1. Thaddeus McCamant Central Lakes College Staples, MN
Government Sponsored Insurance Programs for Specialty Crop Producers 2: Whole Farm Revenue Protection
Thaddeus McCamant
Central Lakes College
Staples, MN

2. What does Whole Farm Revenue Protection mean?
Insuring the revenue instead of the crop
Losses can be from:
Natural disasters
Drop in price
Specifically designed to benefit specialty crop producers
Especially farms with two or more crops

3. Comparison of WFRP and NAP
NAP WFRP
Insures Yield Revenue
Measurements Yield/acre Dollars/farm
Coverage % %
Records Yields Yields and expenses
Application deadline By crop Determined by tax deadline
Administered by FSA Independent insurance agent

4. WFRP and AGR- Lite
WFRP was created out of the Agr-Lite insurance following the 2014 Farm bill.
Improvements over AGR Lite:
Higher premium subsidies
A premium discount for increased diversification stair stepped up to 7 crops;
Coverage for livestock and nursery and greenhouse plants (capped at 35 percent of revenue up to $1 million each);
Inclusion of some incidental processing expenses necessary to make the commodity ready for market, such as washing, trimming, and packaging;
Increased coverage for expanding operations;
Replant coverage for a crop losses early enough for replanting; and
The continued option to insure individual crops under separate crop policies (cannot be CAT level coverage).

5. Coverage levels:
A claim can be made if yearly farm income drops below specified amount
Growers can choose from 50-85% protection in increments of 5
50-75% - two crops
80-85%- must have 3 crops
If gross farm income averages $100,000, and you choose 75% coverage, you can get a $5000 settlement if your income is $70,000, and the drop in income is due to a qualifying event

6. Why encourage diversification?
Optimal conditions for different crops vary
A hot summer is good for some crops and bad for others
2012
Strawberries – worst year ever
Apples - disaster
Pumpkins – high yields
Most vegetables – best ever
Diversification in Specialty Crops Program

7. How do you determine the number of crops?
In order to qualify as a second crop, the sales of that crop must account for a “significant portion” of the total.
95% of sales are apples, and 5% are pears – no.
50% apples, 50% is ideal
Qualifying revenue threshold equation:
(1÷#crops) x .333 x expected gross farm income
$100,000 in Gross Farm Income
2 crops = 0.5 x .333 x $100,000 = $16,665 in sales
3 crops = $11,000 in sales

8. Premiums and number of crops
Actual premium is determined by insurance agent using actuarial documents
Premium subsidy varies with number of crops and coverage level
1 crop, 75% coverage
59% subsidy
2 crops, 75% coverage
80% subsidy
Subsidies drop for 80 and 85% coverage
Coverage Level
50%
55%
60%
65%
70%
75%
80%
85%
Basic Subsidy-Qualifying Commodity Count: 1
67%
64%
59%
N/A
Whole-Farm Subsidy-Qualifying Commodity Count: 2
Whole-Farm Subsidy-Qualifying Commodity Count: 3 or more
71%
56%

9. Actual Premiums for farms in the $50,000 - $100,000 range
Grower 1: 5 crops, 70% coverage = $1600 (1% of Gross Farm Income)
Grower 2: 3 crops. $1300/year
Grower 3: 3 crops. $2900/year 80% coverage. Insures $59,000 in revenue Coverage is 5% of insured revenue
Without subsidy, insurance would be $14,779

10. Determining Farm Income for Coverage
Ideally: 5 years of Schedule F tax returns
Coverage is average of 5 years
Beginning farmers: 3 years of schedule F, plus farming the past year
, plus 2017
If beginning farmer is taking over an existing business, the previous owner’s records can be used

11. Approved income for Growing Farms
Approved income can be up to 35% higher if you can demonstrate that the farm is expanding production
Examples:
Increased acreage planted
Orchard or blueberry acreage coming into production

