Whole Farm Revenue Protection
Whole-Farm Revenue Protection offers a risk management safety net for the entire farm, effectively grouping all of the farm’s commodities (crops and livestock) into one insurance policy. The insurance plan is tailored for any farm with up to $8.5 million in insured revenue, including farms with specialty or organic commodities, or those marketing to local, regional, farm-identity preserved, specialty or direct markets. WFRP Insurance coverage is based on farm financial information including farm operation reports, farm history and tax returns. Therefore, detailed and accurate record keeping is essential. There is a minimum number of commodities that need to be covered in order to attain higher coverage levels. Items must contribute a considerable amount to the overall farm revenue to count towards diversification. WFRP coverage levels range from 50% coverage to 85% coverage, available at 5 percent increment. Projected price are used to establish a minimum guarantee and to calculate the premium.
WFRP Insurance coverage is provided based on farm financial information including farm operation reports, farm history and tax returns. Therefore detailed and accurate recordkeeping is essential. There is also coverage for replanting under WFRP, but a minimum number of items are required for diversification and some levels of coverage. Items must contribute a considerable amount to the overall farm revenue to count towards diversification.
WFRP protects your farm against the loss of farm revenue that you earn or expect to earn from:
- Commodities you produce during the insurance period, whether they are sold or not;
- Commodities you buy for resale during the insurance period; and All commodities on the farm except timber, forest, and forest products; and animals for sport, show, or pets.
The policy also provides replant coverage:
- For annual crops, except those covered by another Federal crop insurance policy;
- Equal to the cost of replanting up to a maximum of 20 percent of the expected revenue multiplied by your coverage level; and When 20 percent or 20 acres of the crop needs to be replanted.
- The approved revenue amount is determined on your Farm Operation Report and is the lower of the expected revenue or your whole-farm historic average revenue. Coverage levels range from 50 percent to 85 percent. Catastrophic Risk Protection (CAT) coverage is not available.
The number of commodities produced on the farm are counted using a calculation that determines:
- If the farm has the diversification needed to qualify for the 80 and 85 percent coverage levels (there is a 3 commodity requirement); The amount of premium rate discount you will receive due to farm diversification; and
- The subsidy amount. Farms with 2 or more commodities will receive a whole-farm subsidy and farms with one commodity will receive a basic subsidy. You can buy WFRP alone or with other buy-up level (additional coverage) Federal crop insurance policies. When you buy WFRP with another Federal crop insurance policy, the WFRP premium is reduced due to the coverage provided by the other policy. If you have other Federal crop insurance policies at catastrophic coverage levels you do not qualify for WFRP. WFRP ‘insured revenue’ is the total amount of insurance coverage provided by this policy. Your crop insurance agent and approved insurance provider determine the farm’s ‘approved revenue’ using the following information:
- Whole-Farm History Report; Farm Operation Report;
- Information regarding growth of the farm; and
- The coverage level you choose (50-85 percent) multiplied by the approved revenue is the insured revenue amount.
|Coverage Level||Commodity Count (Minimum Required)||Maximum Farm Approved Revenue|
The Commodity Count in the table above is a measure of the farm’s diversification, determined by the policy. The calculation determines the minimum proportion of revenue a commodity must contribute to the farm to be considered a commodity for WFRP. A farm’s revenue would be evenly distributed if an equal percentage of revenue came from each commodity produced, for example, 25 percent from corn, 25 percent from soybeans, 25 percent from spinach, and 25 percent from carrots. The minimum proportion to be considered a countable commodity is one- third of that amount. In this example, for corn, soybeans, spinach, or carrots to each county, each commodity would have to make up at least
8.3 percent of the total revenue of the farm to count as a commodity under WFRP. Commodities with revenue below the minimum will be grouped together in order to recognize farm diversification (this will make the commodity count higher). The Maximum Farm Approved Revenue represents the maximum approved revenue for a farm to be eligible for WFRP given the $8.5 million maximum liability allowed.
Eligibility for WFRP coverage requires you to: Be eligible to receive Federal benefits;
- Be a U.S. citizen or resident;
- File either a Schedule F tax form or other farm tax form that can be converted to a Substitute Schedule F for a specified number of years (see information you provide below);
- Have no more than $8.5 million in insured revenue, which is the farm revenue allowed to be insured under the policy multiplied by the coverage level you select (see table above);
- Have no more than $1 million expected revenue from animals and animal products;
- Have no more than $1 million expected revenue from greenhouse and nursery;
- Have no more than 50 percent of total revenue from commodities purchased for resale;
- Have ‘buy-up’ coverage levels on any Federal crop insurance plans you choose in addition to the WFRP insurance plan;
- Meet the diversification requirements of the policy by having two or more commodities if a commodity you are raising has revenue protection or actual revenue history insurance available; and
- Meet the diversification requirements of the policy by having two or more commodities if there are potatoes on the farm.
There are certain documents you must provide to your crop insurance agent to get Whole-Farm Revenue Protection insurance. For the Whole- Farm History Report you must provide:
- 5 consecutive years of Schedule F or other farm tax forms (it must be possible to complete a Substitute Schedule F form if you filed farm tax forms other than Schedule F). For the 2019 policy year, tax forms from 2013-2017 are required except
- If you qualify as a Beginning Farmer or Rancher (BFR) or qualified as a BFR in the previous year under our procedures, you may qualify with 3 consecutive years (4 years if qualified the previous year) of Schedule F or other farm tax forms if you also farmed during the past year (it must be possible to complete a Substitute Schedule F form if you filed farm tax forms other than Schedule F). For the 2019 policy year, tax forms from 2015-2017 (2014-2017 if qualified as a BFR the previous year) are required and you also must have farmed during 2018
- If you were physically unable to farm for 1 of the 5 required historic years but were farming the past year, you may qualify; or
- If you are a tax-exempt entity (such as a Tribal entity) and have acceptable third party records available that can be used to complete Substitute Schedule F tax forms for the 5 year history
- Information supporting expansion if you want the farm to be considered as an expanding operation due to the farm operation physically expanding last year or the coming year, including increased acres, added equipment such as a greenhouse, new varieties or planting patterns, or anything else that expands production capacity (other than just a change in price); and
- Any supporting information required, including other signed tax forms, to show the farm tax forms are accurate and were filed with the IRS
Claims are settled after taxes are filed for the policy year. A loss under the WFRP policy occurs when the WFRP revenue-to-count for the insured tax year falls below the WFRP insured revenue. Revenue-to- count for the insured tax year is:
- Revenue from the tax form that is ‘approved revenue’ according to the policy;
- Adjusted by excluding inventory from commodities sold that were produced in previous years;
- Adjusted by including the value of commodities produced during the tax year that have not yet been harvested or sold; and
- Any other adjustments required by the policy such as those from uninsured causes of loss.
If the farm operation does not have expenses during the insurance period of at least 70 percent of the “approved expenses” the insured revenue amount will be reduced by 1 percent for each percentage point the actual approved expenses are below 70 percent of the approved expenses.
Northern Ag Inc works with top insurance agencies to provide the right insurance policy that suits your needs, and to assist you in completing the proposed farm operation reports. For questions about Whole-Farm Revenue Protection or information about buying a WFRP insurance plan, please contact Northern Ag Inc.