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USDA announces hemp crop insurance

Agriculture Department officials today announced the availability of crop insurance programs to protect hemp producers’ crops from natural disasters and discussed what program regulations they can write and which ones would have to be changed by Congress.

In a news release and a call to reporters, officials said hemp growers may qualify for two insurance programs:

▪ A 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 Noninsured Crop Disaster Assistance Program (NAP) coverage, which protects against losses associated with lower yields, destroyed crops or prevented planting where no permanent federal crop insurance program is available.

Producers may apply for both programs now, and the deadline to sign up is March 16, officials said.

“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,” said USDA Farm Production and Conservation Undersecretary Bill Northey.

During the call to reporters, Northey and Agricultural Marketing Service Administrator Bruce Summers said USDA tried to write the interim rule now in effect to help farmers as much as possible, but that cannot change some of the regulations to which farmers have objected because they are in statute.

Summers noted that the interim final rule included a public comment period that ended January 29 and received 4,600 comments.

USDA is continuing to take comments and will reopen the formal comment period after the first growing season. Under the 2018 farm bill, USDA is required to issue a final rule within two years, he added. It is possible, however, that farmers will still operate under the interim final rule for the 2021 growing season.

It’s still possible to grow hemp under the rules of the 2014 farm bill, but those rules will expire on October 31.

Summers stressed several times that USDA does not have the legal authority to raise the allowed tetrahydrocannabinol (THC), the principal psychoactive constituent of cannabis, above 0.3% in hemp because that number is written into law. Some farm groups have proposed raising that level, but they would have to convince Congress to change it, Summers said.

Farmers have also complained about requirements that hemp has to be tested for THC within 15 days of harvest, and questioned whether they can find Drug Enforcement Administration-approved labs to do the job.

Summers said he has some flexibility on sampling and testing requirements and will be issuing guidance on those subjects.

He noted that the law says hemp with a THC level higher than 0.3% must be “disposed of,” but it does not say it has to be destroyed. Summers said he is working on guidance on what “disposed of” means. He also noted that producers who grow hemp with 0.5% THC are considered “negligent” and risk becoming ineligible to grow the crop.

Hemp produced under the 2014 and 2018 rules are eligible to move in interstate commerce, Summers said. The law requires USDA to provide data to law enforcement “in real time” and USDA is working on how to follow through on that, he added.

Information on crop insurance programs

Here is the guidance that USDA provided today on crop insurance for hemp.

▪ Multi-Peril Crop Insurance (MPCI) — The MPCI pilot insurance is a new option for hemp producers in select counties of 21 states for the 2020 crop year.

The program is available for eligible producers in certain counties in 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.

Information on eligible counties is accessible through the USDA Risk Management Agency’s Actuarial Information Browser. (See link below)

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. Hemp will not qualify for replant payments or prevented plant payments under MPCI.

This pilot insurance coverage is available to hemp growers in addition to revenue protection for hemp offered under the Whole-Farm Revenue Protection plan of insurance.

Also, beginning with the 2021 crop year, hemp will be insurable under the nursery crop insurance program and the Nursery Value Select pilot crop insurance program. Under both nursery programs, hemp will be insurable if grown in containers and in accordance with federal regulations, any applicable state or tribal laws, and terms of the crop insurance policy.

▪ Noninsured Crop Disaster Assistance Program (NAP) — 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.

NAP basic 50/55 coverage is available at 55% of the average market price for crop losses that exceed 50% of expected production. Buy-up coverage is available in some cases. The 2018 farm bill allows for buy-up levels of NAP coverage from 50% to 65% of expected production in 5%t increments, at 100% 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.

Eligibility Requirements

Under a regulation authorized by the 2018 farm bill and issued in October 2019, all growers must have a license to grow hemp and must comply with applicable state, tribal or federal regulations or operate under a state or university research pilot, as authorized by the 2014 farm bill.

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

The farm bill defines hemp as containing 0.3% or less tetrahydrocannabinol (THC) on a dry-weight basis. Hemp having THC above the federal statutory compliance level of 0.3% is an uninsurable or ineligible cause of loss and will result in the hemp production being ineligible for production history purposes.

Asked whether USDA will issue a hemp revenue policy, Northey said that to issue a revenue policy a price would have to be established and that USDA will review that issue “as we move forward.”

–The Hagstrom Report




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