On Thursday, the USDA announced that in the event of natural disasters, hemp farmers would enjoy the benefit of being covered under two crop insurance programs.
The first pilot program referred to as the Multi-Peril Crop Insurance would be available to farmers during the 2020 planting season, and would be accessible for farmers in several counties in 21 states. The insurance program provides coverage for farmers whose crop was lost due to weather, fire, diseases, or other natural occurrences, and the insurance program covers hemp cultivated for fiber, grain, or CBD extraction.
Insurance coverage will be availed to farms that have been operating for a minimum of one year and have a contract to sell the crop. The department also set minimum acreage requirements. For example, farms cultivating hemp for CBD would only be covered if they had at least five acres and those cultivating hemp for fiber and grain should possess a minimum of 20 acres. Under this insurance program, the USDA further stated that the crop would not qualify for replant payments or prevented plant payments.
The second insurance program is called the Noninsured Crop Disaster Assistance Program. Farmers can apply for this insurance program if there is no other permanent federal insurance program available. The insurance program also provides coverage for loss of crop cultivated for fiber, grain, seed, or CBD during the 2020 season.
Fifty-five percent of the average market price of hemp losses would be covered by the USDA; thus exceeding the 50% mark for the expected yield. The agency would also provide buy-up coverage in certain circumstances. Hemp and its derivatives were legalized under the 2018 Farm Bill, and the USDA program offers coverage for 50 to 65 percent of the expected production in increments of 5% at the total market price.
Farmers must be licensed to grow hemp under the 2018 or 2014 Farm Bill to qualify for the two insurance programs. The farmers must also comply with all the federal, state and tribal rules. According to the federal regulations, the hemp must contain less than 0.3% THC, and if the levels are above the stipulated percentage, the crop does not qualify for insurance coverage.
In a press release, the Undersecretary of the USDA Farm and Conservation Bill Northey said that they are happy to be offering these insurance coverage packages to hemp growers. Northey further said that hemp provides farmers with new economic opportunities, and in case of natural disasters, the farmers are anxiously looking for a means through which their crops can be protected.
The deadline for applying for both programs is March 16.
The Office of the Senate Majority Leader Mitch McConnel thanked the USDA for providing farmers with the crop insurance coverage. McConnell led legalization efforts of hemp through the 2018 Farm Bill.
The two hemp insurance programs are the latest developments by the USDA since the legalization of hemp production in 2018. In 2019, the USDA announced that the crop was qualified for Actual Production History Insurance, which covers the plant against natural disasters. Staring from the 2021 planting season, farmers will be provided with crop insurance through two more insurance programs, the Nursery Crop and Nursery Value Select pilot crop insurance program.
Experts agree with hemp industry players, such as SinglePoint Inc. (OTCQB: SING), who feel that it is only natural that hemp farmers have access to federal crop protection programs in the just the same way as other farmers who grow other crops.
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