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Crop Insurance for Industrial Hemp

Interest in the production of industrial hemp is ahead of the tools needed to provide protection against risk.

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Updated:

May 23, 2023

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This article provides an overview of available crop insurance options for industrial hemp grown in Pennsylvania.

Initially, the interest in the production of industrial hemp in the United States was ahead of the tools needed to protect against risk. Now producers have the choice between Multi-Peril Crop Insurance (MPCI) in selected states and the nationwide available Noninsured Assistance Program (NAP) and Whole-Farm Revenue Protection (WFRP). Additionally, hemp may be insured under the Nursery insurance program and the Nursery Value Select pilot program if grown in containers. Private insurance options are available as well. Please note that for all these programs, a hemp crop having a THC level above the federal legal level is not an "insurable cause of loss." In addition, that portion of the production would not be eligible for production history purposes so will not count in your Actual Production History (APH). To be eligible for these programs, producers must comply with state and federal regulations and have a license to grow hemp. More information about obtaining a license in PA can be obtained on the PDA Hemp website. Please note that, since the beginning of 2020, processors must obtain a permit in Pennsylvania. A separate application for each property (deeded property) is required (processing or growing). If hemp was produced on the permitted site in the previous year, a renewal permit may be or a lesser fee. New sites will be required to pay the full price for the first year. For MCPI and NAP, growers must provide a contract with a licensed processor at the time (no later) of the acreage reporting date, July 31^st. Most crop insurance policies are based on your actual yield history (APH), so keeping good production records is very important.

Multi-Peril Crop Insurance Pilot Insurance Program

At the beginning of 2020, the USDA announced the details of the Multi-Peril Crop Insurance (MPCI) Program. This program is available in most counties in 25 states, Pennsylvania being one of them. In Pennsylvania, Philadelphia and Cameron Counties are not covered under the crop insurance program. Under the MPCI, the crop does not qualify for prevented plant or replant payments. Catastrophic 50/55 coverage and additional coverage up to 75/100 is available.

To be eligible for this program, a producer must:

Have one year of history of producing hemp

Have a contract for the sale of the insured crop

Fulfill the minimum acreage requirement of five acres for CBD and 25 acres for grain and fiber

The crop is planted to a type adapted to your area and not on a variety prohibited list from the governing authority.

You may choose to select different coverage levels for each insured type in each county in which you are producing. For example, you may choose to insure your grain production at 60% coverage level, your fiber at 65% coverage level, and your CBD at 75% coverage level. If you only select one coverage level, that will apply to all production types. Also, your processing contract may impact your insurable acreage or production. The USDA Risk Management Agency's Actuarial Information Browser shows the information on eligible counties. The results of THC testing must be provided to the growers' insurance company within 72 hours. Additional provisions are available through the Beginning Farmer and Rancher Benefits for Crop Insurance and Veteran Farmer and Rancher Benefits for Federal Crop Insurance.

Non-insured Crop Disaster Assistance Program

Risk protection is also available for industrial hemp through the Non-insured Assistance Program (NAP) administered by USDA's Farm Service Agency. This program is used when crop insurance is not available for crops produced in your area. For Pennsylvania, the NAP option will not apply since there is a permanent hemp policy. However, the NAP policy will cover prevented planting unless that was a management decision.

To be eligible for this program the producer must have a contract. THC testing results must be provided when a lost production is reported, or for history purposes. The Non-insured Crop Disaster Assistance Program for 2019 and Subsequent Years informs about provisions for beginning, socially disadvantaged, and veteran farmers. For more information concerning NAP, go to the USDA's Non-insured Crop Disaster Assistance Program webpage.

Whole-Farm Revenue Protection

This coverage is designed to cover your total farm income and not specific crops. The coverage provides protection up to an $8.5 million limit with a premium subsidy from 50% to 80% when at least two crops are insured. To obtain WFRP coverage you must have participated in a Section 7606 state or university research project during the 2018 crop year and produced hemp during the 2019 crop year. For more information on WFRP, go to Whole Farm Revenue Insurance or to the USDA Whole-Farm Revenue Protection Risk Management Agency Fact Sheet for more information.

Private Insurance

Private insurance companies may have other insurance products available to cover industrial hemp and may be able to customize a policy to best protect your operation. The company may also be able to provide protection for your industrial hemp crop if destruction is ordered because of excessive THC levels. If you would like to purchase this type of coverage it is important that you research the company for financial strength and understand the types of coverage provided. Remember that records will be required by any company offering insurance and lack of these records may keep you from participating in any program. If you are contacted by an insurance salesperson to cover your hemp production, be sure you understand what you are purchasing and how well the insurance guarantees are backed.