Finding the right crop insurance policy for your farm can be a challenge. If your goal is to protect revenue instead of compensating for extreme weather events, consider whole-farm revenue protection insurance.
“Whole farm is something that reflects the entirety of the farm operation,” explains John Newton, chief economist at the American Farm Bureau Federation (AFBF).
Unlike traditional crop insurance, whole farm provides a risk management safety net for all commodities on the farm under one insurance policy. For example, if you grow corn, soybeans and wheat, instead of having individual policies for each crop, you’d have one policy for your whole farm (hence the name).
This insurance plan can be tailored for farms with specialty or organic commodities (both crops and live- stock), or those marketing to local, regional, farm-identity preserved or direct markets, according to USDA’s Risk Management Agency.
Whole farm allows you to protect crops or products that don’t have traditional market prices, Newton says. For example, fruits and vegetables aren’t publicly traded, which makes it difficult to determine the insurance price. “With whole farm you can cover some of those commodities and provide risk management for those farmers,” he says.
Coverage is based on a producer’s tax returns, which allows it to accurately represent revenue, and the insurance period is based on the farm’s tax year. Producers can choose coverage levels ranging from 50% to 85%. The maximum liability cover- age is $8.5 million, according to USDA. That means a farm or ranch with as much as $10 million in approved revenue could apply.
Whole farm is subsidized through the farm bill. But, crop insurance is considered permanent law, which means funding is not contingent on the farm bill.
Created with the 2014 farm bill, whole farm is available for all counties in all states. A big benefit of this insurance option is its status as a pilot program, Newton says. That means there’s still an opportunity to provide USDA with feedback.
For instance, AFBF has already suggested some improvements on how to average the historical revenue and the possibility to forecast revenue growth, Newton says.
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