Whole Farm Crop Insurance Now Available to North Dakota Producers

December 31, 2015 09:28 AM
North Dakota wheat ND

Officials think education could increase interest in a new type of crop insurance that also might give farmers who diversify a boost.

Whole farm crop insurance became available in North Dakota this past growing season. No policies were sold, but officials in the state Department of Agriculture think more producers might find it useful as they learn more about it.

"I think this is a wonderful tool," said Agriculture Commissioner Doug Goehring, adding that producers may not have had time to look at the program as they have been scrutinizing the new Farm Bill and trying to understand Agriculture Risk Coverage and Price Loss Coverage, along with changes in multi-peril coverage.

"Everybody had their plate full to learn all that," he told The Bismarck Tribune.

Now, whole farm crop insurance will be offered nationwide for the 2016 growing season and officials, including those at the Agriculture Department, are hosting training sessions for insurance agents.

This insurance is different in that it offers revenue protection for the whole farm to producers who are raising at least three commodities, which can include livestock.

The U.S. Department of Agriculture Risk Management Agency said the purpose of the insurance is to encourage diversification. Premiums are discounted the more diversified a producer is. There are 50 commodities produced in North Dakota, 40 of which are plant based, which makes the state a prime candidate for the insurance coverage.

In many cases, when it comes to specialty crops or organic crops, there is little to no insurance protection, Goehring said. Those with livestock and specialty crops, like dry beans, peas and lentils, can loop those commodities in with coverage for standard crops, such as corn and soybeans.

The whole farm insurance works by insuring revenue rather than yield.

"Before, we were always insuring units or bushels," Goehring said, though whole farm can be used in conjunction with multi-peril coverage at a discounted premium.

Wade Haselen, an agent with Cottingham Insurance in Washburn, said it is more about risk.

"In my area, I think we're too diverse in the crops we grow," he said. "It will never be popular in my area. No one wants to take that risk."

Though RMA says whole farm insurance is for diversified producers, Haselen said there gets to be a problem when considering late and early season crops. If a farmer's early season crops do better than their late season ones, they are paid nothing on their late season loss. Most insure crop by crop, instead.

With prices down, many of his clients are choosing to stay with what they have been doing, according to Haselen.

As markets continue to slip, affecting the bottom line, or if expenses go up unexpectedly, whole farm coverage kicks in. Goehring said some things, such as depreciation, also may not work against farmers with this product because it is based on five-year average revenue reported on the Schedule F tax form.

Farm size doesn't matter, and a producer using whole farm may have smaller operations, such as 40 acres of specialty crops. There's also a market readiness feature, covering the cost for those who process their crops to be sold at farmers markets, according to Goehring.

"It isn't going to be for every farmer, but it will work for quite a few if they choose to use it," he said.

North Dakota's neighbors to the west have been buying into the program. Montana had 58 policies in 2015, Washington had 571, Idaho had 132 and Oregon had 98. The policy was particularly popular with apple growers and other orchards, and education was driven by insurance companies who saw the benefit it could offer their clients.

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