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New crop disaster rules increasing need for policies

NORTH BAY – In a year where frost tore what is becoming a multi-million dollar hole in the North Bay grape harvest, more realized the importance of federal disaster subsidies that so far have paid even the uninsured in times of catastrophic loss.

But a recent rule change says that from now on or until it changes, growers must buy into the federal crop insurance program if they want any government relief against major losses, according to the 2008 farm bill, also known as the Food, Conservation and Energy Act.

“We sent out mailings to let people know this was coming, but it’s still taking a lot of people by surprise. It has definitely generated some phone calls,” said Chris Maloney of Chris Maloney Crop Insurance Services in Petaluma. Ms. Maloney is one of about 40 North Bay brokers registered as a crop insurance agent, which is sold through private carriers but is a government subsidized program overseen by the Federal Crop Insurance Corp.

“I think there are a lot of people who don’t have crop insurance, but have been thinking about it that will go ahead now because they know they have to.”

Other brokers say they are just now seeing the effects of the farm bill passed earlier this summer, which includes the launch of the Supplemental Revenue Assistance Payments Program only available to the insured, or who qualify for non-insured crop disaster assistance.

In past years, disaster relief was paid on an ad-hoc basis in areas declared disaster regions or to farmers who lost at least 50 percent of their crops to weather, water shortage, fire, insects, plant disease or wildlife.

Currently, the number of farmers that purchase from the program varies across regions and farm type. In California, about 75 percent of winegrape growers purchase the insurance, or about 64,000 acres in Sonoma, Napa and Mendocino.

In wine-producing states competing with California, the rates of insured acres are comparatively low, even less than half in some states. In Oregon, the third-highest wine-producing state, only 21 percent of growers have insurance with even a greater risk of frost damage, according to the federal Risk Management Agency.

“Even though the premiums are subsidized, there are still a lot of reasons some people don’t participate,” said Jim Otto, acting director for the agency’s Davis office.

“For some it’s a hassle factor, for others, they might not think their risk is that high, and for some, they still just can’t afford it.”

Subsidies for crop insurance premiums can be up to 100 percent for basic, catastrophic coverage, but the buyer still pays an administrative cost. More comprehensive plans are available as a buy-up and subsidized at a lower rate. Depending on the plan, Napa agent George Hunt of George Hunt Insurance Services estimated the cost to be about $100 to $150 per acre.

Mr. Hunt has sold insurance for more than 35 years and crop insurance for more than 12 and said he believes the new program could lead to an increase in premiums. But a spokesman for Rain and Hail, the largest national crop insurance carrier, said farmers will not see the impact for about three or four years if at all.

This year only, those who did not sign up for insurance by the 2008 deadline in January can still purchase a one-time only “buy-in” waiver, but must do so by Sept. 16. The waiver allows the applicant to receive disaster funding this year, but they do not receive insurance coverage.

Farmers “must pay the service fee for

the waiver if they want to be eligible for relief funding this year, and anyone who thinks they may have lost a significant amount in the frost should buy-in,” said Jeff Yasui, chief program specialist for the California office of the Farm Services Agency.

The fee for the waiver is a minimum $100 a crop, with a cap of $300 per producer per county and a total maximum of $900 an applicant for all counties.

Mr. Hunt is planning a seminar in Napa for farmers this December to discuss the subject with a Farm Services Agency official.

He has not set the date for the event, but for more information call 707-226-9314.