12. Revenue Allowed Not allowed
The sales of products or animals that you raised and sold
The sales of produce, grain or animals that you bought and sold for profit
Post production processing
Animals raised by contract
Commodities for which you do not have an insurable interest (timber)
Revenue from governmental programs like NAP

13. Qualified losses (1) Adverse weather conditions; (2) Fire;
(3) Insects, but not damage due to insufficient or improper application of pest control measures;
(4) Plant disease, but not damage due to insufficient or improper application of disease control measures;
(5) Earthquake; (6) Volcanic eruption;
(7) Failure of the irrigation water supply, if caused by an insured peril that occurs during the insurance period;
(8) Wildlife, unless control measures have not been taken; or
(9) a decline in the market price.

14. Decline in local market price
Specifically targets “unavoidable natural causes” rather than man- made causes for the decline in market price

15. Losses that don’t qualify
(1) Negligence, mismanagement, or wrongdoing by you, any member of your family or household, your tenants, employees, or contractors;
(2) An act by any person that affects the revenue on the farm operation including but not limited to chemical drift, or fire caused by anything other than a naturally occurring event;
(3) Failure to follow recognized good farming practices for each insured commodity;
(4) Flooding if you plant below the average height of a reservoir
5) Damage to machinery or equipment;
(6) Failure to carry out good irrigation practices for an insured commodity, if applicable;
(7) Failure or breakdown of irrigation equipment or facilities;

16. Unqualified losses, continued
8) Theft, mysterious disappearance or vandalism of an insured commodity;
(9) Inability to market the commodities due to quarantine, boycott, or refusal of any person to accept your commodities for any reason other than damage due to an insured cause of loss;
(10) Lack of labor to properly care for, harvest or perform any necessary production activities for any insured commodity;
(11) Failure to receive payment for produced commodities;
(12) Failure to follow the requirements contained in any processor contract;
(13) Abandonment;
(14) Failure to obtain a price for any commodity that is reflective of the local market value; or
(15) Deterioration of commodities in storage

17. Expenses
Specialty crops have high expenses whether the crop is harvested or not
WFRP has provisions to encourage the farmer to take care of plants in years with low revenues
If expenses are 70% or lower than average on claim year, claim will be lowered by 1%
5 years applicable expenses

18. Allowable expenses
Most expenses necessary to raise, harvest and sell a crop
Labor, depreciation, fuel etc.
Lines on Schedule F (a few exceptions)

19. Post-Production Expenses and Revenue
Allowable expenses are those that make the product “market ready.”
Washing
Sorting
Packing
When product is altered, expenses are not allowed
Revenue
Revenue from an altered product or value added product is not allowed as farm income
Putting product in gift baskets
Making wine
Slicing apples

20. Doubling up on insurance
Allowable for most types of crop insurance except CAT
If you have NAP and WFRP, then you can’t collect full amounts from both
If you collect NAP insurance on apples, then the collection from WFRP will have the amount from NAP subtracted

21. Assess your risk How often are you wiped out?
What is your lowest revenue ever recorded?
How often will you collect? Probability of getting hurt
Self insure

22. Reporting Losses – Multiple steps
Notice of loss within 72 hours after discovery is made
Submit claim after filing federal income tax

23. Steps to take to apply for WFRP
Contact Insurance Company/Agent
Five (5) years of historic Schedule F farm tax records, except in the following situations:
If you don’t file Schedule F you will need the farm tax forms you file plus supporting information so a Substitute Schedule F can be completed.
Your farm plan for the year to show what commodities you plan to produce and how much of each will be produced.
Historic records may be needed to assist with determining expected prices
If you raise organic commodities you will need your organic certificate unless your farm produces $5,000 or less.
Farm marketing records are acceptable records for direct marketed commodities.
Summaries of coverage for any individual insurance policies you have purchased.
Inventory information for commodities, and accounts receivable or accounts payable if you have them.

24. Grower views Worth it if collect every ten years
Wished they had chosen a higher level
Some growers prefer to self insure
Store up money on good years to survive the bad years

25. Questions?