November 1, 2017
Federal Crop Insurance for Specialty Crops
The current and previous farm bills—the Agricultural Act
of 2014 (P.L. 113-79) and the Food, Conservation, and
Energy Act of 2008 (P.L. 110-246)—enhanced the federal
crop insurance program by expanding its scope and
broadening policy coverage for specialty crops.
Historically, the federal crop insurance program has
covered primarily traditional field crops such as wheat,
corn, and soybeans. In recent decades, the program has
been expanded so that policies are now available for a wide
range of commodities, including specialty crops. Despite
this expansion of the federal program, coverage for
specialty crops remains below that for traditional crops.
Specialty crops refers to “fruits and vegetables, tree nuts,
dried fruits, and horticulture and nursery crops (including
floriculture)” (7 U.S.C. 1621). This definition covers an
estimated 400 agricultural commodities, including fresh and
processed fruits and vegetables, tree nuts (which excludes
peanuts), a range of nursery plants (trees, shrubs, flowering
plants), herbs and spices, coffee and tea, and also honey and
maple syrup, according to U.S. Department of Agriculture
Other farm bill changes also benefit specialty crop growers.
These include expanded Whole-Farm Revenue Protection
(WFRP) insurance, enhanced assistance crops with no
individual policy coverage, and permanent authorization of
supplemental disaster assistance programs.
Figure 1. Share of Fruit and Tree Nut Acres Insured
Figure 2. Share of Vegetable and Melon Acres Insured
Federal Crop Insurance Coverage
The federal crop insurance program provides farmers with
risk management tools to address crop yield and/or revenue
losses on their farms. Under the program, farmers can
purchase subsidized policies that pay an indemnity when
their production or revenue falls below a guaranteed level.
The federal crop insurance program is permanently
authorized by the Federal Crop Insurance Act, as amended
(7 U.S.C. 1501 et seq.). USDA’s Risk Management Agency
(RMA) operates the Federal Crop Insurance Corporation
(FCIC), which is the funding mechanism for the program.
Insurance policies are sold and completely serviced through
approved private insurance companies. The insurance
companies’ losses are reinsured by USDA, and their
administrative and operating costs are reimbursed by the
In purchasing a crop insurance policy, a producer selects a
level of coverage (i.e., deductible) and pays a portion of the
premium—or none of it in the case of catastrophic
coverage—which increases as the level of coverage rises.
The federal government pays the rest of the premium (62%,
on average, in 2015). Premium subsidies received by all
U.S. agricultural producers totaled $6.1 billion in 2015.
Total insurance protection (liability) for all federally
insured crops (excluding livestock) was $101.4 billion in
2015. (This total excludes liabilities under WFRP.)
Source: CRS from FCIC-reported data, April 2015. Data for dry
peas are reported to be more than 100%.
Specialty crops account for a small but growing share of the
federal crop insurance program. RMA data indicate that
liabilities for specialty crops (excluding apiaries) totaled
$16.2 billion, or about 16% of the total liability for all
federally insured crops. In 2000, the sector’s share of total
crop insurance liabilities totaled less than $8 billion.
Specialty crops accounted for an estimated $561 million in
total crop insurance premium subsidies received in 2015, or
about 9% of total subsidies paid that year. The average
premium subsidy paid by the federal government in 2015
was 64% for specialty crops. Actual premium subsidies
paid, however, ranged from about 50% (tree nuts, melons)
to 90% or greater (potatoes, citrus, banana trees).
RMA reports that the number of acres covered by federal
crop insurance totaled 296 million acres for the 2015 crop
year. Of this, the number of specialty crop acres totaled 8.6
million acres, or about 3% of total acres covered. Vegetable
and melon acres covered by federal crop insurance totaled
nearly 4 million insured acres while fruit, tree nut, and
tropical crop acres accounted for the remainder. USDA
does not report acreage coverage for nursery crops.
Federal Crop Insurance for Specialty Crops
According to RMA, federal crop insurance covered roughly
73% of USDA-reported specialty crop acreage. This
compares to an estimated 85% of planted acreage for major
field crops covered by federal crop insurance. (USDA data
is available for a subset of 38 specialty crops.) Market
penetration, however, often varies widely by the type of
crop. For fruits and tree nuts, the share of federally insured
acres ranges from less than 1% (strawberries) to nearly 90%
(plums/prunes) (Figure 1). For vegetables and melons,
insured acres range from 5% of total acres (e.g., fresh
beans, sweet potatoes) to more than 80% of acres (e.g., dry
peas, potatoes, citrus) (Figure 2).
Although many specialty crops are eligible for crop
insurance, coverage is still unavailable for some crops.
