Crop/Livestock Insurance

Crop/Livestock Insurance — Crop and livestock insurance coverage must be meaningful and comprehensive. At the same time, premiums must not be cost prohibitive for producers. Non-insured Crop Disaster Assistance Program (NAP) insurance coverage should be improved with buy-up coverage available for additional premiums. The buy-up level for NAP should be capped at 65% of yield and 65% of price. NAP coverage for grazing must be improved to be commensurate with similar coverage on annual planted crops.

Beginning farmers without a production history should be allowed to use historical county level production data or the actual production data applying to that land. USDA should offer beginning farmers a higher subsidy on the crop insurance premium as an incentive to enter the agriculture industry.

Current federal policies give producers more flexibility in making production decisions. However, many specialty, alternative and non-traditional crops are still ineligible for crop insurance coverage. USDA should accelerate the development of appropriate risk management tools for fruits and vegetables, nursery, vineyard, seed, citrus, tree crops, livestock, aquaculture, milk, and new oil crops like camelina. Additional premium subsidies should be provided since no countercyclical assistance program exists for these crops and livestock.

Innovative and good farming practices involving numerous crop rotations should be encouraged through crop insurance. During establishment of an individual actual production history, improved substitute yields should be available to new producers of crops if the crops are already proven suitable for the region.

Organic producers lack effective financial protection through current crop insurance price elections. USDA should base crop insurance price elections for organic crops on organic rather than conventional commodity prices.

Crop and livestock insurance must provide meaningful coverage and provide incentives for farmers to purchase the insurance. Premium subsidies should be higher for higher levels of coverage and lower for lower levels of coverage encouraging producers to carry more coverage. Any natural disaster assistance provided ad hoc or through a permanent disaster program should be contingent upon participation in the crop insurance or noninsured assistance programs. Disaster assistance must not be a disincentive to purchasing crop insurance; rather the two programs should complement one another.

Additional elements of a crop insurance program to consider are cost of production insurance, whole farm revenue insurance and long-term reserve accounts. A cost of production insurance policy would allow producers to insure a percentage of actual production costs. Cost of production insurance could be expanded to all commodities and possibly become a preferable base insurance program. Whole farm revenue insurance would allow producers to purchase insurance guaranteeing a certain percentage of revenue for the whole farm. It would provide protection against unavoidable losses of production and low prices. Long-term reserve accounts are a way for farmers to save, on a tax-deferred basis, during good times for poorer years.

NASDA believes that farm policy and/or a plan of insurance must provide quality loss adjustment coverage. A properly designed permanent disaster assistance program based on whole-farm revenue would compensate for quality price losses in the "revenue to count" calculation. For inventoried commodities requiring sampling, samples should be taken and analyzed by a grain grader licensed under the authority of the United States Grain Standards Act or the United States Warehouse Act or the Uniform Grain and Rice Storage Agreement, or by a laboratory approved by the USDA Risk Management Agency.