Crop coverage complexity | Good Fruit Grower


Drew Killian, senior vice president – insurance at Northwest Farm Credit Services, shares some thoughts about what growers should know before they purchase Whole-Farm Revenue Protection insurance. (Ross Courtney/Good Fruit Grower)

Whole-Farm Revenue Protection may appeal to producers of high-value specialty crops, such as tree fruit, that carry a lot of price and crop quality risks, but it’s a complicated program compared to the multiple-peril crop coverage growers are most familiar with. 

Sanctioned by the U.S. Department of Agriculture’s Risk Management Agency, Whole-Farm Revenue Protection, or WFRP, serves as a risk management safety net for all commodities on the farm, under one insurance policy, as opposed to insuring a certain crop against certain perils. 

“It protects the almighty dollar,” said Drew Killian, senior vice president – insurance for Northwest Farm Credit Services. He called WFRP one of the best risk management strategies a specialty crop producer could implement, but Good Fruit Grower asked him what growers need to know if they are considering buying a policy.

Growers likely have individual policies for each crop, but if the farm operation falls short of the revenue guarantee due to insured perils, including natural losses and market fluctuations, WFRP will make up the difference.

WFRP evolved from a prior federal insurance program, Adjusted Gross Revenue, which started in 1999. In 2015, the Risk Management Agency expanded on the principles of Adjusted Gross Revenue and renamed the program Whole-Farm Revenue Protection, making it available across the entire country. Northwest Farm Credit Services, a Spokane, Washington-based agricultural lending institution, offered the policies early to producers and created proprietary tools to help manage their specialty crop accounts. 

And growers are using the program. In 2019, WFRP’s approved insurance providers paid nearly $195 million in claim payments nationwide; $150 million of that occurred in Washington, Oregon and California. Meanwhile, the loss ratios — loss payments over premiums — have been climbing since the program started.

Though useful, WFRP is complicated and should be well understood before purchasing, Killian said. Most customer complaints originate from not fully understanding WFRP rules, especially the procedures around setting intended price and yield projections. The Risk Management Agency and the approved providers can and will audit policies at any time — after the time of purchase, during the claim process and even after a claim payment. 

“The providers not only have the right but the responsibility to correct inaccuracies in a customer’s WFRP policy,” Killian said. Getting the policy right upfront is paramount.

“Growers need to make sure all details are accurate before they purchase and factor in their potential revenue guarantees from WFRP into their budget plans,” Killian said.

To help pave the way, Killian and his insurance staff shared the following tips for tree fruit growers who are considering WFRP:

—Maintain complete, organized and accurate tax, acreage, production and sales records.

—Project intended yields and prices following the rules detailed in the WFRP handbook. Ask your agent to work with the provider ahead of time to ensure projected yields and prices are acceptable. 

—Purchase WFRP insurance from an agent who understands entity structuring, tax records, program eligibility, underwriting and claim processes.

—Be informed about expense triggers and when they come into play. During the claims process, if a farm did not incur its normal, expected expenses because of the loss (for example: because it did not harvest damaged fruit — and harvest is one of the largest production expenses) then the policy’s liability and the potential claim can be reduced. 

—Become familiar with how normal Multi-Peril Crop Insurance works with WFRP to maximize savings.

—Learn ahead of time the loss notice rules WFRP expects of the producer. Failure to notify your agent in a timely fashion can result in denial of a claim.

—The claims process is different depending on how you market your crop — direct, contracted, open market, secondary markets, etc. The insurance company must know how you intend to market the crop throughout the sales cycle, especially when you have to change your intended market.

—Remember: Lack of labor is not a covered peril.

—The WFRP sales closing date for late fiscal filers in 2021 is Nov. 20. For all others, the closing date is March 15, 2022. 

by Ross Courtney



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