Crop Insurance Helps Manage Risk

Importance of Crop Insurance

By Jessica Theisman, Associate Editor

Crop insurance is an important risk management tool for California farmers. California Ag Today recently spoke with Mickey Paggi about the topic. He’s an agriculture policy analyst for National Crop Insurance Services, a nonprofit trade association based in Kansas.

There are certain deadlines for getting enrolled in the programs.

“The force of the crop insurance agents that are on the ground in the areas where these crops are grown is really valuable, and they can work individually with the producer to make them aware of what they have to do when they have to do it,” Paggi said.

These agents work with the farmers and available programs to find the best fit for their operation. They cover northern, central, and southern California.

Paggi said that a good place to start if you’re looking for more information about crop insurance is the USDA Risk Management Agency. The RMA looks to increase the availability and effectiveness of federal crop insurance, which is to be used as a risk management tool.

“RMA’s vision is to secure the future of agriculture by providing world-class management tools to rural America. This website can be found at rma.udsa.gov,” he said.

“I would start … with the USDA RMA website because it actually has a link to the individual commodity coverage, and within those fact sheets, they actually have a listing of crop insurance agents within your commodity,” Paggi explained.

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Importance of Recall Insurance

Brokers Can help Growers Minimize Losses

By Jessica Theisman, Associate Editor

California Ag Today recently met with Caitlin McGrath, the national product recall and contamination risk consultant with Lockton Insurance Brokers. Insurance is needed for California growers in case of recalls and contaminations. Lockton feels the most important part of finding the right recall insurance is the consulting element.

Caitlin McGrath, Lockton Insurance Brokers

“Now, what I think is the most important part of insurance coverage is the consulting element,” McGrath said.

These are consulting services that are available if you are a recall or contamination insurance purchaser that allows you access to specialists during and before incidents. One of the struggles that McGrath is noticing is that the quality assurance folks she speaks to are not insurance buyers.

“They are the ones finding out the information about all these services that are available, and it’s not always getting down into the field,” she said.

Preparation in the case of recalls or contamination is important.

“Fan Favorite, as I call them, do a lot of really great work on behalf of a lot of our clients,” McGrath said.

Some of that work can be Hazard Analysis Critical Control Point (HACCP) training and mock recalls. Financial costs are rising due to the increasing number of recalls.

“We believe that that’s the effect of [the Federal Information Security Management Act or] FISMA. They are getting larger in financial cost, and that has to do with the amount that is being recalled and the implications in terms of publicity,” McGrath said.

Recall plans need to cover all of the elements, not just mock recalls.

“The internal message is just as important and knowing who is going to handle what within an organization. Planning and practicing that is really critical to help mitigate if there is a problem,” McGrath explained.

“Having directives around the use of social media as an employee of an organization is very important, but just one department not talking to another is going to have a huge part in this,” she said.

Buying product contamination insurance is expensive, but necessary. Since McGrath started, the number of brokers has nearly tripled.

“I think that not having insurance is now the outlier, so I think the majority of folks are still buying,” she said.

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Greater Crop Insurance Protection Now Offered for Fruit, Vegetable and Specialty Crop Growers

Greater crop insurance protection is now available for crops that traditionally have been ineligible for federal crop insurance. New provisions under Noninsured Crop Disaster Assistance Program will provide greater coverage for losses when natural disasters affect specialty crops such as vegetables, fruits, mushrooms, floriculture, ornamental nursery, aquaculture, turf grass, ginseng, honey, syrup and energy crops.

“For years, commodity crop farmers have had the ability to purchase insurance to keep their crops protected, and it only makes sense that fruit and vegetable, and other specialty crop growers, should be able to purchase similar levels of protection,” said Agriculture Secretary Tom Vilsack.

Previously, the program offered coverage at 55 percent of the average market price for crop losses that exceed 50 percent of expected production. Producers can now choose higher levels of crop insurance coverage, up to 65 percent of their expected production at 100 percent of the average market price.

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New Farm Bill Resource Now Available to Help Farmers and Food Advocates Navigate USDA Programs

By: Monique Bienvenue; Cal Ag Today Social Media Manager/Reporter

The National Sustainable Agriculture Coalition (NSAC) published a comprehensive digital guide to the key federal farm and food programs that support sustainable farm and food systems.  The Grassroots Guide to Federal Farm and Food Programs will help farmers and non-profit organizations navigate the numerous farm bill and other U.S. Department of Agriculture programs that have been championed by NSAC.

