USDA Announces Crop Insurance Programs for Hemp

February 10, 2020

The U.S. Department of Agriculture (USDA) announced two crop insurance programs on February 6, 2020, which are meant to provide assistance for hemp producers’ crops in regard to natural disasters (1).

To aid farmers, the first pilot hemp insurance program is called “Multi-Peril Crop Insurance” (MPCI). This program assists in providing coverage for damages leading to loss of crops because of natural events such as disease, fire, and weather. Hemp crops cultivated for fiber, grain, or cannabidiol (CBD) oil are qualified for the program. MPCI insurance will be available in select counties of 21 states for the 2020 crop season. To see whether your county is eligible to apply, please visit the USDA Risk Management Agency’s Actuarial Information Browser (2).

Another requirement to receive eligibility regarding the pilot MPCI insurance program is that a hemp producer is required to have a contract to sell their insured crops and also be operating for at least a year. “There is a minimum acreage requirement of 5 acres for CBD and 20 acres for grain and fiber. Hemp will not qualify for replant payments or prevented plant payments under MPCI,” the USDA stated in their press release (1).

The USDA’s second insurance program is called, “Noninsured Crop Disaster Assistance Program” (NAP), which provides coverage when there is no permanent federal crop insurance program offered. Hemp farmers are able to apply to this program to help cover losses for the 2020 season. The NAP 50/55 coverage is offered to farmers for 55% of the average market price regarding hemp losses that may exceed 50% of expected production. In certain circumstances, there may be the option to buy-up coverage as well. Within the 2018 Farm Bill (3), hemp was reclassified and legalized for producers to grow. This bill allows for buy-up of 5% increments for coverage of 50–65% of the expected production. According to the USDA press release, “for all coverage levels, the NAP service fee is $325 per crop or $825 per producer per county, not to exceed $1,950 for a producer with farming interests in multiple counties” (1).

In October 2019, new regulation was instituted by the 2018 Farm Bill, where all cultivators must be licensed to grow hemp and be in compliance of all tribal, state, or federal statutes. The Farm Bill also further illustrates hemp as containing 0.3% or less tetrahydrocannabinol (THC) (4). In the circumstances of a crop exceeding that level, it will not be eligible for coverage.

The deadline for farmers to sign up for these programs is March 16, 2020.

More information regarding these new hemp insurance programs can be viewed on the U.S. Department of Agriculture’s press release web page (1).