Protecting The Harvest: Navigating Crop Insurance And Tornado Risks

Tornadoes can be extremely destructive to farms, causing damage to buildings, vehicles, and crops. In the aftermath of a tornado, farmers may be forced to protect their remaining stock and calculate their losses, which can be extensive. While insurance is available for crops, standard policies may not cover all types of losses suffered by farmers, and even commercial policies may not be extensive enough to cover all damages. This can leave farmers with significant out-of-pocket expenses. To ensure adequate coverage, farmers should carefully consider add-ons and extensions to their policies, such as property damage extensions, pollution cleanup, and commercial auto coverage.

The US Department of Agriculture (USDA) offers assistance to farmers affected by tornadoes

The US Department of Agriculture (USDA) offers a range of assistance to farmers, ranchers, and communities affected by tornadoes and severe weather. USDA provides technical and financial assistance to help agricultural producers recover from crop, land, infrastructure, and livestock losses and damages.

USDA offers several risk management and disaster assistance options to help producers recover after disasters like tornadoes. The Federal Crop Insurance Program, a public-private partnership between USDA’s Risk Management Agency and private companies, is one such tool. For crops without crop insurance, the Noninsured Crop Disaster Assistance Program (NAP) is available through the local Farm Service Agency (FSA). Producers with risk protection through Federal Crop Insurance or NAP should report crop damage within 72 hours and follow up in writing within 15 days.

Several disaster programs are offered by FSA for livestock and perennial crop producers, including:

• The Livestock Indemnity Program (LIP) provides assistance for livestock deaths due to eligible adverse weather events.
• The Emergency Assistance for Livestock, Honeybees, and Farm-Raised Fish Program (ELAP) offers compensation for feed and grazing losses.
• The Tree Assistance Program (TAP) provides cost-share assistance to replant or rehabilitate eligible trees, bushes, or vines lost.

USDA also provides assistance for communities impacted by tornadoes. The Emergency Watershed Protection (EWP) program helps local government sponsors address watershed impairments or hazards, such as debris removal and streambank stabilization. USDA Rural Development offers programs for the repair and modernization of rural infrastructure, including drinking water systems, electric infrastructure, and essential community facilities.

USDA's Food and Nutrition Service (FNS) works with FEMA and state and local authorities to provide emergency nutrition assistance and support to those in need. USDA also assists with emergency housing needs, offering information to FEMA for those requiring temporary housing and providing loans or loan guarantees for buying or repairing homes in eligible rural areas.

Farmers can avail of the Federal Crop Insurance Program, a public-private partnership

Farmers can avail of the Federal Crop Insurance Program (FCIP), a public-private partnership between the USDA's Risk Management Agency and private companies and agents. The program offers agricultural producers financial protection against losses due to adverse events, including drought, excess moisture, damaging freezes, hail, wind, disease, and price fluctuations. It is a key federal support program for agriculture in the United States, providing insurance to around 1.2 million policies and covering an average of 284 million acres annually.

The FCIP provides tools for producers to manage their risk before disasters strike. For crops without crop insurance, the Noninsured Crop Disaster Assistance Program (NAP) is available through the local Farm Service Agency. This risk protection includes crop production loss and tree loss for certain crop insurance products. Producers should contact their crop insurance agent or local FSA office to learn more.

The FCIP offers a wide variety of crop insurance products, broadly classified into individual-based policies or area and index-based policies. Individual policies trigger indemnity payments in response to the individual producer's loss experience, while area or index plans are conditional on a high-level outcome or index. Yield-based policies protect against a drop in production quantity, while revenue-based policies guarantee a certain level of production revenue, protecting against low output prices and/or quantity.

The FCIP has evolved since its inception in the 1930s, with legislative changes, premium subsidies, and new insurance products increasing participation. As of 2021, the aggregate crop coverage level reached an all-time high of 74%. The program's cost has also increased, with premium subsidies being the largest share, followed by administrative costs and underwriting gains.

