USDA Revises Rules on Crop Insurance for Hemp Producers

The U.S. Department of Agriculture is changing some rules around crop insurance for hemp, including making the insurability requirements more flexible.

USDA’s Risk Management Agency (RMA) has also added a new requirement for producers who grow direct-seeded hemp and is bringing the crop insurance policy in line with the most recent USDA hemp regulation.

USDA says the changes are in response to feedback received from hemp producers.

“Hemp is an emerging crop, and we are working with hemp producers to provide insurance options that make sense for producers and for insurance providers,” RMA Administrator Marcia Bunger said. “RMA has worked to expand and refine our offerings to be responsive and dynamic.”

The changes include additional flexibility to the insurability requirements for hemp under contract. Producers are no longer required to deliver hemp without economic value for insurability. However, contracts between producers and processors may still include delivery requirements.

Additionally, RMA has clarified how the amount of insurable acreage is determined if the processor contract specifies both an acreage and a production amount. RMA said this change was made in the policy to ensure producers know how their insurable acreage is determined for those contracts.

To ensure consistency across USDA, RMA has updated references to regulations, including the Agriculture Marketing Service final rule, which took effect March 22, 2021. This rule contains provisions on licensing requirements; recordkeeping requirements for maintaining information about the land where hemp is produced; procedures for testing the tetrahydrocannabinol (THC) concentration levels for hemp; procedures for disposing of non-compliant plants; compliance provisions; and procedures for handling violations.

In passing the 2018 Farm Bill, Congress directed USDA to issue regulations to implement a program for the commercial production of hemp.

Among the other changes announced by RMA is new requirement for producers who grow direct-seeded hemp, or hemp grown from seeds planted in the ground. Before insurance attaches, producers must have the acreage inspected and must have a minimum of 1,200 live plants per acre. This requirement was added to align direct-seeded hemp with the common farming practice for transplanted Cannabidiol (CBD) of transplanting at least 1,200 live plants per acre.

The hemp crop insurance policy provides Actual Production History (APH) coverage against loss of yield due to insurable causes of loss for hemp grown for fiber, grain, or CBD oil. The latest federal Farm Bill defines hemp as containing 0.3% or less tetrahydrocannabinol (THC) on a dry-weight basis. Hemp having THC above the federal statutory compliance level of 0.3% is an uninsurable or ineligible cause of loss and will result in the hemp production being ineligible for production history purposes.

The hemp crop insurance policy is available in certain counties within 25 states: Alabama, Arizona, Arkansas, California, Colorado, Illinois, Indiana, Kansas, Kentucky, Maine, Michigan, Minnesota, Montana, Nevada, New Mexico, New York, North Carolina, North Dakota, Oklahoma, Oregon, Pennsylvania, Tennessee, Texas, Virginia and Wisconsin.

In 2021, hemp producers insured 12,189 acres and 59 policies to protect $10.9 million in liabilities.

In addition to the APH crop insurance policy, coverage for hemp is available through Whole-Farm Revenue Protection, the Nursery crop insurance program, and the Nursery Value Select pilot crop insurance program. Additionally, the Noninsured Crop Disaster Assistance Program coverage, offered through USDA’s Farm Service Agency, protects against losses associated with lower yields, destroyed crops or prevented planting where no permanent federal crop insurance program is available.

Hemp producers can learn more at farmers.gov/hemp.

Crop insurance is sold and delivered solely through private crop insurance agents.