Written by M. Sean High – Staff Attorney
On February 18, 2016, the United States Department of Agriculture (USDA) issued a press release announcing that the department was expanding crop insurance to allow farmers transitioning to certified organic production the ability “to purchase insurance coverage that better reflects their product's actual value.”
In announcing the crop insurance expansion for farmers transitioning to certified organic production, Agricultural Secretary Tom Vilsack stated, “[c]onsumer demand for organic products continues to increase and the industry has experienced remarkable growth, representing more than $39 billion in U.S. retail sales." Secretary Vilsack further stated that the growth in organic products "creates opportunities for farmers and businesses across the country” and that “[e]xpanding the safety net for farmers wanting to enter the organic market ensures they have the tools and resources they need to meet this growing demand while protecting their operation."
According to the press release, while organic products may offer farmers the potential for higher profits, transitioning from conventional to certified organic production could take up to three years. To assist farmers in bridging this gap between conventional and certified organic production, starting with the 2016 crop year, USDA will now permit transitioning producers the opportunity to utilize the Contract Price Addendum (CPA).
Through CPA, farmers will have the ability to insure certain transitional organic crops at either the contract price or the published USDA Risk Management Agency (RMA) price election. According to RMA, this choice will allow for “a Federal crop insurance guarantee that is more reflective of the actual value of [a] certified organic crop or crop which is transitioning to organic.”
Importantly, if a farmer decides to select contract pricing: 1) that decision must be made by the sales closing date and 2) a copy of the contract must be provided to the farmer’s crop insurance agent by the acreage reporting date. Accordingly, CPA coverage will continue while the crop insurance policy remains active.
Additional information regarding organic agricultural risk management is available at RMA’s organic crop website located at http://www.rma.usda.gov/news/currentissues/organics/.