USDA Urges Small-Scale Farmers to Check Insurance

July 9, 1997

Greensboro, NC: Changes in crop insurance handling might result in unnecessary fees for small-scale farmers, unless they are aware of special provisions, says USDA.

To ensure that all producers would be able to afford at least catastrophic (CAT) coverage, the Federal Crop Insurance Act of 1994 provided that the administrative fee be waived for limited-resource farmers, who are generally defined as producers or operators with an annual gross income of $20,000 or less from all sources.

Beginning with the 1997 crop year, North Carolina became a single delivery state, meaning that all policies serviced by the USDA Farm Service Agency were transferred to private insurance providers for administration.

During that transition, some limited-resource farmers may not have been contacted, or may not have understood that the administrative fee associated with CAT policies could still be waived with private insurance providers.

Private insurance providers are trying to contact all 1996 limited-resource farmers who do not have a 1997 policy. If producers certify their status as limited resource farmers in 1997, the insurance company can accept a late filed application for CAT coverage.

According to Dr. John M. O'Sullivan, a farm management and marketing specialist with the NC A&T Cooperative Extension Program, though important, crop insurance is only one of many ways that farmers should consider addressing risk.

"Farmers should address risk management wherever risk can enter into the production process, especially with high-value crops like tobacco," said O'Sullivan. "In addition to insurance, risk management can include such things as irrigation and planting diverse crops. All farmers should analyze their situation, and make appropriate plans."

Eligible producers should contact a crop insurance agent, as soon as possible, in order for the companies to process late applications by August 1, 1997.

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