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Hemp crop insurance has been an area of curiosity for our friends in the farmer / producer community.  Crop insurance on traditional crops is part of the standard toolkit of risk management products for many large operations, and in fact is often a required complement to crop loans.  Needless to say, with the market for hemp itself evolving so rapidly, the markets for hemp risk management products – such as hemp crop insurance have been equally dynamic. 

Over the last 4 weeks, the many of the details of the 2020 hemp crop insurance program have come into focus.  With the assistance of our friends at Adams Insurance Advisors and Graybeal Insurance, we’ve started to wrap our heads around the product.  Here’s what we’ve learned:

1.      This is the first year that federally subsidized, multi-peril hemp crop insurance is available.  The Risk Management Agency at the USDA deserves our thanks for pushing so hard to make the product available in time for the 2020 crop year, whatever the limitations of the product may prove to be.  Thank you!

2.      The most important deadline is March 16 – that is when you must have your initial application completed and submitted. 

3.      There are great hemp insurance FAQs available online to answer your general questions about multi-peril hemp crop insurance.  Here’s a great place to start:  https://www.farmers.gov/manage/hemp/FAQs 

4.      Your ability to access the hemp insurance program will depend on (a) your state, (b) your county and (c) whether you farmed hemp last year.  If your location and experience qualify you, then you can move on to the nuances of the products that are available to you.

5.      In general, you can get hemp insurance coverage for (a) grown for oil, fiber or seed, (b) conventional hemp or organic hemp, (c) irrigated hemp or dry land, (d) grows started from hemp seed or hemp transplants, and (e) plants grown for the whole plant or hemp flower Each of those affect the target yield and product value of your hemp crop for insurance purposes.

6.      We have no idea how they established the average hemp yields for different areas in different counties.  Those numbers could look very right or very wrong to you.

7.      We have no idea how they established the dollar value of the different harvested hemp crops For instance, whole plant (for oil) is valued at $3.56 per dry pound, flower (for oil) is valued at $8.64.

8.      Despite all the weirdness, the examples we ran through the RMA calculator resulted in at least a break-even insurable value for our sample crops ($3-6,000/acre) , for a subsidized premium of approximately $350-400/acre.  Every producer’s situation will be different but this is night and day more attractive than the hemp insurance products that were available in the market a year ago.

9.      One of the headlines regarding hemp underwriting requirements is that the producer must have an off-take contract in place with a processor.  While this is true, the deadline for submitting this hemp processor contract is August 15, 2020 In the event that a producer applies for hemp crop insurance in March, only to determine later that they don’t want that insurance for any reason, they can always cancel the insurance later in the year, report zero acres, and owe no hemp crop insurance premium.

       

There’s a lot to wrap your head around in crop insurance products generally, and hemp crop insurance is no exception.  Nonetheless, it is worth 30 minutes of time for a hemp farmer making a sizable investment of time, money and acreage (at least 5 acres in the case of hemp production for CBD) to talk with an experienced crop insurance broker about the availability of hemp crop insurance.  If available, it’s worth a couple additional hours gathering up the necessary information to get a quotation and determine whether the extra cost of the premium is worth the extra peace of mind.

For additional peace of mind, don’t hesitate to reach out to HNP for your hemp seed, hemp seed coating, hemp transplants and other operational needs associated with your 2020 hemp crop