Spring 2022 ORGANIC REPORT 44 RMA to Partially Address Organic Agriculture Crop Insurance Concerns Jeff Schahczenski Regulatory “What’s in a word? A rose by any other name would smell as sweet.” –William Shakespeare, Romeo and Juliet IN A recent flurry of press releases and federal rulemaking, USDA’s Risk Management Agency (RMA) is possibly re-thinking to change its understanding of organic agriculture. Perhaps the most intriguing is the proposal by RMA to change its definition of organic agriculture. While one might think the definition of organic agriculture is common across all USDA agencies, it is not. The new proposed RMA definition is as follows: “Organic farming practice. A system of plant production practices used on organic acreage to produce an organic crop this is approved by a certifying agent in accordance with 7CFR, part 205.” What is interesting about this new definition and perhaps of most significance is that RMA now agrees at least in part that organic production is a system of production. However, the changed definition is still confusing since it also continues to see organic agriculture as a practice or set of practices. The important point here is what a system of production actually means. A system of production is not merely a set of practices, but rather the dynamic interaction of those practices where the whole is much greater than the sum of its parts. RMA has not fully embraced the concept of a system of production in part because it seems to believe organic production is riskier than non-organic production, which our recent research calls into question as not likely. Because RMA’s definition does not embrace a system of production, organic livestock production is excluded. This, too, may be short sighted since the re-integration of cropping with livestock production systems would likely lower revenue risk as well as address climate disruption. This confusion around organic agriculture systems and crop insurance is partially understandable given the conflictive and confused history of how RMA established insurance for newly certified organic farmers and livestock producers. Although not well known, the first organic crop insurance policies were written in 2002. A total of 110 policies covering 20 different organic crops were sold. However by 2004, fundamental changes were made by RMA such that organic crop insurance policies were limited to a small number of commodity crops, based indemnity (loss) payments on non-organic prices, added a 5% surcharge on the premium costs of all organic crops, generally established that the ten-year county average yields of most organic crops were 35% of non-organic yields, and finally that organic prices of crops were always about double those of non-organic crops. These policies led to a situation where many organic farmers paid more for crop insurance with less coverage than their non-organic peers. It took until the passage of the 2014 Farm Bill to see significant reform with an elimination of the 5% premium surcharge and the creation of the Contract Price Addendum (CPA) whereby organic and transitioning organic farmers who had sales contracts could insure their crops at almost the full contracted price rather than the projected price established by RMA, which was wholly based on nonorganic prices. The passage of the 2014 Farm Bill also created the Whole-Farm Revenue Protection (WFRP) policy, which provides coverage based on the historic or expected economic capacity of the whole farm to generate revenue. Because organic farmers and livestock producers tend to generate higher levels of gross revenue and generally grow a higher diversity of often unique crop and livestock products otherwise uninsurable, WFRP offered a clear advantage to organic farmers. A system of production is not merely a set of practices, but rather the dynamic interaction of those practices where the whole is much greater than the sum of its parts.
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