, winter grain, as well as raising hogs. Like all farmers, Nuessmeier is at the mercy of the weather and fluctuating crop prices, and so it makes sense to buy crop insurance to guard against disaster.

Easier said than done. Nuessmeier has to buy an individual policy for each crop he grows; and there is no policy available to protect his relatively small hog production.

What’s funny is that Nuessmeier is luckier than some others. Many organic and diversified farmers can’t even find a policy to cover the crops they grow.

The very words “crop insurance” are enough to make most people’s eyes glaze over. But crop insurance is the foundation of America’s agricultural safety net. A new federal program, called Whole Farm Revenue Protection, offers coverage to producers like Nuessmeier. That’s important for farmers because it levels the playing field for smaller and diversified farmers. But it’s also a big win for eaters because it provides an incentive for farmers to grow healthy and sustainable food. “Long term, we hope this creates a pathway to make all of American agriculture more sustainable,” said Ferd Hoefner, policy director for the National Sustainable Agriculture Coalition.

To understand how something so boring could be so transformational, it’s necessary to look at the history of federal agricultural supports. In the early aughts, crop insurance became the primary way for the government to subsidize farmers. Instead of farmers’ receiving a subsidy, or direct payment, for growing certain crops, the government would help farmers pay insurance premiums that protect against low crop yields or drops in price. Like direct payments, though, the policies are designed primarily to help farmers growing commodity crops like corn, soybeans, cotton and wheat. Farmers can get a policy for other crops, blueberries, say, or strawberries. But by and large, the insurance policies are geared to big farmers growing one thing.

Whole Farm Revenue Protection (WFRP) policies do the opposite. They offer insurance for everything grown on the farm. This gives diversified farmers the opportunity to insure all their crops, whether that’s a few dozen kinds of vegetables or mixed grain and livestock farms. That’s good news for small and diversified farms as well as organic producers who grow crops for which a policy isn’t available. (Currently, there are only organic policies issued for 38 organic crops, not including tobacco.) Better, it could be an incentive for conventional and commodity farmers who want to transition to a more diversified cropping system.

The benefits are appealing. For example, WFRP policies cover losses up to 85 percent, and there is a premium subsidy of up to 80 percent when at least two crops are grown. The policies even cover some processing expenses such as washing, trimming and packaging, which are essential to farmers who are selling directly to consumers. Deadlines vary but most interested farmers can apply for policies through March 2016.

The concept of insuring a whole farm is not new. The U.S. Department of Agriculture offered a similar program, called Adjusted Gross Revenue, beginning in 1999. But AGR and its sister program AGR-Lite had lower liability limits and far more onerous paperwork than the new version. Moreover, AGR was available only in some counties and states.  WFRP, part of the 2014 Farm Bill, is available nationwide. In 2015, the program’s first full year, 1,046 farmers bought WFRP policies, a 20 percent increase over the number of 2014 AGR policies.

It’s a start. But growing the program means getting the word out to farmers and educating the insurance industry for whom it is much easier to write an old-school policy for corn or soy. Case in point: Nuessmeier, the Minnesota farmer, looked at WFRP last year, but he said that the program was so new that his insurance agent wasn’t comfortable with the offerings, and it appeared that his passel of hogs was too small to qualify for coverage. Still, Nuessmeier plans to look at the program again this spring because it rewards the diversity he has on his farm. “As a farmer, I think diversification is really important for environmental issues and for the profitability of family farms,” he said. “Diversification is a risk management tool in itself, but the way crop insurance developed, it incentivizes commodities like corn and soy.”

There are kinks to be worked out. For example, it’s hard for beginning farmers to get a policy because applicants need to have three years of tax records to qualify for coverage. Organizations including the National Sustainable Agriculture Coalition are working to find ways to incentivize insurance brokers to sell the policies, perhaps by offering higher commissions. Still, it’s a giant leap forward: a federal farm policy that encourages diversity and sustains the small and midsize farms that grow the food we eat.

Originally published February 10, 2016

Jane Black

Jane Black is an award-winning food writer who covers food politics, trends and sustainability issues. Her work appears in The Washington Post (where she was a staff writer), The New York Times, The Atlantic, Slate, New York Magazine and other publications. She is currently at work on a book about one West Virginia community's struggle to change the way it eats.

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