Five Things to Know About the USDA’s Hemp Crop Insurance Programs

By William Sumner, Hemp Content Manager, New Frontier Data

More than 13 months after passage of the 2018 Farm Bill, the U.S. Department of Agriculture (USDA) is rolling out two pilot crop insurance programs for the hemp industry’s 2020 growing season. There are five key details for cultivators to know about them:

#1) CBD Qualifies for Crop Insurance

When hemp was made federally legal under the 2018 Farm Bill, farmers were curious whether crops grown for CBD could be insured. Initially, the USDA only allowed crops grown for fiber, flower, and seed to be covered, but included crops for CBD in its announcement of the insurance programs.

#2) Hemp Farmers Can Apply for Both Types of Insurance

The USDA’s first program, the Multi-Peril Crop Insurance (MPCI), offers protection against various natural causes including drought, excessive moisture, freeze, and disease. MPCI often includes yield protection and price protection against market fluctuations.

MPCI offers 50/55 coverage against insurable losses, meaning that if a season’s production falls below 50% of a farm’s average yield, losses are paid at a rate of 55% of the highest price election. Additional protection is available up to 75/100 coverage.

The USDA’s second type of coverage is the Noninsured Crop Disaster Assistance Program (NAP). Offered in areas where no permanent federal crop insurance program is available, basic NAP coverage starts at 50/55, with additional coverage available for a service fee. Coverage is$325 per crop or $825 per producer per county, not to exceed $1,950 for producers with operations in multiple counties.

#3) How to Qualify

Cultivators wanting crop insurance coverage must be licensed in compliance with state, tribal, or federal regulations, or else operate under a research pilot program as authorized by the 2014 Farm Bill. Cultivators must also report hemp acreage to the USDA’s Farm Service Agency after planting.

Beyond the basic federal requirements for hemp crop insurance, producers need to have at least one year of production history and a contract of sale for the insured hemp, and meet acreage requirements of 5 acres for CBD and 20 acres for grain and fiber.

#4) MPCI Coverage Is Not Available Nationwide

For now, MPCI coverage is only available among a handful of counties in select states including 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. Eligible counties are identified in the USDA Risk Management Agency’s Actuarial Information Browser.

#5) Hot Hemp is Not Covered

Hemp crops testing over the federal THC limit of 0.3% will not be covered under the programs.

The deadline to apply for hemp crop insurance is March 16.