North Carolina Organic Grain Guide 2013 - BOPS Coalition
Disaster Programs Discourage Organic and Natural Food Production
1. Buried in the military supplemental
spending bill currently working
its way to a presidential veto are
provisions to provide disaster
assistance to farmers who suffered
natural disaster losses all the way
from Hurricane Katrina almost two
years ago to freezes over this year’s
Easter weekend. This funding is
long overdue, and vitally necessary
for the many farmers who are
waitingforit. But,likemanyFederal
Agriculture programs, the structure
of current programs and proposals
do much to discourage farmers
from responding to expanding
higher-value, environmentally-
sound markets like organic and
others, and create a competitive
disadvantage for those who do.
In a nutshell, to decrease costs
and encourage participation, crop
disaster payments supplement crop
insurance or, where there is no
crop insurance, the Non-Insured
Crop Disaster Assistance Program,
or NAP payments. NAP provides
crop-insurance-like benefits to
crops without policies, and requires
that the farmer sign up in advance of
the season, just like crop insurance.
No crop insurance or NAP, no
payment.
But crop insurance and NAP work
very poorly for alternative markets
like direct markets and organic,
and work not at all for independent
livestock producers. So the
producers that we would most
like to encourage; the innovative
producers who are responding to
emerging markets and bringing
a greater share of our food dollar
back to the farm and our rural
communities, are the least likely to
be assisted by disaster programs.
The disincentives are built into the
program. Crop insurance requires
organic producers to pay an
additional 5% premium, assumes a
lower yield than conventional, and
pays benefits based on the lower
conventional price. They pay more
for less.
Because their crop is valued at the
conventional price, the organic
DisasterProgramsDiscourageOrganic
and Natural Food Production
Scott Marlow, Farm Sustainability Program Director
RAFI-USA
April 25, 2007
Scott Marlow discusses a lost crop with farmer Rob Turner in the wake of Hurricane
Floyd. RAFI’s work with farmers shows that current disaster policy puts organic
and specialty farmers at a disadvantage.
Photo by Rob Amberg
2. producer has a smaller percentage
of his return covered by more
expensivepolicies. Becauseorganic
producers get lower crop insurance
benefits for higher premiums, they
are less likely to participate in the
program. Because they do not
participate in the program, even
though it is the correct financial
decision, they are then excluded
from crop loss payments.
While the disadvantages are
obvious for organic production,
they are even more extreme for
more recently emerging markets
like grass-fed beef, pastured pork
or poultry, and vegetables marketed
directly to restaurants or at farmers
markets.
The effects do not end with disaster
programs. When innovative
farmers go in to see their banker
to get operating loans, they are at a
financial disadvantage. Operating
loans use the crop as collateral.
Generallytheworthofthatcollateral
is based on assured income, which
is determined by, you guessed it,
crop insurance. Bankers seldom
value specialty crops at their full
value without some assurance
because, as one banker told RAFI,
“Just because you can get that price
for it doesn’t mean I can get that
price for it if you go belly up.” The
lack of effective crop insurance
doesn’t just hurt in the event of a
disaster, it hurts every time they go
to the bank.
Which brings us to the most
common disaster assistance
program; the emergency loan
program. Emergency loans are
available from local Farm Services
Agency offices whenever a disaster
is declared. They provide low-
interest loans, usually around 3 ¾%
for the amount of the documented
losses. But the farmer still has to
be eligible for the loan, and must
show repayment ability. That
budget is once again determined by
the valuation of the crop, and the
availability of crop insurance, and
once again the innovative farmer is
at a disadvantage.
In recent years a whole series of
federal and state programs have
aimed at encouraging farmers to
follow emerging markets and carry
the value of their crops further into
the marketplace. But at the same
time, our agricultural financial
infrastructure, determined by
federal policy, makes it almost
impossible to survive if they do.
The bridge to the future becomes a
cliff. It is about time that our federal
programs reward those innovative
farmers who follow emerging
markets and provide fresh food
directly to our communities.
In the long term, we must develop
crop insurance that provides
effective risk management for
innovative crops and markets.
Programs like the Adjusted Gross
Revenue crop insurance program
show some promise, but extremely
slow rates of adoption show that
they are not yet effective. Beyond
these pilots, according to USDA
officials, we are looking at 10 to 15
years for the development of new
programs.
In the mean time, which means in
this disaster supplemental and in
this farm bill, we must shift the
terms of crop insurance and disaster
programs to recognize higher
value markets when the farmer can
document a price history, eliminate
the increased premium for organic,
develop price and yield histories for
alternative markets and address the
needs of our growing community
of farmers providing fresh foods
directly to consumers.
We have all said that this is the
transition that we want to see. We
now have to make it possible for
farmers to make it.
RAFI is a nonprofit organization
that works for community, equity,
and diversity in agriculture. For
more information on RAFI or our
work on disaster programs, visit
our Web site, www.rafiusa.org.