USDA Expands Crop Insurance Options for Organic Farmers

In mid-February, federal agriculture officials announced an expansion of crop insurance options to better serve farmers transitioning to certified organic production.

Agriculture Secretary Tom Vilsack said the expanded coverage is in response to the increasing market demand for certified organic products.

“Consumer demand for organic products continues to increase and the industry has experienced remarkable growth, representing more than $39 billion in U.S. retail sales,” said Vilsack.

Farmers transitioning to certified organic production may now use the Contract Price Addendum to cover their crops at a higher price than traditional crops, according to the announcement by the U.S. Department of Agriculture’s (USDA). The Contract Price Addendum allows farmers transitioning to organic production to insure certain crops at their contract price rather than the published USDA Risk Management Agency (RMA) price election.

The USDA noted that certified organic products often return higher profits for farmers, however the transition from conventional to certified organic production can take up to three years.

Previously, producers of transitional crops were only able to insure them at the same price as a conventional producer.

The USDA offered this example: Under the Contract Price Addendum, a producer in Nebraska can use a contract price for millet up to a maximum of $7.34 per bushel (transitional) or $8.44 (certified organic production), as opposed to using the existing RMA price elections of $3.67 (transitional) or $4.22 (certified organic production).

RMA has also expanded organic premium price elections to 57 crops, up from four in 2011, providing organic producers the option to protect their 2016 crops closer to the market value, the agency said.

Barley, rice and wheat are among the crops for which organic price elections have been added. New additions for 2017 will include grapefruit, lemons and oranges.

USDA reported that U.S. certified and exempt organic farms sold a total of $5.5 billion in organic products in 2014, up 72 percent since 2008. The U.S. retail market for organic products is valued at more than $39 billion, and in 2014 there were 19,474 certified USDA organic operations in the United States, representing nearly a 250 percent increase since 2002. Worldwide, in 2014 there were nearly 28,000 certified organic operations in more than 120 different countries.

A list of commodities eligible for the Contract Price addendum is available online.

Topics USA Agribusiness