AUGUSTA — Whole Farm Revenue Protection (WFRP) is a crop insurance policy that protects a farm’s adjusted gross revenue from production losses or decline in market prices due to natural causes. The deadline to enroll in WFRP is March 15, 2018 for insurance during the 2018 growing season, but farmers should begin the sign-up process with an agent well in advance of the deadline to ensure coverage.
A WFRP Perspective from the Field
Jean Hay Bright and her husband David Bright have owned and operated BrightBerry Farm in Dixmont for 17 years. On their 30-acre organic farm, the couple raises about two acres of berries including highbush blueberries, red and black raspberries, blackberries, and strawberries. They also sell garden seedlings, and vegetables including tomatoes, onions, winter squash, and pumpkins, although they plan to cut back on the annuals in the coming years, focusing more on the berries and seedling sales. “The whole farm is designed around the concept that only David and I will be the operators” which eliminates additional labor costs. The farm is open for “pick- your-own” blueberries and red raspberries. The couple also sells berries fresh to natural food stores, and frozen to several local ice cream and candy companies. The veggies are sold wholesale to stores and food distributors.
“It’s been very interesting trying to farm with climate change. We are a certified organic farm, we use no pesticides or herbicides so it’s been interesting and challenging to deal with new insects that have arrived and problems with pollinators because they seem to be struggling right now. This year we had a drought that we had to deal with. We did not have adequate means to put water on so we did have some crop losses. But we also had some successes, so it sort of balanced out.”
Why WFRP Crop Insurance
“Being semi-retired and on Social Security we are in a position where we need to have the farm provide a certain amount of income just to maintain its existence. The insurance on the farm is substantial. The property taxes are substantial as well as the many expenses that we would have to spend just maintaining the property, mowing the fields and keeping things neat. So, the whole idea is to have the farm itself at a minimum provide enough beyond expenses to pay for the property taxes and insurance. And that’s where crop insurance comes in. Whole Farm Revenue Protection sounded like the perfect protection that we needed to make sure that those three components would be covered at a minimum.”
Enrolling in WFRP Crop Insurance
The enrollment process began with a crop insurance agent in December and it took until March 2017 to get the required documents submitted. As Jean put it, “it was a learning process for both the agent and us. The overall insurer needed a lot of detail. I have good records, but even with my good records I had to convert from what my records showed to the units that they wanted and how they wanted it addressed and documented. It was a learning experience for both of us, but it worked. The kinds of information that they needed were the crop yields going back 5 years, sales records going back and as detailed as possible for each of the categories [crops].”
Jean Hay Bright’s Record Keeping System
Enrolling in WFRP requires 5 years of Schedule F tax documents, an intended farm plan for the insurance year, and verifiable sales records to justify the farm’s income history, expected yields and income for each crop. Accounting or farm management records are valid records for enrollment purposes. “The detail did take some work, but I was motivated.” To maintain their records, Jean uses Excel and has separate files for “plantings” and “yields” with tabs for each crop, and data recorded by crop variety in that tab. Coming in from the field, all berries, regardless if they are for wholesale or pick-your-own, are weighed so that actual yield figures are produced. Beyond insurance purposes these data allow monitoring of crop progress, show how yields compare with previous years, and help in determining if perennial plots need to be replaced. Excel formulas are used to translate data from the “sales” file to a “sales analysis” tab that shows the percentage each crop enterprise (berries, seedlings, tomatoes, squash, onions) contributes to the total income. An “accounts analysis” tab computes all of the sales by market so she can tell what percentage of total farm income is derived from sales at the stores, farm, distributors, and processor.
WFRP protects the lesser of the farm’s intended revenue for the insurance year or the historic average gross revenue. The approved gross revenue of BrightBerry Farm was “around $13,000 to $15,000.” The couple figured about $10,000 in coverage was needed to protect the income required for the property tax, farm insurance, and general farm maintenance expenses. With WFRP, the number of commodities produced by the farm determines the level of coverage the farmer is eligible for and the premium subsidy. The couple met the highest commodity count of three to qualify for the greatest subsidy amount and coverage level. They choose the 80% coverage level meaning they were protecting around $10,400 of gross revenue. This value is also known as the “insurance trigger.” At the end of the insurance period should their actual revenue fall below the trigger, the indemnity payment would be the difference between their trigger and actual gross revenue. The couple paid $162 for their WFRP premium. At the 80% coverage level, the Federal government subsidizes 71% of the premium cost while the farmer pays the remaining 29%. According to Jean, “it was certainly worth it to us for that amount of money to make sure that we would be able to cover those expenses that are going to be there whether the farm is producing or not.”
Reporting During the Insurance Year
At the time of enrollment, the farmer submits a “Farm Operation Report” which is an outline of what the farm intends to produce during the insurance year. Should the plan change, the farmer must submit a revised report during the season and a final report after the year is complete. Jean did not find the in-season reporting to be exceedingly onerous. “With all my record keeping it was just a matter of plugging in the figures as they came along. The initial one was the hardest to try to determine projections because all my records were past tense. But because I had the records, I was able to look forward and get a good guess. We’ve been pretty close on some. We were not close on all of them and some of them were because of the weird weather this year.”
As losses became apparent the farmers notified their agent. One of three strawberry varieties and one of six blueberry varieties did not blossom because of the flutuating warm and cold springtime weather. Also, there was a germination issue in one of the vegetable plots. An adjuster came out and inspected the loss but as it turned out the other crops produced enough to exceed the insurance trigger.
Unexpected Aspects of WFRP
“The one thing that was a little confusing about the whole process was the insistence that we justify our farm expenses because they have something called ‘allowable expenses’ and ‘non-allowable expenses.’ What it came down to is that if you have value-added products they want to make sure that the expenses for the jam, jars, and sugar, if you’re making jam, are not included in your farm expense reductions so that they’re not insuring the cost of the jars and the sale of the jam in them. We don’t do jam but I can see with the way my record keeping is I could easily take those expenses out.” Jean is correct. “Added-value” expenses are considered “non-allowable expenses.” In other words, these expenses must be excluded from the policy because crop insurance is designed to insure the crop at risk. The items needed to turn the berries into jam are not considered at risk. Farms that are “adding-value” to crops they produce should be careful to keep records that allow them to tease out the value of the crop versus the value of the inputs used to “add-value.” Expenses that are “allowed” in the policy are expenses that are incurred in the production of the crops produced by the farm. “Allowable expenses” include the minimum needed to take the crop out of the field, for example, expenses associated with washing, packing, packaging, etc.
Locating a Crop Insurance Agent
Having your farm records organized before meeting with an agent is favorable.
Jean and David met their crop insurance agent at the Maine Agricultural Trades Show. You can also locate an insurance agent using the Risk Management Agency’s online agent locator tool.
Visit the UMaine Risk Management and Crop Insurance website at: https://extension.umaine.
Contact Crop Insurance Education Program Manager Erin Roche (email@example.com or 207.949.2490).
See the fact sheet Preparing a Diversified Veggie and Fruit Farm for Whole Farm Revenue Protection Crop Insurance with a checklist to help organize your own farm records.
The University of Maine Cooperative Extension is in partnership with the USDA RMA to deliver crop insurance education in Maine. For more information, please visit the UMaine Risk Management and Crop Insurance website.
–Maine Department of Agriculture, Conservation and Forestry
For more articles out of New England, click here.