Whole farm risk management: a place for produce growers?

04/22/2012 09:47:00 PM
Tom Karst

The Senate Farm Bill draft document was issued Friday, and I just spent some time looking at the horticulture and crop insurance titles tonight. The document appears to focus a good deal on local agriculture and organic programs, though while not ignoring already established programs such as the Specialty Crop Block Grants program. More on the local angle later.

National Editor Tom KarstBelow is a description of a newly introduced insurance concept that could have implications for specialty crop growers.

(18) WHOLE FARM DIVERSIFIED RISK MANAGEMENT INSURANCE PLAN.—‘‘(A) IN GENERAL.—The Corporation shall conduct activities or enter into contracts to carry out research and development to develop a whole farm risk management insurance plan, with a liability limitation of $1,500,000, that allows a diversified crop or livestock producer the option to qualify for an indemnity if actual  gross farm revenue is below 85 percent of the average gross farm revenue or the expected gross farm revenue that can reasonably be expected of the producer.

(B) ELIGIBLE PRODUCERS.—The Corporation shall permit producers (including direct-to-consumer marketers, and producers servicing local and regional and farm identity preserved markets) who produce multiple agricultural commodities, including specialty crops,industrial crops, livestock, and aquaculture products, to participate in the plan in lieu of any other plan under this subtitle.

‘‘(C) DIVERSIFICATION.—The Corporation may provide diversification-based additional coverage payment rates, premium discounts, or other enhanced benefits in recognition of the risk management benefits of crop and livestock diversification strategies for producers that grow multiple crops or that may have income from the production of livestock that uses a crop grown on the farm.

‘(D) MARKET READINESS.—The Corporation may include coverage for the value of any packing, packaging, or any other similar on farm activity the Corporation determines to be the minimum required in order to remove the  commodity from the field.

‘(E) REPORT.—Not later than 2 years after the date of enactment of this paragraph,the corporation shall submit to the Committee on Agriculture of the House of Representatives and the Committee on Agriculture, Nutrition,and Forestry of the Senate a report that describes the results and feasibility of the research and development conducted under this paragraph, including an analysis of potential adverse market distortions.’’.


TK:  Including producers of specialty crops into the mix for the "whole farm diversified risk management insurance plan" is potentially  a watershed development. How much produce industry excitement/enthusiasm for this type of approach is unknown; association leaders have been very guarded about revenue crop insurance because of the threat it presents for market-distorting signals. The merits and demerits of the plan must be a matter of some internal debate by members of the Specialty Crops Farm Bill Alliance. Even if the farm bill passes this year, it appears from the language that this insurance product may be years away from implementation. Even so,  produce associations must take measure of this proposal and provide their up or down views soon.

 

 

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