A new interim rule introduced by the U.S. Agriculture Department that provides additional crop insurance options for first-time farmers is welcome news for insurers, and the fulfillment of a promise made by the federal government back in May.
“Crop insurance is critical to the ongoing success of today's farmers and ranchers and our agriculture economy. These improvements provide additional flexibility to ensure families do not lose everything due to events beyond their control,” says Agricultural Secretary Tom Vilsack. “We need to not only encourage new farmers to get into agriculture, we must ensure they're not wiped out in their riskiest initial seasons so they can remain in agriculture for years to come.”
Insurers can now offer farmers and ranchers different levels of coverage for a variety of irrigation practices, and more importantly, exempts new farmers from paying the $300 administrative fee for catastrophic policies.
The interim rule change also provides guidance on conservation compliance, enacts protections for native sod and provides for adjustments to historical yields following significant disasters.
New farmers' premium support rates will increase by 10 per cent during their first five years of farming. They will also receive a greater yield adjustment when yields are below 60 per cent of the applicable transitional yield.
These incentives will be available for most insurance plans in the 2015 crop year and all plans by 2016.
Farmers who till native sod and plant an annual crop on that land will see reductions in their crop insurance benefits during the first four years, starting in the fall of 2014.
The provision applies to acreage in all counties in Iowa, Minnesota, Montana, Nebraska, North Dakota, and South Dakota that is greater than five acres per policy and is producing annual crops, according to a summary of the rule filed in the Federal Register.Finally, the rule states that additional flexibility for irrigated and non-irrigated enterprise units and coverage levels will be available in the spring of 2015, according to the Agriculture Department.
The interim rule is making good on a promise made by the Agriculture Department back in May thatt it would be expanding the federal crop insurance program to include fruit and vegetable crops through a new pilot program. The crop insurance industry has praised that expansion, calling it a sign of the “increasingly important role of crop insurance in protecting food producers in the United States.”
The Farm Bill cut spending by $23 billion over 10 years by ending direct payments to farmers for commodities and by cutting $8 billion from the food stamp program. Most of the $5 billion cut from the direct payment program was shifted into the federal crop insurance program.
Source - http://www.ibamag.com/
