Whole Farm Revenue Protection
There is a new revenue safety net allowing you to insure all your crops under one policy. Available in all counties, this Federal Crop Insurance Product protects your farm revenue against low yields, low prices or both.
Whole Farm Revenue Protection (WFRP) is tailored for any farm with up to $8.5 million in insurable revenue. This includes farms producing specialty or organic commodities (both crops and livestock), or those marketing to local, regional, farm-identity preserved, specialty, or direct markets.
The program was designed to provide a broad based revenue program for commodities that don’t have a good revenue insurance plan today, such as sweet potatoes, pumpkins, melons, broccoli, cattle and squash. It does exclude timber, forest, forest products, and animals for sport, show or pets. Replant costs may be covered, with approval.
What are the features of WFRP?
The WFRP program provides revenue protection coverage levels from 50-85% of your Approved Revenue in 5% increments. There is no catastrophic level available.
All farm revenue is insured together under one policy, and individual commodity losses are not considered. To help further your protection, you may purchase other Federal crop insurance policies covering individual commodities. These must be at buy-up coverage levels and any indemnities will count as revenue earned under WFRP.
The number of commodities produced count toward the diversification requirement within WFRP. Each commodity must provide a calculated percentage of the expected farm revenue. Commodities providing small amounts of revenue may be grouped to meet the qualification. In general:
- 3 commodities required for the top levels of 80% or 85%.
- At least 1 commodity for most other levels.
- Cherry, potato and select other farmers will need to farm at least one additional qualifying commodity in order to be eligible.
WFRP includes premium subsidies based on qualifying commodity counts and % coverage levels. Farms with two or more commodities receive Whole-Farm Subsidies. Farms with one commodity receive a Basic Subsidy.
How is the amount of insured revenue determined?
Approved Revenue is based off of a 5-year history from your farm tax returns and your expected revenue for the upcoming year. Specifically, it is the lower of:
- Your current year’s expected revenue (determined by your farm plan) at the selected coverage level; or
- Your historic revenue adjusted for growth at the selected coverage level. The program has a built-in automatic indexing process (with opt-outs allowed) that can account for farm growth. An expanding operations provision also allows for up to a 35% growth over historic average with approval.
What causes a loss payment?
Both natural causes and a decline in market price may trigger claims for loss under WFRP. A loss payment will also be made when revenue-to-count is lower than insured revenue.
In any event, taxes must be filed for the insurance year before any claim can be made. For example, losses in this insurance year of 2017 would require 2017 year farm taxes to be filed first. For commodities that grow each year, like cattle, only the growth for the insurance year counts.
Since taxes are based on cash sales, beginning and ending inventory must be determined and any accounts receivables included to adjust Schedule F revenue accordingly. If your adjusted Schedule F revenue is less than your guarantee, you would have a payable loss.
Who is the best fit for this program?
With the features and benefits of this new Federal program, Whole Farm Revenue Insurance is best suited for farms that are:
- Highly diverse
- Produce specialty commodities
- Sell to direct markets, specialty markets, regional or local markets, and farm-identity preserved markets
Overall, the liability-to-premium ratio is considered very affordable.
We’re Here to Help
For more information, a free farm insurance review or to get a quote, contact Basi Insurance at 209.847.3065.
If you’re ready to get started with Whole Farm Revenue Insurance, please be ready to provide five years of farm tax forms (with exceptions), information about what you plan to produce on the farm during the insured year, and other supporting records specific to your operation.
Reference: United States Department of Agriculture (USDA), Risk Management Agency. www.rma.usda.gov. Accessed May 22, 2017.