USDA Announces Two Hemp Insurance Programs Offering Natural Disaster Coverage

Federal agriculture officials are offering farmers in select states and counties in the U.S. two options to protect hemp crops against natural disasters.

The United States Department of Agriculture (USDA) is now offering hemp farmers two options of insurance programs to sign up for in order to protect crops from natural disasters.

“We are pleased to offer these coverages to hemp producers. Hemp offers new economic opportunities for our farmers, and they are anxious for a way to protect their product in the event of a natural disaster,” said Farm Production and Conservation Undersecretary Bill Northey in a USDA news release.

Both pilot programs come with a March 16 signup deadline. According to the USDA, the Multi-Peril Crop Insurance (MPCI) provides coverage against loss of yield because of insurable causes of loss for hemp grown for fiber, grain or Cannabidiol (CBD) oil.

The other option is the Noninsured Crop Disaster Assistance Program (NAP) coverage, which protects against losses linked with lower yields, destroyed crops, or prevented planting where no permanent federal crop insurance program is available.

The MPCI insurance is a new crop insurance option for hemp farmers in select counties of 21 states for the 2020 crop year. The USDA insurance program is available for eligible producers in certain counties in Alabama, California, Colorado, Illinois, Indiana, Kansas, Kentucky, Maine, Michigan, Minnesota, Montana, New Mexico, New York, North Carolina, North Dakota, Oklahoma, Oregon, Pennsylvania, Tennessee, Virginia, and Wisconsin.

Limitations of Hemp Insurance Options

One area of loss the insurance does not cover is the loss of a crop due to THC levels exceeding the 0.3 percent threshold, otherwise known as “hot hemp.” This was one of the biggest areas of concern noted by the public when the USDA called for public feedback on hemp regulations in 2019.

Other possible challenges with the insurance programs are due to federal limitations. Eligibility for the insurance programs is determined by regulations from the 2018 Farm Bill. Under the law, all growers must have a license to grow hemp and must comply with applicable state, tribal or federal regulations or be authorized by the 2014 Farm Bill to operate under a state or university research pilot.

Hemp Industry Daily reported that the USDA has so far only approved only six state and seven tribal hemp production plans. Under the 2014 Farm Bill, 14 states will keep their current hemp rules.

USDA hemp insurance

Other Hemp Challenges in the U.S.

Other challenges are emerging in the hemp market going into 2020.  Julie Lerner, founder and CEO of Denver-based online marketplace PanXchange, told Hemp Industry Daily that the 2019 season saw few buyers in the commercial marketplace for hemp.

“There are no major trade houses in this market that come in and take counterparty risk and transportation risk and storage risk and have the working capital to make these types of forward contracts,” Lerner told Hemp Industry Daily.

“So we’re coming into the 2020 crop year with a surplus (of hemp) and a dearth of commercial buyers in this space.”

Price decline is also a challenge that U.S. hemp farmers will seek to overcome in the next several years.

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