The 2020 hurricane season officially began on June 1 and many experts predict that hurricane activity will be particularly active this year. The National Oceanic and Atmospheric Administration is predicting an above-normal 2020 Atlantic hurricane season with 13 to 19 named storms, of which 6 to 10 could become hurricanes, including 3 to 6 major hurricanes (category 3 or higher). An average hurricane season produces 12 named storms, of which 6 become hurricanes, including 3 major hurricanes.

USDA is ready to help producers during this hurricane season. USDA’s Risk Management Agency (RMA) recently introduced a new crop insurance hurricane endorsement, Hurricane Insurance Protection – Wind Index (HIP-WI), which covers a portion of the deductible of the underlying crop insurance policy when a county, or county adjacent, is within the area of sustained hurricane-force winds. HIP-WI provides coverage for 70 different crops and is available in counties in the vicinity of the Gulf of Mexico and the Atlantic, as well as Hawaii.

USDA has also helped affected producers recover from disasters in past years. The Additional Supplemental Appropriations for Disaster Relief Act of 2019 authorized the Wildfire and Hurricane Indemnity Program Plus (WHIP+) to help agricultural producers affected by natural disasters in 2018 and 2019. This includes hurricanes Michael, Florence, and Dorian as well as other natural disasters, such as floods, snowstorms, tornadoes, typhoons, volcanic activity and wildfires, and related conditions. In addition, in the Further Consolidated Appropriations Act of 2020, added drought, excess moisture, sugar beets and quality losses as covered under WHIP+. WHIP+ provides disaster payments to producers to offset losses of crops, trees, bushes, and vines that occurred as a result of those disaster events.

RMA and USDA’s Farm Service Agency (FSA) have been working together on WHIP+ implementation through what is called the linkage requirement. The WHIP+ linkage requirement stipulates that all producers who receive WHIP+ disaster assistance payments must purchase either crop insurance or Noninsured Crop Disaster Assistance Program (NAP) coverage at the 60% or higher level for the next two consecutive crop years.

This WHIP+ linkage requirement has contributed to a 60% increase in crop value covered for citrus crops in Florida alone, where fruit production and trees are often in danger of hurricane damage. For the 2020 crop year, 87% of orange trees insured were covered by buy-up policies versus 18% in crop year 2018. Similarly, 92% of acreage insured under the orange fruit policy are covered by buy-up for the 2020 crop year versus 50% in 2018. This increased coverage going into another hurricane season is good for producers, because it means more piece-of-mind that their risk is diminished, and they don’t have to rely on ad-hoc disaster assistance.

In addition to working with FSA on implementing disaster relief programs, RMA works with their stakeholders to develop new insurance policies that better protect them in cases of a disaster like a hurricane. Recently, RMA has been working with the citrus industry in Florida and other stakeholders, including citrus producer groups and the crop insurance industry to use what’s called the 508(h) process to develop a new insurance policy that is better suited to the Florida citrus producers’ needs, the Florida Citrus APH policy. The 508(h) process was created to allow private groups – farm organizations, insurance companies, and others – to present new insurance concepts to the Federal Crop Insurance Corporation (FCIC) Board of Directors. If approved, these policies are then incorporated into the Federal crop insurance system for years to come. This Florida Citrus APH policy was approved by the FCIC Board on May 21, 2020, and the policy will be available beginning in the 2022 crop year, which has a sales closing date (deadline to purchase) of November 1, 2020.

The Florida Citrus APH policy offers several advantages over the existing Florida Citrus Fruit Dollar plan. With the new APH policy, coverage is individualized based on the operation’s historical yield, versus the existing dollar plan that bases its coverage on a state average value. This allows producers to have coverage that is more reflective of their own expected yields, so they do not have to pay for coverage they don’t need, or they can get the greater coverage level they do need based on their historical yield. The new plan also offers more comprehensive coverage. It covers citrus fruit during the bloom phase until fruit forms on the tree, something the dollar plan does not cover. This means that you are covered, for example, when there is a freeze event during the bloom period. In addition, the new APH plan allows the producer to choose enterprise units if they wish, allowing the risk to be spread out over their entire operation. This is a better value for the risk management dollar – it lowers premium rates and allows the producer to perhaps buy a higher percentage of coverage for the entire operation in case of a major disaster like a hurricane. Finally, the new plan also offers a simpler loss adjustment process and faster settlement of claims. For example, if you have coverage under the dollar plan during a hurricane, and the citrus fruit falls off the tree and floats away, it is extremely difficult for an insurance adjuster to determine the exact percentage of the total crop that was damaged, because it has simply disappeared. With the APH plan, the producer is covered based on the operation’s historic average yield, so the claims process is simply a matter of determining the difference between it and the remaining citrus left on the trees able to be harvested.

The development of new plans like Hurricane Insurance Protection – Wind Index and Florida Citrus APH are just some recent examples of how RMA listens to producers and adjusts insurance options to help them. We can’t control the weather, but we can plan ahead and help producers to protect themselves from the results of disasters now and in future years. And, as the hurricane season begins again, producers should be confident that USDA is ready to assist them, and in knowing they are now better positioned to ride out the storms that may come.

Source: USDA RMA