Hemp Insurance: The New Frontier
When a farmer decides to grow a crop that is highly labor intensive, expensive and prone to disease and mold would he or she grow it without Insurance? Any rational farmer wouldn’t dare take that capital risk on growing something that could be totally wiped out via natural disaster, theft, or lack productivity in the field. Unfortunately for hemp farmers across the United States this is exactly what is occurring even after the 2018 Farm Bills passage. The 2018 Farm Bill did allow for the national hemp crop to become eligible for subsidized federal crop insurance, but the legality of something oftentimes does not coincide with tangible protection and action.
Insurers need multiple years of analysis to determine the average potential crop yield to generate an appropriate premium. It is a potentiality that the USDA could use the data from the multiple years of pilot programs across the country to formulate an expected number of pounds per acre and expected yields, but this has yet to be determined. As the 2019 growing season edges ever closer, the uncertainty and reality that there may be no viable insurance for hemp farmers is daunting. Martin Barbre who is the administrator of the Agriculture Department’s Risk Management Agency, said “If someone is growing industrial hemp, the agent can talk to them but at present there is no coverage for hemp. We are working on it. It takes time, there is an entire process we have got to go through,” said Barbre at the meeting of crop insurance companies, reinsurers and agents. This process could potentially take three to five years. In the interim farmers should discuss this with their local Farm Service Agency (FSA) which is a department of the USDA, secondly a farmer should obtain a farm serial number which is assigned by the FSA. As of now though all an insurance broker can do is alert a farmer to a potential change in federal policy and what insurer may be willing to provide coverage. Insurance exist to provide some level of comfort and even after the passage of the 2018 Farm Bill this comfort is still absent.
Hemp farmers will have to sit back and wait patiently until insurers across the country determine the real risk and cost of hemp crops, as well the expected yields. This could process could potentially take several years and consequentially leaving active hemp farmers across the United States at risk to natural disasters, pest and theft.
