Is Whole Farm Revenue Protection Right for You?


Baby Root Farm at The Abundant Table, Camarillo, Ventura County, California. Photo by Stella Kalinina.

Is Whole Farm Revenue Protection right for you? We asked and young farmers answered.

There aren’t many crop insurance programs that truly meet the needs of many of the young farmers in our network. In fact, only 5% of young farm owners who responded to our 2017 survey reported using the Risk Management Agency’s (RMA) crop insurance and only 7% used FSA’s Noninsured Crop Disaster Assistance Program (NAP).* Yet, here at the National Young Farmers Coalition, we’d love to see risk protection programs created with your farms and ranches in mind.

The products that come the closest to being useful to small, diversified, direct-market, pasture-raised, specialty, or higher value crop producers are the Pasture, Rangeland, Forage and the Whole Farm Revenue Protection (WFRP). We’ve spent time over the last few years talking to farmers about WFRP, trying to find farmers who use WFRP who fit the descriptions above (smaller, diversified, direct-market, and/or higher value producers), and trying to understand exactly where this product works and where it needs to be changed to meet the needs of those farmers.

A Note about COVID-19: WFRP, like other types of crop insurance, protects farms from “natural disasters,” but not from revenue losses related to marketing losses unrelated to weather. You can read more about RMA’s response to COVID-19 here.

 

What kinds of farms and ranches does WFRP work for?

Farmers and ranchers who have had fairly steady income over the last five years. WFRP allows farmers to buy revenue protection based on an average income over a farm’s last five years. If your income has been steady and you expect to sell a similar amount in the coming year as the last five, you can buy coverage that is a percentage of your expected income. If you’ve spent some of the last five years scaling up, those lower income years will be incorporated into the insurable average and you’ll only be able to insure part of your revenue. Beginning farmers only need to prove three years of income, but their coverage is still based on the average. RMA has made improvements to WFRP so that farms can drop one bad year of their revenue history, which can also be quite helpful.

Farmers and ranchers who file taxes early. The deadline to buy WFRP is March 15th in most counties for most crops. Because that’s before most farmers will have their previous year’s taxes filed, the most previous year’s taxes don’t count toward the average. This is yet another reason that this type of protection works best for farmers who have had steady sales for a few years. If a farmer files their taxes early, they may be able to use the most recent year as part of their average.

Farmers and ranchers facing unpredictable weather. All farmers are facing unpredictable weather as the impacts of climate change intensify. In some regions, this challenge is even riskier as farmers may battle wildfires, drought, early or late frosts, hail, and heavy rain, all in the same season. WFRP needs to be linked to a weather event.

Farmers and ranchers with good recordkeeping. WFRP requires that a farm can show what they’ve earned in previous years and what they plan to earn from each crop in the coming year. Farmers need to be able to clearly document these expected earnings and to document the price that they receive for their crops. If you have uninsurable income, such as from on-farm events, value added enterprises, custom hire, or off-farm income, you’ll need to be able to separate those easily from your crop sales. WFRP is also based on the Schedule F tax form, so farms will need to use that form to qualify.

Value Added farms that buy from themselves. For farms like a grass-fed artisanal dairy operation, there are ways to break the business into two entities and have the cheesemaking side buy from the dairy side. That separation can allow some coverage for the dairy.

 

What changes are necessary to reach farmers outside of the traditional RMA network?

A farmer-facing online tool. Because of the odd public/private nature of crop insurance, there has long been a push to keep price calculators behind paywalls. In that way, insurance salespeople were able to provide a service that farmers couldn’t get elsewhere. But this is not the age of seeking information from salespeople. Thankfully, RMA provides links to their handbooks online as well as an online calculator. Unfortunately, none of these tools are user-friendly, farmer-facing, or easy to digest. In walking through this tool with many farmers, there were frequently moments of confusion and frustration. Other federal programs have been plagued by discrimination, and RMA’s unique public/private system distances the crop insurance agents from the type of oversight and reporting we see at other USDA agencies, such as FSA. Providing farmers with the power to understand what type of coverage, subsidizes, and prices to expect is not a panacea for discrimination, but it is a step toward clarity and shifting power.

Easier access to user-friendly materials or tools can also create pathways for all farmers and ranchers—farmers of color, in particular—to understand their eligibility.

Improved clarity around CSA models. In its original and most idyllic iteration, the CSA model was a way for a farm to manage and share risk.* As the model has proliferated, been adapted, and, perhaps, reached capacity in some places, farmers feel more pressure to ensure that their CSA shares are very strong in order to retain customers.

Some insurance salespeople have sold WFRP polices to direct-market farmers and removed the farm’s CSA income because they considered it uninsurable. This seems logical since that income is often pre-paid and therefore would not be lost due to a weather event. However, other WFRP salespeople have suggested that a farm that experiences dramatic losses due to weather and cannot fill their CSA shares is likely to lose members the following year and thus interpreted this as a potentially insurable loss. The WFRP pilot program handbook does not mention CSA farms or how an agent should write those policies. Further clarity is needed.

On-ramp for farmers or ranchers. We have recommended that USDA use NAP as an on-ramp for WFRP by aligning the paperwork and requirements. Some of those methods are outlined in a report we co-wrote. We will continue to explore other methods of applying this program to farmers who are left out of other crop insurance programs.

Generally, we believe that this product has real potential to work for some farmers in our network, especially with a few tweaks and some clarity. We want to hear from farmers about how this program has or hasn’t worked for them. If you’re interested in learning more about it and seeing how or if it could work for your farm, please read the blog posts linked above and contact cara@youngfarmers.org.

 

*75% of survey respondents were first generation farmers, but there’s a very different story if you look at multi-generation farmers. Many of the multi-generation farmers who responded to the survey seemed to be much more familiar with the kinds of programs designed by FSA to support commodity crop growers—17% of total respondents use these programs.

*something this author feels and felt passionately about, while acknowledging that times might have changed a little.

Cornell University delivers crop insurance education in New York State in partnership with the USDA Risk Management Agency. This material is funded in partnership with USDA Risk Management Agency, under award number RM17RMETS524020.

 

 

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