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Local hemp growers gain access to crop insurance

SoVaNow.com / February 19, 2020




Mecklenburg, Halifax, Charlotte, Brunswick, Lunenburg and Pittsylvania counties are among the 84 Virginia localities where hemp growers are now eligible for crop insurance.

Virginia senators Mark Warner and Tim Kaine announced the news through a joint press release on Friday.

“We are pleased that Virginia’s hemp producers will now be able to protect their crops in the event of unforeseen disasters,” said the senators. “With Virginia positioned to be a top producer of industrial hemp in the country, these additional protections will help hemp growers tap into this thriving industry.”

Virginia hemp producers are eligible to apply for two programs overseen by the U.S. Department of Agriculture to protect hemp crops in the 2020 growing season. The Multi-Peril Crop Insurance (MPCI) pilot program provides coverage for hemp producers in case they lose their crop due to natural disasters. The Noninsured Crop Disaster Assistance Program (NAP) offers coverage to protect against crop losses where no permanent federal crop insurance program is available.

Virginia’s hemp producers must apply for the programs by the March 16, deadline.

At least two local farmers have expressed reservations with the programs as outlined. Gregg Gordon with Aaron’s Creek Farm in Buffalo Junction said the multi-peril MPCI program “relies on past production requirement and five-acre minimum, which is okay, but you must have a contract in place to secure [the insurance]. Details of contracts and prices will probably be delayed until later than the March 16 deadline.”

Gordon said his overall sense of the programs is that “insurance is good to have, but I’m not sure if it will be the big encouraging factor for hemp production this year. Market stabilization, sustainable price structure and [a lower allowed standard] THC level is more important to me than insurance programs.”

THC, the active ingredient in marijuana, is present in low levels in industrial hemp, pot’s cannabis cousin. Under the 2018 Farm Bill, growers must limit THC levels in legalized industrial hemp to 0.3 percent.

Jeff Plaztke and Chad Nehme with Horizon Hemp in Boydton called the programs “a good start” but also “very limited” and challenging to many growers due to the stipulations imposed by the USDA. The MPCI insurance requires growers to have a contract to sell their insurance before they can qualify for coverage.

“This may limit the small grower who grow for themselves to create their own retail/wholesale product. Additionally, not all growers will be able to contract the sale of their harvest for a number of factors,” Plaztke said.

They also are concerned that MPCI insurance would not cover crops that had to be destroyed this year because the THC levels tested above 0.3 percent. This one-year production history would not allow new growers just getting into the industry to qualify for insurance, while also excluding those who cannot or do not grow more than five acres of hemp.

Plaztke and Nehme have similar concerns with the NAP program which, like the peril insurance, would not cover corps that tested above 0.3 percent THC last year. It, too, will not be available to growers who do not have an existing purchase contract.

To be eligible for the MPCI pilot insurance program, a hemp producer must have at least one year of history producing the crop and have a contract for the sale of the insured hemp. In addition, the minimum acreage requirement is five acres for CBD and 20 acres for grain and fiber. Hemp will not qualify for replanting payments or prevented plant payments under MPCI.

This pilot insurance coverage is available to hemp growers in addition to revenue protection for hemp offered under the Whole-Farm Revenue Protection plan of insurance. Also, beginning with the 2021 crop year, hemp will be insurable under the Nursery crop insurance program and the Nursery Value Select pilot crop insurance program. Under both nursery programs, hemp will be insurable if grown in containers and in accordance with federal regulations, any applicable state or tribal laws and terms of the crop insurance policy.

NAP coverage comes with a service fee of $325 per crop or $825 per producer per county, not to exceed $1,950 for a producer with farming interests in multiple counties.

The basic coverage is available at 55 percent of the average market price for crop losses that exceed 50 percent of expected production.

Growers seeking to qualify for NAP coverage must have a license to grow hemp and must comply with applicable state, tribal or federal regulations or operate under a state or university research pilot authorized by the 2014 Farm Bill.

Producers must report hemp acreage to their local FSA office after planting to comply with federal and state law enforcement. Hemp having THC levels above the federal statutory compliance level of 0.3 percent is an uninsurable or an ineligible cause of loss and will result in the hemp production being ineligible for production history purposes.

Virginia now joins 20 other states selected to participate in these pilot hemp insurance programs. The other states are Alabama, California, Colorado, Illinois, Indiana, Kansas, Kentucky, Maine, Michigan, Minnesota, Montana, New Mexico, New York, North Carolina, North Dakota, Oklahoma, Oregon, Pennsylvania, Tennessee, and Wisconsin.

Only select counties within these states can participate in the program. Information on eligible counties is accessible through the USDA Risk Management Agency’s Actuarial Information Browser, or for more information go to farmers.gov/hemp.

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