New Farm Bill alters Whole Farm Revenue Protection
WASHINGTON — The passing of the 2018 Farm Bill has been touted as a success by many agricultural organizations, including the American Farm Bureau Federation.
After the AFBF Board of Director’s endorsement of the Farm Bill in December, AFBF President Zippy Duvall in a press release said, “This 2018 Farm Bill is a complete package — one that will serve all Americans. Farm and ranch families in particular will find a good degree of risk management support they need to help them weather the prolonged downturn in the agricultural economy that many of us are facing.”
Risk management was among AFBF’s top priorities, centered mostly around crop insurance programs.
When discussions of crop insurance come up, many people think of protection programs that support the major commodities like corn, soybeans and wheat.
But USDA provides policies for more than 100 crops through the Risk Management Agency and Farm Service Agency.
And the 2018 Agriculture Improvement Act, signed into law in December, brings several promising improvements for beginning farmers and diversified farm operations, including key changes to the Whole Far Revenue Protection program.
Whole Farm Revenue Protection
Whole Farm Revenue Protection is a relatively new national crop insurance program, implemented in 2014.
It was intended to help farms that weren’t traditionally covered by crop insurance programs including organic farmers, local food producers and livestock producers.
Generally, a single commodity insurance protection is not a good fit for these farms, which may not produce enough to make the insurance premiums worth the expense.
Instead, WFRP provides a safety net for all commodities grown on a farm under a single insurance policy.
Whereas most crop insurance policies are based on yield, WFRP is based on revenue.
The program is designed to ensure that a farm earns a certain amount of revenue and covers the income that the farmer is expecting to earn off his or her crop.
WFRP protects the farm against uncontrollable factors like weather, pests and market prices.
If a farmer doesn’t earn the projected revenue, he or she may receive an indemnity payment to cover the shortfall.
A farmer can insure all commodities produced on the farm including animals and animal products.
But the WFRP does not provide coverage for timber, forest, and forest products or animals for sport, show or pets.
Several improvements were made to WFRP in the 2018 Farm Bill including new definitions for beginning farmers, who may qualify for an additional ten percent premium subsidy on their WFRP policy.
In the past, new and beginning farmers were defined as individuals who have been farming for five or fewer years. Now, they can qualify for up to 10 years.
The cost of WFRP depends on the farm’s historical revenue, the projected revenue, the types of crops and whether or not the individual qualifies as a beginning farmer.
Diversified farms are already taking steps to mitigate exposure to risk and as a result can qualify for additional coverage through WFRP.
If a farm produces only one or two commodities, it can insure up to 75 percent of your projected revenue.
On the other hand, farms producing three or more qualified commodities may insure up to 85 percent of the farm’s projected revenue.
Farms with two or more commodities may receive a whole-farm premium subsidy, while single commodity farms will only receive the basic level of premium subsidy.
Beginning farmers may qualify for an additional ten percent premium subsidy.
Like any insurance, WFRP is there “just in case.” The hope is that you never have to use it.
But if people need it, it’s there.
The way many young farmers mitigate the risk is by having an off-farm source of income.
But what if you don’t have that safety net? Whole Farm Revenue Protection is a way to guarantee your income.
Those interested can learn more about Whole Farm Revenue Protection on the USDA’s Risk Management Agency’s website: rma.usda.gov/policies/wfrp.html
To purchase WFRP or other crop insurance products, you must go through a crop insurance agent.
To find a list, visit https://prodwebnlb.rma.usda.gov/apps/AgentLocator/#/