“The Grassroots Guide will be a valuable resource for farmers as they look for opportunities and financing to grow their farms and help build a more sustainable farming system,” says Juli Obudzinski, Senior Policy Specialist with the National Sustainable Agriculture Coalition.  “The Guide is specifically targeted to the farming community and distills very technical federal policies and programs in a way that is accessible to farmers and consumers alike.”

The Grassroots Guide includes up-to-date information on conservation, credit, rural development, research, and food programs authorized in the farm bill and other pieces of federal legislation – including recent policy changes made in the 2014 Farm Bill.

This new resource details over 40 federal food and farm programs that provide funding to farmers and organizations for conservation assistance, farm real estate and operating loans, outreach to minority and veteran farmers, beginning farmer training programs, value-added enterprises, support for farmers markets and farm to school programs, and more.  The Guide is organized into the following topic areas:

  • Beginning and Socially Disadvantaged Farmers
  • Conservation and Environment
  • Credit and Crop Insurance
  • Food Safety
  • Local and Regional Food Systems
  • Organic Production
  • Renewable Energy
  • Rural Development
  • Sustainable and Organic Research

For each program included, the Guide provides plain-language explanations of how the program works, who can utilize the program, examples of the program in action, step-by-step application instructions, additional resources, and a brief overview of the program’s history – including legislative and administrative changes and historical funding levels.

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New Pilot Program Offers Coverage for Fruits and Vegetables, Organic and Diversified Farms

Agriculture Secretary Tom Vilsack today announced a new risk management option that will be available for fruit and vegetable growers and producers with diversified farms.

The policy, called Whole-Farm Revenue Protection, will provide flexible coverage options for specialty crop, organic and diversified crop producers. The program will be implemented in counties across the country and will expand in availability over the next several years.

Whole-Farm insurance allows farmers to insure all crops on their farm at once, rather than insuring commodity by commodity.

Traditionally, many fruit and vegetable crops have not had crop insurance programs designed for them—making it less attractive for a farmer that primarily planted a commodity crop like wheat or corn to use another part of his or her land for growing fruits and vegetables or other specialty crops.

This allows farmers greater flexibility to make planting decisions on their land.

“Crop insurance has been the linchpin of the farm safety net for years and continues to grow as the single most important factor in protecting producers of all sizes from the effects of unpredictable weather,” said Vilsack.

“Providing farmers the option to insure their whole farm at once gives farmers more flexibility, promotes crop diversity, and helps support the production of healthy fruits and vegetables. More flexibility also empowers farmers and ranchers to make a broader range of decisions with their land, helping them succeed and strengthening our agriculture economy.”

The 2014 Farm Bill requires a whole-farm crop insurance policy option, and paves the way for the Risk Management Agency (RMA) to make it broadly available to specialty crop, organic, and diversified growers.

The Federal Crop Insurance Corporation Board of Directors (FCIC Board) approved the Whole-Farm Revenue Protection pilot policy for RMA to offer it through the federal crop insurance program in 2015.

USDA has taken many steps to provide effective insurance coverage for diversified, organic and specialty crops. The whole-farm crop insurance policy provides flexibility to meet the needs of specialty crop growers, organic producers and those with diversified farms, and who have farm production and revenue history, including five years of historic farm tax records. This policy is also part of USDA’s commitment to small and mid-sized producers managing diversified operations.

USDA has been strengthening crop insurance by providing more risk management options for farmers and ranchers.

The policy offers coverage levels from 50 to 85 percent; recognizes farm diversification through qualification for the highest coverage levels along with premium rate discounts for multiple crop diversification.

The Market Readiness Feature, as outlined in the Farm Bill, simplifies insurance coverage for producers under the Whole-Farm Revenue Protection pilot policy by allowing the costs such as washing, trimming, and packaging to be left in the insured revenue instead of having to adjust those amounts out of the insured amount.

The new Whole-Farm Revenue Protection policy combines Adjusted Gross Revenue (AGR) and AGR-Lite along with several improvements to target diversified farms and farms selling two to five commodities, including specialty crops to wholesale markets.

The new policy is also designed to meet the risk management needs of diversified crop or livestock producers including those growing specialty crops and/or selling to local and regional markets, farm identity preserved markets, or direct markets.

As part of the pilot, Whole-Farm Revenue Protection will be available where AGR and AGR-Lite are currently offered, and will expand to other counties as data are available for underwriting and actuarial ratemaking.

