Home Farm Policy Menu Making Sense of Federal Programs Crop Insurance Issues Under Production Flexibility Contracts Sustainable Farming Connection Where farmers find and share information. Making Sense of Federal Programs: Crop Insurance Issues Under Production Flexibility Contracts Several USDA programs -- including market transition payments, CRP payments, and FSA farm loans -- include what is sometimes called a linkage requirement. In order to be eligible for these program, the farmer must either: Get at least catastrophic crop insurance for each crop of economic significance. Sign a form that waives any eligibility for emergency crop loss assistance in connection with the crop. Catastrophic insurance is the minimal amount of coverage required. Farmers can always purchase additional coverage. Unless they qualify as a limited resource farmer, farmers must pay an administrative processing fee of $50 per crop per county for catastrophic insurance. Administrative fees for the producer are limited to $200 per county, and $600 total. Several linkage issues could be of particular importance to farmers with highly diverse cropping systems. First, the linkage requirement only applies if crop insurance is available for the crop in question. For example, if a farmer raises five different crops in rotation and federal crop insurance is not available for one of those crops, the linkage requirement does not apply to that crop. Second, a crop of economic significance is a crop that contributes 10 percent or more of the total value of all crops grown by the farmer. This calculation will be more complicated for farmers with several different crops. Farmers should check with their crop insurance provider and the Farm Services Agency to determine which of their crops meet the test for economic significance. Finally, if the total expected liability under the insurance policy is equal to or less than the administrative fee required to sign up for insurance, the crop is not of economic significance under the terms of your Production Flexibility Contract. In general, farmers should refer to their crop insurance contract to find their crop insurance rights and responsibilities. Farmers experiencing a crop loss should follow the contract closely in order to make sure they receive an indemnity. The contract likely requires that farmers suffering losses preserve at least part of the crop and retain production records over several growing seasons. Federal crop insurance does not cover losses due to the farmer's failure to follow good farming practices. Many policies, for example, say that farmers must follow recognized good farming practices. Farmers who substitute crop management practices, integrated pest management or other well-established practices for a portion of their pesticide or fertilizer applications have sometimes complained that these were not regarded as "good farming practices" under their insurance policy. In response to such complaints, USDA has emphasized that the definition of "good farming practices" does not exclude the use of sustainable or alternative practices. As long as the production practices control weeds, provide sufficient nutrients, protect against disease and insects, they should fall within the definition of "good farming practices," according to the USDA. The best strategy for highly diverse farming operations is to iron out any possible problems with crop insurance before the crop is planted. Crop insurance contracts usually contain an arbitration clause. This means that if disputes arise with the provider that cannot be worked out between the agent and the farmer, those disagreements go to an arbitrator. Top of Page Next: The Non-Insured Crop Disaster Assistance Program (NAP) Home Farm Policy Menu Making Sense of Federal Programs Crop Insurance Issues Under Production Flexibility Contracts ©1997 Committee for Sustainable Farm Publishing Please read about our usage permission policy and disclaimer. Send comments, suggestions and questions to the site author: Craig Cramer cdcramer@clarityconnect.com Coded using HoTMetaL Pro 3.0. Best viewed in Netscape 3.0 or later. Please see our credits page for more information. http://sunsite.unc.edu/farming-connection/farmpoli/features/makesens/cropins.htm