In late December 2019, USDA’s Risk Management Agency (RMA) announced a new crop insurance option for hemp growers in select counties of 21 states in 2020. The pilot insurance program will provide Actual Production History (APH) coverage under 508(h) Multi-Peril Crop Insurance (MPCI) for eligible producers in certain counties in:
- New Mexico
- New York
- North Carolina
- North Dakota
The MPCI coverage is for hemp grown for fiber, grain or CBD oil for the 2020 crop year. It is in addition to the Whole-Farm Revenue Protection coverage available to hemp growers announced earlier this year.
The 2018 Farm Bill amended the Controlled Substances Act to address how industrial hemp is to be defined and regulated at the federal level, and those modifications cleared the way for the Federal Crop Insurance Corporation to offer policies for it. The Farm Bill defines hemp as containing 0.3 percent or less tetrahydrocannabinol (THC) on a dry-weight basis.
To be eligible for the MPCI pilot program, among other requirements, a hemp producer must comply with applicable state, tribal or federal regulations for hemp production, have at least one year of history producing the crop, and have a contract for the sale of the insured hemp. Producers also must be a part of a Section 7606 state or university research pilot, as authorized by the 2014 Farm Bill, or be licensed under a state, tribal or federal program approved under the USDA Agricultural Marketing Service (AMS) interim final rule issued in October 2019. The MPCI provisions state that hemp having THC above the federal statutory compliance level will not constitute an insurable cause of loss. Additionally, hemp will not qualify for replant payments or prevented plant payments under MPCI.
In addition, beginning with the 2021 crop year, hemp will be insurable under the Nursery crop insurance program and the Nursery Value Select pilot crop insurance program. Under both programs, hemp will be insurable if grown in containers and in accordance with federal regulations, any applicable state or tribal laws, and terms of the crop insurance policy.
More information on the MPCI pilot will be available in 2020. Crop insurance is sold and delivered solely through private crop insurance agents.
Whole Farm Revenue Protection
While all states have the ability to insure Hemp under Whole Farm Revenue Protection, only select states—including Alabama—will be able to insure hemp under the new MPCI policy.
WFRP provides a risk management safety net for all commodities on the farm under one insurance policy. It is available in all counties nationwide. This insurance plan is tailored for any farm, and can cover up to $8.5 million in insured revenue. This includes farms with specialty or organic commodities (both crops and livestock), and those marketing to local, regional, specialty or direct markets.
- Forest products
- Animals for sport, show or pets
Beginning farmers—those that have been farming for more than 10 years—are eligible to apply and can receive a premium subsidy. However, three years of farm tax returns are necessary to apply. WFRP can be paired with other crop insurance policies but they must have more than catastrophic level coverage, as well as receive a premium subsidy.
WFRP Hemp Coverage
There are some requirements to apply as a hemp producer. Hemp farms must be in compliance with all state and federal laws. The crop must be grown under a marketing contract. “Hot” hemp will not be an insurable loss.
As stated in the overall WFRP guidelines, a grower must have been farming for three years—with tax returns—to apply.
Until the required three years of returns are available, growers can seek assistance through the Non-insured Crop Disaster Assistance Program.
The application period for WFRP coverage closes February 28. Contact an RMA agent, or Alabama Cooperative Extension System Agribusiness agent, Kevin Burkett for more information about Whole Farm Revenue Protection.