RMA will release information on the policy later this summer when it becomes available. This information will be announced on the RMA website at www.rma.usda.gov.

According to the CDFA, California’s agricultural abundance includes more than 400 commodities. The state produces nearly half of US-grown fruits, nuts and vegetables. Across the nation, US consumers regularly purchase several crops produced solely in California.

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Drought Assistance Open House for Farmers, Ranchers and Farmworkers

As California faces one of the driest years ever recorded, the California Department of Food and Agriculture and the U.S. Department of Agriculture will be holding an informational session on drought resources for farmers, ranchers and farmworkers in Cloverdale.

This session will provide information on a variety of state and federal government programs designed to assist farmers with water conservation, crop insurance, and other on-farm management tools. Information on farmworker assistance programs will also be available.

While deadlines for some federal assistance programs have already passed for the 2014 crop year, there are many programs still available to those involved in agriculture.

Cloverdale event information:

March 17, 2014 – 4:30 p.m. to 7:00 p.m. (Cloverdale/Sonoma County) – Cloverdale Citrus Fairgrounds 

Several state/federal government entities will be represented at this event, including: USDA Farm Service Agency; USDA Risk Management Agency; USDA Natural Resources Conservation Service; USDA Rural Development; the California Employment Development Department; and other community resources.

CDFA continues to support California’s drought response. The department has developed a web page as an information clearinghouse on assistance programs for farmers, ranchers and farmworkers; will continue to work with California food banks to address drought-related impacts; and is working with the University of California to develop a real-time assessment of drought impacts in farming and ranching communities.

Additionally, CDFA continues to work as part of Governor Brown’s Drought Task Force to coordinate drought response efforts with other state agencies.

For more information concerning drought resources for California farmers, ranchers, and farmworkers, please visit – www.cdfa.ca.gov/drought

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TULARE CITRUS INCURS FREEZE DAMAGE

Tulare Citrus Grower Evaluates Freeze Damage

 

Ed Chambers is a citrus grower whose main acreage is located down by Richgrove in Tulare County.

Chambers grows “the whole gamut of citrus” on 650 acres, including murcotts, tangos, seedless Valencias, Satsumas, Navels, regular oranges, lemons, grapefruit, and limes.

Chambers assessed damage from the early December freeze, resulting from the temperature drop and short water supplies. “Of the 340 acres in the Richgrove area, I have 80 acres of late navels and they are hurt bad. They will probably go to juice; I think they may be a total loss.”

“The seedless Valencias are the same way, they were hurt pretty badly, but we have to wait and see about them,” said Chambers. ‘The same is true for regular navels, the old line navels and the Fisher navels, there was a lot of damage, but we don’t know to what extent yet.”

Chambers continued, “We have water and wind machines, but the temperature was down around 25 or 26 degrees (F) for too many hours over too many consecutive nights, and the fruit is not hardy enough to withstand such temperatures.”

“Wind machines were started 30 degrees or below and they went all night, but they bring down temperatures only a few degrees.” Chambers remarked, the low temperatures are hard to combat; if the wind machines don’t bring you up above 27 degrees, you are still hurting all the time.”

“The mercots and tangoes are thin-skinned,” Chambers said. “We did manage to keep the temperatures up a little more in those, and I think we will be able to salvage them. There is damage, but it’s not so that you can’t pack fruit.”

Chambers explained, “We had a really light crop on the late fruit, generally found in the middle of the block. I think when you have light crops, there isn’t enough fruit to keep everything else warm, and so they get cold more quickly.”

“I went into the citrus business for myself in 1967,” Chambers recalled. “In 1990, I spent half the night sobbing, looking at the trees facing temperatures of 16 or 17 degrees. It was the worst citrus freeze in history. There were spots in the Valley that were zero degrees. It was devastating.”

Chambers recalled, “1967 was a nasty freeze too. There were some freezes in the ‘70’s too, but back then we didn’t have any insurance.”

“Insurance eases the pain; in times like these, you don’t make any money—only about 2/3 of your cost of production,” Chambers commented. “ Some growers did not insure enough. The big insurance, for the most part, keeps you from going broke; but it is expensive. If you buy the big insurance, you can emerge with your costs covered, and maybe just a little more.”

“We’ll get through it,” declared Chambers. “We’ve gotten through every time before this. While this time was not as bad as ’90, I think it was worse than ’07 or ’98, a pretty tough one too.”

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