WASHINGTON, May 31, 2017 - Farmers who don’t have access to conventional crop insurance are showing increasing interest in the Noninsured Crop Disaster Assistance Program (NAP), which was expanded by the 2014 farm bill. Before 2014, farmers could only buy catastrophic NAP coverage, which protected producers against yield losses of more than 50 percent at 55 percent of the average market price. Now, producers can also get buy-up NAP policies, which cover up to 65 percent of the approved yield at 100 percent of the average market price.
Interest in NAP doubled the first year, going from 66,000 applications in 2014 to 138,000 in 2015, according to a report by USDA’s Economic Research Service. Sixteen percent of the NAP policies, or about 23,000, provided buy-up coverage, which requires payment of a premium.
NAP enrollment also doubled among beginning and socially disadvantaged farmers, who don’t have to pay the normal service fee for basic coverage. (The service fee for basic coverage varies depending on the number of crops and the number of counties in which a farmer operates. The premium is a percentage of the value of the covered crop and coverage level selected.)
Grass producers accounted for 41 percent of NAP applications in the program, and there also is demand for vegetables, salad greens, fruit and tree nuts. Enrollment for greens increased from 1,027 applications to 6,360 from 2014 to 2015.
The program also is proving popular with cherry growers, according to the ERS report. Nearly two-thirds of the NAP applications for cherries in 2015 were for buy-up coverage, for example. Federal crop insurance is only available in select counties in eight states for cherries.
Most pecan producers in Texas and Oklahoma can’t buy crop insurance either, even though many counties in those states have at least 500 acres of pecan trees, and NAP enrollment increased in both states. The number of policies went from 26 in 2014 to 167 in 2015 in Oklahoma and 56 to 84 in Texas.
The ERS analysts also tried to gauge how much impact buy-up coverage could have on farmers, regardless of their crop, so they assessed the difference between basic and buy-up coverage on feed corn, a crop for which there is extensive historical data on both prices and yields.
The analysts found that expected payments for buy-up coverage on feed corn in Bell County, Texas, a relatively high-risk area for the crop, would be 63 percent higher than for basic coverage. The lowest likely revenue for a farmer in that county in 2015 without NAP would have been $113 an acre, the report said. With NAP buy-up coverage, the revenue floor would have been $267 an acre, including the NAP payment.
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