USDA Provides More Insurance Options for Hemp Producers

The department recently announced a Noninsured Crop Disaster Assistance Program and provided additional details on its pilot Multi-Peril Crop Insurance program.

February 6, 2020

The U.S. Department of Agriculture (USDA) has announced another crop insurance program available for hemp growers this upcoming season. 

The recently announced Noninsured Crop Disaster Assistance Program (NAP) coverage will protect against losses associated with lower yields, destroyed crops or prevented planting where no permanent federal crop insurance program is available. 

NAP acts as a supplement to the previously announced pilot hemp insurance program through Multi-Peril Crop Insurance (MPCI), which provides coverage against loss of yield because of insurable causes of loss for hemp grown for fiber, grain or cannabidiol (CBD) oil. 

The pilot MPCI program is only for growers in certain counties, while the NAP program is available to all growers who meet the program’s requirements. Both programs protect hemp producers’ crops from natural disasters. Applications are open now, and the deadline to sign up for both is March 16, 2020. 

“We are pleased to offer these coverages to hemp producers. Hemp offers new economic opportunities for our farmers, and they are anxious for a way to protect their product in the event of a natural disaster,” says Farm Production and Conservation Undersecretary Bill Northey.

Multi-Peril Crop Insurance Pilot Insurance Program

The MPCI pilot insurance is a new crop insurance option for hemp producers in select counties of 21 states: Alabama, California, Colorado, Illinois, Indiana, Kansas, Kentucky, Maine, Michigan, Minnesota, Montana, New Mexico, New York, North Carolina, North Dakota, Oklahoma, Oregon, Pennsylvania, Tennessee, Virginia and Wisconsin. To find out if you’re in an eligible county, check on the USDA’s Actuarial Information Browser.

Among other requirements, to be eligible for the pilot program, a hemp producer must have at least one year of history producing the crop and have a contract for the sale of the insured hemp. In addition, the minimum acreage requirement is 5 acres for CBD and 20 acres for grain and fiber. 

The policy will not protect against crop losses due to hemp that contains more than the legal 0.3% tetrahydrocannabinol (THC) threshold. Hemp also will not qualify for replant payments or prevented plant payments under MPCI.

Earlier this year, the USDA also announced that Whole-Farm Revenue Protection coverage is available to hemp growers in addition to the MPCI pilot. 

More insurance options for hemp growers are coming up the pipeline as well. In 2021, hemp will be insurable under the Nursery Crop Insurance program and the Nursery Value Select pilot crop insurance program. Under both programs, hemp will be insurable if grown in containers and in accordance with all applicable regulations.

Noninsured Crop Disaster Assistance Program

NAP provides coverage against loss for hemp grown for fiber, grain, seed or CBD for the 2020 crop year where no permanent federal crop insurance program is available.

The USDA says NAP basic 50/55 coverage is available at 55 percent of the average market price for crop losses that exceed 50 percent of expected production. Buy-up coverage is available in some cases. 

The Agricultural Improvement Act of 2018 (the 2018 Farm Bill) allows for buy-up levels of NAP coverage from 50 to 65 percent of expected production in 5 percent increments at 100 percent of the average market price. Premiums apply for buy-up coverage.

For all coverage levels, the NAP service fee is $325 per crop or $825 per producer per county, not to exceed $1,950 for a producer with farming interests in multiple counties.

Eligible Farmers

To be eligible for any insurance options, all growers must have a license to grow hemp and must comply with applicable regulations depending on their state.

Producers must report hemp acreage to Farm Service Agency (FSA) after planting to comply with federal and state law enforcement. 

Farmers interested in crop insurance can use the USDA’s Agent Locator to get started with an agent. The USDA’s site has other resources for hemp farmers, including how to report acreage. 

In addition, some hemp producers will be eligible for FSA farm loans this year, such as operating, ownership, beginning farmer, and farm storage facility loans. More information will be available soon on its site.