United States Department of Agriculture Risk Management Agency August 2011

The role of the USDA Risk Management Agency (RMA) is to help farmers manage their business risks through effective, market-based risk management solutions. As part of this mission RMA, through the Federal Crop Insurance Corporation (FCIC), provides crop insurance to producers. Seventeen private-sector insurance companies sell and service the policies. RMA develops and/or approves the premium rate, administers premium and expense subsidies, approves and supports products, and reinsures the companies.

Crop and revenue insurance are important risk management tools available to farmers. The New England states have been identified as “underserved states” by RMA, primarily because the region’s farmers have not been significant users of the insurance products. RMA, in collaboration with New England Land Grant Universities, State Departments of Agriculture and private industry, have been reaching out to growers and agricultural professionals to make them aware of the opportunities, as well as the limitations, of crop and revenue insurance policies. The results of these efforts have improved farmer understanding and use of crop and revenue insurance products.

In recent years, insurance policies have been modified to better suit the particular needs of the region’s growers and more changes are on the horizon. New England farmers who grow sweet corn and potatoes know the value of coverage for those crops. Other vegetable crops can be covered either as components of whole farm revenue policies under Adjusted Gross Revenue (AGR) or Adjusted Gross Revenue-Lite (AGR-Lite). Coverage under AGR and AGR-Lite are based on farm revenue, not production levels of specific crops. Alternatively, producers may request crop insurance coverage not available in a county by competing and submitting appropriate forms through their crop insurance agent

For more information about RMA, crop insurance policies and risk management strategies go to the RMA website at http://www.rma.usda.gov/. Specific information about polices for each New England State can be found under “Field Offices, Regional Office State Directory.” You can locate a crop insurance agent online at http://www3.rma.usda.gov/apps/agents/. Keep in mind that crop insurance agents are not employees of RMA or FCIC, rather, they are employed by private firms. Crop insurance agents are the professionals with on-the-ground experience and knowledge of what works and what doesn’t for a particular situation. Part of the effort to improve service in New England includes increased communications with well-informed agents. Your unique scenarios will help this to happen, whether or not you actually purchase coverage.

Is now the time to be covered by crop insurance? Let’s consider a few important factors which may help you decide:

•             The volatility of farm income has increased significantly in recent years. Environmental and economic conditions have let to greater variability and uncertainty in farm sales and profits.

•             There has been a trend away from funding the common “disaster based programs” that have sometimes provided free “insurance” in areas where losses are catastrophic. Congress is under increasing pressure to share the management of risk with the farmer. For some Federal programs offered by USDA Farm Service Agency, such as the Supplemental Revenue Assistance Payments program (SURE), farmers are required carry crop insurance coverage in order to participate and receive benefits. 

•             Lenders see crop insurance as a means to reduce their risk exposure, improving a farmer’s eligibility as well as an opportunity to secure better loan terms.

•             Crop and revenue insurance can be a very good value if the coverage fits your needs. Due to significant ongoing subsidies from the Federal Government, farmers do not pay for the full cost of coverage. Under the current sweet corn policy, the Federal Government subsidizes from 55 to 100 percent of the premium cost depending on the coverage level selected by the grower. Under the potato policy, subsidies range from 55 to 67 percent.

The sooner you look into purchasing specific crop and revenue insurance policies, the more likely it is that you will be ready when having this type of coverage is the primary protection in a disaster situation. If coverage makes sense for you in the upcoming growing season, find out more information as soon as possible. Keep in mind that many applications must be completed in the fall or winter prior to planting.

This information is provided by The United States Department of Agriculture's Risk Management Agency (RMA), in cooperation with the Extension programs of the New England states.