Farming Magazine - September, 2013


New England Farmers Union: Whole-Farm Insurance

A better fit for New England
By Sarah Andrysiak

It was late June, a very busy time at his diversified farm in New Hampshire, but Roger Noonan packed his bags and headed to Kansas City, Kan., to represent the National Farmers Union in a roundtable discussion with other agriculture leaders on whole-farm insurance. The USDA's Risk Management Agency (RMA) was involved in the meeting. As president of the New England Farmers Union (NEFU), Noonan already had a full plate of advocacy work waiting for him at home, with the farm bill under consideration on the floors of the Senate and the House of Representatives. But as a vegetable farmer, he understands that the current crop insurance options for New England producers - diversified farms, organic farms, direct-to-market farms - are woefully inadequate.

"Lack of crop insurance is a real issue for New England farmers," Noonan said. "There just aren't good options, and I want to ensure that NEFU does everything we can to fix the situation." As federal farm policy is moving away from direct payment subsidies and ad hoc disaster assistance programs to mitigate farm risk, it's moving toward increasing federal crop insurance. In that process, it is important that the United States Department of Agriculture (USDA) develop programs that meet the needs of all farmers.

The RMA, through the Federal Crop Insurance Corp., provides crop insurance to producers. The vast majority is for commodity crops, and the policies are commodity-specific. These policies insure against falling prices or lower-than-expected yields for a particular crop. They are not necessarily suited to New England's diversified farms. Organic producers, meanwhile, pay a 5 percent surcharge on top of their premium, because the RMA classifies organic farming as higher-risk. Adding insult to injury for organic producers, the loss payouts are based on conventional rather than organic prices. Diversified dairy farms are also left out of the mix.

However, in recent years, the RMA has developed insurance policies that better suit New England. These "whole-farm insurance" products are based on farm revenue, rather than production levels for a particular crop. They insure against a loss of revenue because of natural disasters, low market prices or both.

Adjusted Gross Revenue-Lite (AGR-Lite) is the whole-farm insurance product most used in New England. It calculates insurable farm revenue based on seven years of operating history. It covers income from almost all crops and agricultural commodities, including greenhouse production, animals and animal products. However, extra revenue from value-added activities is not eligible.

Because it insures revenue, AGR-Lite is particularly attractive for producers of premium-priced products or farms who sell directly to consumers. Producers can insure the revenues earned from the sale of their high-value or organic products, or from direct sales, because the price premiums are reflected in prior years' income. It seems that the product is well-suited to our diversified farms.

However, the operating history requirement represents a barrier to participation for beginning farmers and ranchers, putting them at a further disadvantage.

So is AGR-Lite a good risk management strategy? With relatively low coverage and a high deductible, AGR-Lite is unlikely to pay out for most of the crop losses suffered by a diversified farmer. When farmers incur losses, they are typically a field or two, or a crop or two. Thus, diversified farmers may not receive any benefit from AGR-Lite.

After all, diversification is, in itself, a risk management strategy: By growing a variety of crops, producers can often make up for one unsuccessful crop. A survey conducted by University of Vermont Extension following Tropical Storm Irene ("Risk Management Strategies in Use on Vermont Farms," 2011) found that only 5 percent of farm respondents identified crop insurance as their top risk management strategy. Diversification was ranked first by 27 percent of farms, followed by nonfarm income (12 percent). When identifying all strategies to manage crop production risk, respondents most commonly cited nonfarm income (51 percent), diversification (44 percent) and pest management plans (44 percent). The use of crop insurance was the sixth most utilized out of 10 options.

AGR-Lite may be valuable as insurance for whole-farm catastrophic loss, but even here there are issues. The extensive record-keeping required on the part of the farmer, along with high premiums and low coverage, makes the program less than successful in its current form.

Another option for specialty crop growers is the Noninsured Crop Disaster Assistance Program available through the USDA Farm Service Agency. This program can provide a catastrophic level of crop-insurance-like protection. However, payments have often been based on low crop prices. The program appears to be administered differently across counties. For example, some allow coverage of multiple plantings in one year while others do not, and it's not attractive to organic producers. A price premium for organics has not been established for many crops, so organic crops often receive payout at the same rate as conventional crops.

Organic producers have been advocating for more appropriate insurance products, such as better whole-farm insurance. U.S. Secretary of Agriculture Tom Vilsack has announced that the RMA will increase organic price coverage options for organic producers in 2013 and provide even more options in 2014. Additionally, beginning in 2014, the RMA will remove the 5 percent surcharge on organic crop insurance policies.

Both the House Agriculture Committee and the Senate approved bills that call on the RMA to develop better whole-farm insurance products. In recognition of the risk reduction associated with crop and livestock diversification strategies, the bills also allow the RMA to provide enhanced product features (such as premium discounts) to producers who grow multiple crops or have income from livestock that use a farm-grown crop.

As the RMA begins to work on this, you can be sure that NEFU will be at the table, advocating for your needs. If you want to provide input, you can email Noonan at Please become a member of NEFU at Your membership supports our work to advocate for whole-farm insurance and other products important for New England producers.

Sarah Andrysiak is a communications consultant for New England Farmers Union.