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USDA Launches Risk Management Programs for Hemp Growers

February 6, 2020

5 Min Read
USDA Launches Risk Management Programs for Hemp Growers
The U.S. Department of Agriculture announced the availability of two insurance options for hemp cultivators this week. Image courtesy of Pixabay

The U.S. Department of Agriculture (USDA) is rolling out two insurance programs for hemp cultivators that will cover crop losses from natural disasters, the agency announced in a release Thursday. Hemp growers can now apply for coverage from a Multi-Peril Crop Insurance (MPCI) pilot hemp insurance program and the Noninsured Crop Disaster Assistance Program (NAP). 

“We are pleased to offer these coverages to hemp producers. Hemp offers new economic opportunities for our farmers, and they are anxious for a way to protect their product in the event of a natural disaster,” Farm Production and Conservation Undersecretary Bill Northey said in a statement.   

MPCI will cover loss of yield due to insurable causes of loss for hemp grown for fiber, grain, or Cannabidiol (CBD). The pilot insurance will only be available to hemp producers in certain counties in 21 states during the 2020 season. To be eligible for the program, the applicant must have a one-year history of hemp production and have a contract for the sale of the insured hemp. Those applying must also have a minimum acreage of five acres for CBD and 20 acres for grain and fiber. 

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In addition to the pilot coverage, hemp cultivators can also obtain revenue protection from the Whole-Farm Revenue Protection plan of insurance from MPCI. During the 2021 crop year, growers can apply for the Nursery crop insurance program and the Nursery Value Select pilot crop insurance program. 

NAP coverage protects growers of hemp for CBD, fiber, or seed against losses from lower yields, crop destruction, or prevented planting where no permanent federal crop insurance program exists. The 50/55 coverage is available at 55% of the average market price for crop losses that exceed 50% of expected production. The 2018 Farm Bill permits buy-up levels of NAP coverage from 50% to 60% of expected production in 5% increments, at 100% of the average market price. Premiums will apply for buy-up coverage. 

The NAP service fee is $325 per crop,or $825 per producer per county, and will not exceed $1950 for a producer with farming interests across multiple counties. 

USDA published an interim final rule in the Federal Register last October to establish a new program that will provide a new regulatory framework for hemp production in the U.S. Required by the 2018 Farm Bill, the program establishes Federal guidelines for the USDA to approve states’ and tribes’ hemp production plans, including recordkeeping on land used to grow hemp, testing hemp for delta-9 tetrahydrocannabinol, licensing requirements, disposal of non-compliant plants, and methods of demonstrating compliance.

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