The Federal Crop Insurance Corporation (FCIC), a wholly-owned government corporation, administers the FCIP. The FCIC promotes economic stability in agriculture through a sound system of crop insurance and provides the means for research to establish such insurance.

The Noninsured Crop Disaster Assistance Program (NAP) covers crops without insurance

The Noninsured Crop Disaster Assistance Program (NAP) is a form of financial assistance for producers of non-insurable crops. The program is administered by the U.S. Department of Agriculture's (USDA) Farm Service Agency (FSA).

NAP provides financial assistance to farmers and ranchers who have suffered crop losses due to natural disasters. This includes disasters such as droughts, floods, hurricanes, and tornadoes. The program covers crops that cannot be insured through traditional crop insurance options or the USDA's Risk Management Agency.

Eligible crops under NAP include those grown for food, fiber, livestock consumption, biofuel, or bio-based products. Commercially produced crops and agricultural commodities that do not have crop insurance available are generally eligible for NAP coverage.

NAP offers basic coverage, which is equal to a catastrophic level of risk protection. It covers 50% of the expected yield at 55% of the average market price. Additionally, NAP offers "buy-up" coverage, which allows producers to purchase additional coverage for a premium. The buy-up coverage ranges from 50% to 65% of the yield and up to 100% of the average market price.

To be eligible for NAP, producers must apply for coverage using Form CCC-471 and pay the applicable service fees at their local FSA office. The service fees vary depending on the number of crops and the number of counties the operation is located in. There are also premium costs for the buy-up coverage.

NAP is an important risk management tool for farmers, especially those with small specialty crop operations or those who are unable to obtain adequate insurance coverage for their crops. By providing financial assistance, NAP helps farmers recover from natural disasters and protect their livelihoods.

The Livestock Indemnity Program reimburses farmers for lost or injured livestock

Farmers can suffer income loss and damage from adverse weather events such as tornadoes. Unfortunately, most standard insurance policies do not cover the types of losses suffered by farmers and livestock owners. However, there are specialty insurance options that can help farmers and ranchers recover from tornado damage.

One such option is the Livestock Indemnity Program (LIP), which is a US Department of Agriculture (USDA) program that provides benefits to livestock producers for livestock deaths or injuries in excess of normal mortality caused by adverse weather events or attacks by animals reintroduced into the wild by the federal government. LIP payments are equal to 75% of the average fair market value of the livestock. To qualify for LIP payments, livestock owners must have legally owned the livestock on the day they died or were injured, and the livestock must have been maintained for commercial use as part of a farming operation.

In addition to LIP, the USDA offers several other risk management and disaster assistance programs to help agricultural producers recover from disasters like tornadoes. These include the Federal Crop Insurance Program, the Noninsured Crop Disaster Assistance Program (NAP), the Tree Assistance Program, the Emergency Conservation Program, and the Emergency Forest Restoration Program.

It is important for farmers to carefully consider their insurance options and choose the right coverage to protect their livelihood in the event of a tornado or other natural disaster.

The Emergency Conservation Program assists with restoring damaged farmland

The Emergency Conservation Program (ECP) is a form of disaster assistance offered by the USDA to help farmers and ranchers repair damage to farmland and conservation structures caused by natural disasters such as tornadoes. The program also helps implement emergency water conservation measures during severe droughts.

The ECP provides funding and technical assistance to repair damaged farmland and put in place methods for water conservation. To qualify for ECP funds, the damage from the natural disaster must create new conservation problems that, if not addressed, would further damage the land, significantly affect its productive capacity, be too costly to repair without federal assistance, and represent damage from a natural disaster unusual for the area (except for wind erosion).

The Farm Service Agency (FSA) County Committee inspects the damage to determine if the land is eligible for ECP. The funding for ECP is determined by Congress, and qualified limited-resource producers may earn up to 90% cost-share. The FSA County Committee can approve applications up to a certain amount, with larger amounts requiring approval from the state committee or the national FSA office.

To apply for the Emergency Conservation Program, farmers and ranchers should contact their local FSA Service Center to find out about ECP sign-up periods, which are set by the FSA County Committee.

Frequently asked questions