BLOOMINGTON, Ill. — Doug Yoder, crop insurance expert for COUNTRY Financial Services, wants small and specialty farmers to know about the new “Micro-Farm” crop insurance option designed specifically for agricultural producers who earn less than $100,000 per year in gross sales. The option, intended for small farmers who sell locally and-or direct to customers, is offered as a subset of the USDA’s Whole-Farm Revenue Protection program, and will be offered for the first time in 2022. 

Yoder led a discussion of the new Micro-Farm policy option during the 2022 Illinois Specialty Crops Conference, held January 5-7 in Bloomington and online, during which he admitted that only a dozen Whole-Farm insurance policies were sold by COUNTRY agents to Illinois growers in 2021. 

“The Micro Farm policy is part of the USDA’s suite of federal crop insurance tools that the Risk Management Agency (RMA) offers to farmers. In a nutshell what they have done is tried to simplify Whole-Farm revenue and design it, so it is easier and more accessible to what they call micro farms,” said Yoder. “This is the government’s latest effort to offer specialty crop producers better, more accessible tools. Will it be good enough? It will be in your hands to determine if this is something you will want to pursue.”

With lack of historical data to draw upon, Yoder was unable to offer much guidance on how the program actually works and the amount or ratio of payments made to farmers. However, the veteran crop insurance specialist was able to discuss the provisions of the Micro-Farm policy option, adhering to information provided by USDA-RMA:

Micro-Farm is available to producers who have a farm operation that earns an average allowable revenue of $100,000 or less, or for carryover insureds, an average allowable revenue of $125,000 or less.

All coverage levels will be available to producers using Micro-Farm. This will enable producers to purchase the 80% and 85% coverage levels without providing additional paperwork.

Micro-Farm minimizes underwriting and recordkeeping requirements, and producers will not have to report expenses and individual commodities.

Producers can include post-production costs activities as revenue, such as washing and packaging commodities or value-added products like jam.

“RMA data shows that 85 percent of producers who sell locally have less than $75,000 in gross annual sales, and that’s who they are targeting with this,” said Yoder. “The first year you use this tool, $100,000 (gross sales) is your limit. If you use it the second year and years forward, they call that a carry-over year and your limit is $125,000 in revenue to qualify for this product.”

Yoder noted that part of the appeal of the Micro-Farm option is that small producers and specialty growers will not be required to supply five years of tax records, which is required with the Whole-Farm option. “Submitting five years of tax records is sometimes burdensome and this is one area they have tried to make this easier; Micro-Farm requires three (years),” he said. “In addition, there is no expense reporting. The only thing you are going to be reporting are your sales records, and your expected revenue to come up with the guarantee, and then revenue for that year to see if you have a claim or not.” 

Coverage levels for Micro-Farm range from 50 to 85 percent, with those claiming the maximum facing a 15 percent deductible. “Like with any crop insurance, there is a sizable deduction. If you go for the minimum coverage you would have to lose half of your revenue for the policy to kick in. In this high-input-cost environment, I think (maximum coverage) is money well spent,” Yoder said. 

Sales closing dates for the USDA’s Micro Farm policy option are January 31, February 28, or March 15 depending on the producer’s state and county.

Yoder can be reached with questions about the USDA Micro-Farm policy and other crop insurance questions at doug_yoder@countryfinancial.org.