Specialty crops that do not have access to federal crop
insurance include asparagus, beets, broccoli, carrots (fresh
and for processing), cashews, cauliflower, celery, chives,
dates, eggplants, garlic, hazelnuts, leeks, lettuce, some
melons, spinach and other leafy greens, squash, and most
root crops. Some crops may be covered by other types of
insurance coverage, such as plans based on historical farm
income (e.g., whole farm insurance programs).
Specialty crops are defined in statute as “fruits and
vegetables, tree nuts, dried fruits, and horticulture and
nursery crops (including floriculture)” (7 U.S.C. 1621).
Many of the new crop insurance products introduced each
year are intended to broaden coverage of fruits, vegetables,
and tree nuts. The number of insurance products covering
specialty crops has increased in recent years.
Still, specialty crop growers face a number of challenges
pertaining to expanding insurance coverage, including
generally small acreages, multiple crop varieties and
farming practices (which contribute to greater complexity
and cost), quality and price discovery issues, grower
interest, non-weather risks, and other coverage limitations.
In some cases, USDA has reportedly not pursued policies
for particular commodities because producers have
expressed concerns that offering insurance could adversely
affect the market (i.e., because an insurance policy reduces
producer risk, farmers may plant more acreage, which could
drive down prices and total crop revenue). This has been a
concern for specialty crop growers and explains in part
lower levels of insured acreage compared with other crops.
Federal crop insurance policies for specialty crops (and
other crops as well) are generally either yield-based or
revenue-based. For most yield-based policies, a producer
can receive an indemnity if there is a yield loss relative to
the farmer’s “normal” (historical) yield. Insurable causes of
loss include drought, excess precipitation, hail, frost, freeze,
fire (if due to natural causes), and insects and disease.
Revenue-based policies protect against crop revenue loss
resulting from declines in yield, price, or both. Nursery crop
producers can be protected against plant damage or losses
in value due to adverse weather, failure of irrigation water
systems, fire, and wildlife.
Participation is greatest in the leading specialty crop
producing states, such as California, Washington, Florida,
Michigan New York, and Oregon. Participation rates in
these states range from about 50% to 70%, with up to 90%
participation in Florida.
Whole-Farm Revenue Protection
The 2014 farm bill required RMA to provide a wholefarm crop insurance policy option to producers and
authorized higher premium subsidy levels for wholefarm policies over other policy types. The WFRP pilot
policy was first offered in 2015. It insures 50% to 85%
of revenue for all commodities on a farm under one
insurance policy, including (but not limited to) farms
with specialty or organic commodities that lack
individual policy coverage or those marketing to local,
regional, farm-identity preserved, specialty, or direct
markets. Tax returns determine the historical revenue
guarantee and revenue for the insured crop year.
Participation is low but has increased significantly in
the last two years.
RMA estimates there were about 1,100 WFRP policies
receiving premium subsidies in 2015, rising to nearly
2,700 policies in 2017. Premium subsidies totaled more
than $100 million in in 2017. Total liability is estimated
at $2.8 billion in 2017, up from $1.1 billion in 2015.
The average premium subsidy rate paid by the federal
government was about 70% (2015-2017).
WFRP is currently available in all counties nationwide
as a stand-alone policy or in combination with other
policies. WFRP does not offer catastrophic (CAT) level
coverage (high deductible, 100% premium subsidy) and
cannot be combined with CAT level policies.
Alternative Options to Crop Insurance
The 2014 farm bill also enhanced financial assistance to
producers of noninsured crops (or crops with no current
individual policy coverage, including some specialty crops)
and also permanently authorized supplemental disaster
assistance programs benefitting specialty crops.
In lieu of available federal crop insurance for some
specialty crops, the Noninsured Crop Disaster Assistance
Program (NAP) provides an alternative option for
producers. NAP provides financial assistance to producers
of noninsured crops when low yields, loss of inventory, or
prevented planting occur due to natural disasters. Specialty
crops currently eligible for NAP include mushrooms,
flowers, ornamental nursery crops, Christmas trees,
turfgrass sod, and ginseng.
Two supplemental agricultural disaster assistance
programs also provide assistance to orchard crops and
beekeepers for certain losses. The Tree Assistance
Program (TAP) provides payments to qualifying
orchardists and nursery tree growers to replant or
rehabilitate trees, bushes, and vines damaged by natural
disasters. The Emergency Assistance for Livestock,
Honeybees, and Farm-Raised Fish Program (ELAP)
provides assistance to beekeepers and other types of
Renée Johnson, Specialist in Agricultural Policy
Isabel Rosa, Analyst in Agricultural Policy
Federal Crop Insurance for Specialty Crops
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