Crop Insurance for Hemp Farmers Offers Some Reassurance

In this post:

  • Brief History on Hemp
  • Modern Day Hemp
  • Hemp Insurance
  • Multi-Peril Crop Insurance Pilot Insurance Program
  • Noninsured Crop Disaster Assistance Program (NAP)

Brief History on Hemp

Hemp has been growing in Florida since the 1500’s when conquistadors were commanded to plant oranges and hemp, which they called Cañaba. Little did the Spaniards know that the plant they grew in the more northern climate of Spain would grow differently in the warmer and more humid days and nights in Florida.

They only knew the plant as an industrial crop, great for making clothing, sails, paper and especially rope. In fact, hemp production was the centerpiece of the Spanish economy, as it was in Italy, France and Russia.

When they planted their Cañaba in St. Augustine and Ft. Pierce, they didn’t know what to make of the strong-scented flowers on the top of their plants, so they cut them off and left them on the ground, only to be picked up by indigenous shaman who recognized them as powerful herbal medicine.

Modern Hemp

Now, in the 21st century, we now have a greater understanding of every part of the plant and acknowledge that, with changes in altitude and latitude, the plant can differ in its growth pattern, with warm climates spurring on greater resin and trichome production and increased levels of THC and other cannabinoids.

This variation from the industrial plants has also caused hemp to be ostracized since cannabis was made illegal for possession and use in 1937, robbing the modern world from the ancient industrial uses of the plant.

So, what happens when hemp is planted, but high-THC cannabis grows instead? What happens when the humidity, mold and insect pests endanger the crops which farmers have invested time and money into?

Hemp Insurance

To that end, the USDA, along with the rules that were brought forth in October and finalized after public comment, made farmers eligible for two insurance programs to protect that investment from these unforeseen outcomes.

According to a USDA press release dated February 6, 2020, “The U.S. Department of Agriculture (USDA) today announced the availability of two programs that protect hemp producers’ crops from natural disasters. A pilot hemp insurance program through Multi-Peril Crop Insurance (MPCI) provides coverage against loss of yield because of insurable causes of loss for hemp grown for fiber, grain or Cannabidiol (CBD) oil and the Noninsured Crop Disaster Assistance Program (NAP) coverage protects against losses associated with lower yields, destroyed crops or prevented planting where no permanent federal crop insurance program is available.”

Multi-Peril Crop Insurance Pilot Insurance Program

The MPCI pilot insurance is a new crop insurance 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.

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.

Florida is not one of the states chosen for this pilot program, but other options are or will be available. to hemp growers for 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.

Non-Insured Crop Disaster Assistance Program (NAP)

Then there is this program when all other options are not viable. 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 percent of the average market price for crop losses that exceed 50 percent 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 percent of expected production in 5 percent increments, at 100 percent 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 for these programs is straightforward. 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.

Still to come – blogs on conservation, reporting to the USDA and loan programs.

ACS Laboratory is the largest ISO/IEC 17025:2017 accredited, DEA registered, CLIA certified hemp/CBD and cannabis testing facility in the Eastern United States. It is a clinical-grade operation that has been continuously refining methods for testing hemp for 10+ years.

The team at ACS Laboratory is committed to elevating the hemp and cannabis industry by providing a reliable, consistent source of testing. Watch this short video on the Laboratory.

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