Big wins in revenue protection for the entire farm
October 5, 2022
In late August, the United States Department of Agriculture’s (USDA) Risk Management Agency (RMA) announced several changes to improve the effectiveness of the Whole-Farm Revenue Protection (WFRP) program, the only insurance product designed to cover a farmer’s entire operation to protect, not just a crop. Building on these improvements, RMA just announced a roadshow, beginning this October with two virtual events and evolving into a series of virtual and in-person events this fall, to educate growers and crop insurance agents about WFRP. Perhaps there has never been a better time for farmers to sign up for the WFRP.
WFRP is a novel crop insurance product that offers producers across the country the ability to insure the income from their entire operation, including crop, livestock and nursery production, under a single policy. It also includes a built-in crop and business diversification insurance premium rebate that takes into account the inherent risk mitigation impact.
WFRP, first authorized in the 2014 Farm Bill, has long been championed by the National Sustainable Agriculture Coalition (NSAC) for its potential to promote diversification and level the playing field for growers underserved by other government crop insurance options. The USDA 2021 Climate Adaptation and Resilience Action Plan identifies WFRP as a key program to support farmers who use diversification to reduce risk and combat declining agricultural productivity.
Despite this potential, national WFRP participation rates are low and enrollment trends are not favourable. Just 1,934 policies were sold to farmers in 2021, down about 32 percent from the program’s peak in 2017. This is generally due to overly complicated paperwork and other requirements, as well as skepticism from farmers and crop insurance agents. RMA introduced a microfarm pilot in 2022 intended to reduce administrative burdens and increase access for the smallest direct-to-consumer producers, but the maximum approved eligibility cap of $100,000 was too low to serve most local food producers supported by WFRP could benefit.
NSAC has worked with RMA since the program began to remove these barriers to entry and increase farmer enrollment into WFRP. Thanks in part to the continued dialogue facilitated by NSAC, including discussions with manufacturers and insurance agents who sell WFRP, RMA was able to introduce significant improvements to the program this year. These improvements should meaningfully address the paperwork that has prevented farmers from buying WFRP in the past.
2023 improvements to WFRP
NSAC welcomes RMA’s proposal for several notable changes to the Whole-Farm Revenue Protection program approved by the Federal Crop Insurance Corporation Board of Directors on August 18. These new regulations, which will come into effect in the upcoming crop year 2023, include:
- replacing existing expense reporting procedures with a 40 percent reduction in expected revenue for goods that cannot be planted for insurable reasons;
- Increase in maximum approved revenue for the Micro Farm program from $100,000 to $350,000;
- Adjusting sales closing date revenue reporting requirements to streamline record keeping and reduce overall paperwork; and
- Increased maximum insurable earnings for WFRP from $8.5 million to $17 million, allowing more producers to participate in the program.
NSAC anticipates that replacing existing expense reporting processes will be one of the most impactful improvements to WFRP since the program’s implementation. This change is in line with a long-standing NSAC recommendation to eliminate the expense report requirement, which places an undue burden on all claimants, particularly small, unearned and local food producers.
In practice, expense reporting often requires manufacturers to keep comprehensive records of every sale made over the course of a year as proof of revenue. No other crop insurance product requires this level of record-keeping, which is particularly unrealistic for the many small, diversified, and direct-to-consumer farmers who rely on more frequent, small transactions every day.
The tripling of the maximum approved revenue for the Micro Farm program from $100,000 to $350,000 is another win that meets NSAC recommendations. Originally, NSAC required that the microfarm pilot’s reduced reporting requirements apply to all registered growers, or shortly before that, the eligibility cap would at least apply to all small and medium-sized farms up to $1 million. While RMA’s action raises the cap by only a quarter of the amount recommended by NSAC, the blanket elimination of expense reporting effectively applies the Micro Farm Program’s most valuable provision to all WFRP members. NASC is awaiting an opportunity to assess
These reforms to the WFRP are particularly timely given the upcoming launch of Phase 2 of the FSA’s Emergency Response Program ( ERP), which is designed to distribute relief funds to farmers and ranchers affected by natural disasters in 2020 and 2021. The second phase of ERP will be specifically aimed at helping growers excluded from existing programs on the condition that they obtain insurance or coverage under the Noninsured Crop Disaster Assistance Program (NAP) for the next two available crop years. With a streamlined administrative burden, WFRP will be an ideal option for the small, diverse, organic and otherwise underserved producers who receive help from ERP.
Watch this video message from RMA Administrator Marcia Bunger to share news about these significant improvements to WFRP.
WFRP formation this fall
This fall, RMA is launching a Whole-Farm Revenue Protection and Micro Farm Road Show with in-person and virtual events across the country. RMA experts will examine these guidelines in detail and answer questions from farmers and representatives. With recent changes to significantly reduce historical paperwork and streamline access, as well as worsening weather-related disasters across the country, now is an ideal time for farmers to consider registering with WFRP.
The first two virtual events to kick off RMA’s roadshow will be Tuesday, October 11 at 11:30 am Eastern and Thursday, October 13 at 4:00 pm Eastern . Here is an updated list of in-person and virtual events throughout the season.
NSAC is grateful for RMA’s decision to double down on education for WFRP at this critical moment and strongly encourages members and farmers in our network to attend or participate in WFRP events hosted by RMA.
What’s on the horizon?
NSAC looks forward to continuing to work with RMA to improve the protection of total farm revenue while always truthing our recommendations with farmers and ranchers and insurance agents with WFRP experience. In fact, despite these positive changes, hurdles remain for WFRP to shed its negative reputation on farms.
Above all, NSAC hopes in the coming year that the RMA will prohibit the adjustment of price and production expectations in the event of damage. This is an alarmingly common practice, most often leading to a last-minute cut in the farmer’s compensation payment and, in our experience, is the main reason farmers discontinue WFRP cover.
Additionally, NSAC supports provisions that would strengthen the diversification discount built into WFRP. This is a unique selling point among insurance products that attracts many manufacturers to the program. Farmers routinely comment that they get little or no rebate beyond three commodities, or that they are too different for the incentive to matter. Finally, NSAC advocates that the RMA update its definition of Good Farming Practices so as not to interfere with the adoption of conservation practices on insurance products.
This year’s changes, particularly when complemented by the changes and active outreach to producers and RMA representatives we see on the horizon, may have the potential to solidify WFRP as a modern and streamlined crop insurance option for all producers.
Categories: Carousel, Commodity, Crop Insurance & Credit Programs, Conservation, Energy & Environment, Organic