MicroFarm Insurance Program


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USDA’s Risk Management Agency (RMA) established the Micro Farm Insurance Policy Program through the 2018 Farm Bill, providing risk management for all commodities on operations, under one policy, with up to $100,000 in approved revenue. The Micro Farm Policy is a new insurance program offered through Whole-Farm Revenue Protection (WFRP). This program is specifically for producers who have small farms and sell to their local communities. Micro Farm Policy protects operations against loss of expected agricultural revenue from crops or livestock produced during the insurance period. Protection will carry over coverage from the previous year if you are insured in the following year. It also covers post-production costs like washing, canning, freezing, processing, and packaging commodities and value-added products by considering these costs allowable revenue, and minimizes the inconvenience of expense and commodity reporting, which simplifies the record keeping process and producer requirements. CAT coverage is not available under the Micro Farm Program.


Coverage levels range from 50 to 85 percent. The insurance year for the Micro Farm Policy will depend on how you file your taxes. If you file for January 1 to December 31, you will use a calendar year. If you use July 1 to June 30 to file your taxes, you will use the fiscal year for the Micro Farm Policy.


Applying

The Micro Farm Insurance Policy program is currently available in every U.S. county. Sales closing and coverage modification dates for the 2022 calendar year will be March 15 in Maryland. You must file by July 15 to revise farm operation report dates and change your contract date, if needed, by August 31. Check with your local crop insurance agent to determine what your reporting deadlines would be. Producers can buy directly by contacting a crop insurance agent. Please contact your local USDA Service Center or the call center for further application questions or assistance at 877-508-8364.


The operation must file taxes for the policy year before any claim can be made, and claims should be made no later than 60 days after the date farm tax forms are submitted to the IRS. Producers must submit a notice of loss within 72 hours after the discovery that revenue for the policy year could be below the insured revenue. Claim payments for a revenue loss under Micro Farm Policy are paid within 30 days after the payment due is determined, as long as you are in compliance with the policy.

*A list of crop insurance agents is available at all USDA service centers and on the RMA website at www.rma.usda.gov/en/Information-Tools/Agent-Locator- Page.


Eligibility

Producers eligible for Micro Farm Policy must be U.S. citizens or resident aliens, and must be eligible for Federal benefits. They must also market to local, regional, farm-identity preserved, specialty, or direct markets, and can have specialty or organic commodities (both crops and livestock). To be eligible for coverage, a producer must:

  • Have 3 consecutive years of the operation’s tax history; for the 2022 Micro Farm Policy insurance year, the operation’s tax records from 2019- 2021 must be available

  • File either a Schedule F tax form or other farm tax form which can be converted to a Substitute Schedule F

  • Have no more than $100,000 in approved revenue (or $125,000 if you had a Micro Farm Policy the previous year), which is the maximum operation’s revenue allowed to be insured under the policy

  • Not be a vertically integrated entity or have other Federal crop insurance policies

  • Have no more than 50 percent of total revenue from commodities purchased for resale

Ineligible commodities, which are not covered, include timber, forest, forest products, and animals for sport, show, or pets.



Growing Operations

A Micro Farm Policy recognizes that operations may grow and expand over time so that the insurance guarantee would need to be increased. An insurance company may increase the insurance guarantee of the expanding operation if the operation can potentially increase the approved revenue amount based on an indexing procedure. The indexing procedure requires 5 consecutive years of revenue history and measures growth of the farm operation over this period.



Revenue and Revenue Eligibility

Micro farm insured revenue is based on the total amount of insurance coverage provided by the policy. The amount of approved revenue covered by Micro Farm Policy will depend on:

  • Whole-Farm History Report;

  • Farm Operation Report; and

  • The coverage level you choose (50-85 percent) multiplied by the approved revenue. This will equal the insured revenue amount.

For example, your expected approved revenue is $90,000, and insured at the 75-percent coverage option. Based on this, your insured revenue amount will be $67,500 ($90,000 * .75).



Revenue Loss

Losses occur if the operation’s revenue which the IRS requires to be reported on the operation’s tax records (“Allowable Revenue”) falls below the insured revenue. Insured Revenue to consider include:

  • Revenue from the tax form that is “approved revenue” according to the policy;

  • Adjusted by excluding inventory from commodities sold which were produced in previous years;

  • Adjusted by including the value of commodities produced during the tax year which have not yet been harvested or sold; and

  • Any other adjustments required by the policy such as those from uninsured causes of loss.

The Micro Farm Policy provides protection against the loss of insured revenue due to an unavoidable natural cause of loss occurring during the insurance period, and will also provide carryover loss coverage if you are insured the following year, though an inspection may be required to evaluate these losses.



Premium Subsidy

All farms insured under Micro Farm receive a whole-farm premium subsidy. Your premium subsidy will be based on the coverage level you elect. WFRP premium takes into account the county or counties where the crops are grown, types of commodities grown, percentage of revenues from each commodity grown, and number of commodities grown. Commodities under the micro farm policy are not assigned individual prices. Instead, one value for all commodities on your farm operation is established based on the average allowable revenue of the previous three years.



For more information regarding the Micro Farm Policy, please visit:

  1. https://www.rma.usda.gov/en/News- Room/Press/Press-Releases/2021-News/USDA- Introduces-New-Insurance-Policy-for-Farmers- Who-Sell-Locally

  2. https://www.rma.usda.gov/en/Fact-Sheets/National-Fact-Sheets/Micro-Farm-Program

  3. https://www.rma.usda.gov/en/News-Room/Press/Press-Releases/2021-News/Small- Scale-Local-Producers-Get-Improved-Insurance-Coverage-through-New-Micro-Farm-Policy

This material is funded in partnership by USDA, Risk Management Agency, under award number RMA21CPT0011599