With the passing of the 2018 Farm Bill, it finally became possible for hemp businesses to get coverage under the USDA’s federal crop insurance program. As an industry that’s full of volatility and uncertainty, it’s incredibly helpful to have options when it comes to insuring hemp crops.
This development is significant because, like with any crop, loss happens at a high cost to farmers. From weather-related issues to pests to unforeseeable circumstances, all it takes is one bad day and a crop can get decimated. Not having the protection of insurance then makes growing hemp even more of a risk. Thankfully, it’s no longer such an issue.
Hemp crop insurance
Even though hemp-derived products are still undergoing research and are not FDA-approved, the USDA is ready to help hemp farmers thrive. They’re doing this by offering two programs that help with insuring hemp crops and protecting your businesses.
There are tight deadlines and limits on who’s eligible, so make sure to act fast and read the fine print.
Multi-Peril Hemp Crop Insurance
Multi-Peril Crop Insurance (MPCI) covers loss of yield for hemp grown for fiber, grain, or CBD because of insurable causes. This includes drought, excessive moisture, freeze, and disease.
Crop losses must exceed 50 percent of expected production for coverage to kick in, and basic coverage is only 55 percent of the average market price. You can get additional protection at 75/100. Coverage often includes yield protection and price protection, but it’s only available in select counties in 21 states, including Alabama.
To meet the requirements for MPCI coverage, growers must:
- Have grown hemp for at least one year prior.
- Have a contract for purchase of their hemp crops.
- Have a license to grow hemp.
- Have at least five acres dedicated to growing hemp for CBD, and 20 acres for grain or fiber.
Growers must also be in compliance with the appropriate state, tribal, or federal regulations or operate under a state or university research pilot program authorized by the 2014 Farm Bill.
The cost for MPCI is $655 per crop per county with a $30 additional charge, per crop per county, for buy-up coverage.
Noninsured Hemp Crop Disaster Assistance Program
This program, also known as NAP, protects farmers in situations where no permanent crop insurance is available for specific losses. These include lower yields, destroyed crops, and prevented planting. It costs $325 per crop or $825 per producer per county, not to exceed $1950 for producers in multiple counties. Basic coverage is 50/55, however, for an extra fee, you can increase coverage.
To meet the requirements for NAP coverage, growers must:
- Have a contract for purchase of their hemp crops.
- Have a license to grow hemp.
- Have a process contract they can show the USDA.
Like with MPCI, growers must comply with all local and federal regulations or operate under an approved program based on the specifics of the 2014 Farm Bill.
What’s not covered when insuring hemp crops
Crop loss due to hot hemp is not covered by either policy. This is when hemp tests over the federal THC limit of 0.3 percent. When this occurs, the crop must get destroyed. This loss is at the farmer’s expense which is why it’s important to carefully monitor your hemp crop and work with plant strains naturally known for low levels of THC.
There are also rules about what crop grew in the field the year before you plant hemp. To get coverage, hemp cannot follow cannabis, canola, dry peas, mustard, rapeseed, or sunflowers. In the North, soybeans are also added to the list.
When to apply
The deadline to apply for both of these policies, and you can apply for both at the same time, is early March. Acreage reporting is due mid-August, and you must notify the insurance company within 72 hours of getting the results of your crop THC test. You can learn more about insuring hemp crops both programs here.
You’re not in this alone
As a hemp farmer, keeping track of insurance deadlines and options can feel like just another detail to worry about in order to successfully grow your crop. You’re not alone in insuring hemp crops though. Let Arbor Vita8 help. Our expert team understands the regulations and processes for growing hemp, and we’re ready to pass our knowledge onto you. Not only that, our seed-to-sale array of services means you’ll have a partner that’s there every step of the way. Contact us today to learn more.
