We are still waiting for a comprehensive Hemp Crop Insurance program. While we wait we wanted to take the time to explain how Crop Insurance works, so you can be one step ahead when a program becomes available.
If this is your first time to our blog I would recommend reading up on our previous posts:
Projected Price and Harvest Price. Two very important prices for Federal Crop Insurance that you should understand. These two prices are part of the Commodity Exchange Price Provisions (CEPP) which can be found here -
There really is a lot to it, but in an effort to help you understand we will use Winter Wheat in Montana to help you understand.
Projected Price (PP)
This used to be called the Base Price, which made more sense but I digress, and for Montana Winter Wheat is set for the following Crop Year from the middle of August to the middle of September. They take the average daily price - bunch of fine print on this in the link above - during that time and come up with a bushel price to set the base of the next crop year.
For example - in 2019 the PP for Winter Wheat in Montana was $5.84 a bushel. For 2020 the current average price is at about $4.54 today (won't be set until after 9.15.19). Each year this price changes as the market changes, and it is the foundation of your Federal Crop Insurance. It does not matter if you are in Revenue Protection or Yield Protection (more on those programs next time). Your Projected Price is the same (again, talking Montana Winter Wheat here - different crops have different rules).
Hemp needs to follow this setup. The only issue with Hemp is what markets will they use, contract date, and varieties to come up with a fair Projected Price. This is something that Hemp Crop Insurance advocates will want to actively participate in during any "listening sessions." Just ask the organic farmers how well their Prices are when it comes to Federal Crop...hint, not good.
Harvest Price (HP)
This only applies to you if you are in the Revenue Protection program (more on that next time), so if you have Yield Protection you can skip ahead. However, if you have Yield Protection you should pay attention because you really should have Revenue Protection.
The Harvest Price for Winter Wheat in Montana is set during the month of August. They take the average daily price - lots of fine print here, see the CEPP link - and come up with a bushel price.
For example, the Harvest Price for Winter Wheat in Montana is just about set and is currently averaging $4.01 per bushel. Compare that to the PP for Winter Wheat in Montana for 2019 at $5.84 and you can see a 31.3% loss in Revenue.
Hemp needs to follow this setup as well. Again, the issue will be finding the proper markets to track to come up with the price. I am confident there are Hemp growers out there that can help guide the USDA to a good place. After all, it really was not that long ago if you walked into a USDA office with Hemp they would have called the local authorities on you, and now they are in charge of creating a comprehensive program for that very same commodity. That makes me a little nervous...
If you have been reading along you should have a better grasp on what Federal Crop Insurance looks like. Next time we will be going over Revenue Protection and Yield Protection.
As always - these articles are references. They are not gospel. The purpose is to give you an entry level understanding of Federal Crop Insurance. If you have questions reach out any time -