The Agricultural Act of 2014, commonly referred to as the 2014 Farm Bill, strengthened crop insurance by adding new products and expanding coverage to previously underserved crops, which increased crop insurance’s role as a key component of the farm safety net.
Among the new programs is the Stacked Income Protection Plan, or STAX. This protection is for upland cotton acreage only, as cotton is not a covered commodity for assistance under other parts of the farm bill. STAX is an area revenue plan that a cotton farmer may use alone or in combination with an underlying policy or plan of insurance, which is similar in design to the existing area plan called Area Revenue Protection.
Another new program, the Supplemental Coverage Option, or SCO, provides certain crop farmers with the option to purchase area coverage in combination with an underlying individual policy or plan of insurance that would allow indemnities to be equal to a part of the deductible on the underlying individual plan of insurance. SCO indemnities are triggered if area losses exceed 14 percent of expected levels, with SCO coverage not to exceed the difference between 86 percent and the coverage level selected by the farmer for the underlying policy. SCO coverage is not available for crops enrolled in the Agriculture Risk Coverage (ARC) protection or acreage that is enrolled in STAX.
The 2014 Farm Bill also required the Risk Management Agency (RMA) to develop a product that addressed the needs of diversified farms. RMA was already developing a new product called Whole Farm Revenue Protection (WFRP) prior to the enactment of the farm bill and policies were available for sale beginning with the 2015 crop year. WFRP may be particularly attractive to growers of specialty and organic crops because it enables them to cover all farm revenue under one policy. It also allows for other Federal crop insurance policies to be purchased covering individual commodities of significant importance to the operation.
Additionally, a new Peanut Revenue policy now provides farmers the ability to manage risk for both yield and revenue losses.
The 2014 Farm Bill may also result in several new crop insurance products coming to market. One new type of product authorized for commodities, Margin Protection, (MP) became available in the 2016 crop year, for corn, rice, soybeans, and wheat in select states and counties. MP provides coverage against an unexpected decrease in a farmer’s operating margin (revenue less input costs). It is area-based, using county-level estimates of average revenue and input costs to establish the amount of coverage and indemnity payments.
New product priorities were also placed on policies that increase participation by farmers of other underserved agricultural commodities, including sweet sorghum, biomass sorghum, sugarcane, alfalfa, pennycress, dedicated energy crops, and specialty crops. Insurance products specifically identified for approval for sale, or research and development, include alfalfa, biomass sorghum and sweet sorghum for use in renewable energy and bio products.
Finally, the 2014 sought to increase participation among new and beginning farmers by providing additional premium discounts. It also linked crop conservation practices to insurance participation by requiring farmers to adhere to an approved conservation plan intended to protect highly erodible land and wetlands in order to be eligible for a premium discount.
* As of August 2018