2007 Press Releases
OTA Executive Director Testifies Before Key Subcommittee Reviewing Crop Insurance
Contact: Laura Trivers (301-229-6481)
Barbara Haumann (413-774-7511, Ext. 20)
Wilcox Proposes Crop Insurance Remedies For Organic Farmers
WASHINGTON, D.C. (May 14, 2007) - Organic farmers are penalized by the current system of crop insurance in our country, the executive director of the Organic Trade Association (OTA) today told a key Congressional subcommittee and urged the members of Congress to fix the broken system and create fairness for organic farmers.
"Currently, organic farmers are charged a 5% premium over the cost a conventional farmer pays," OTA Executive Director Caren Wilcox testified. "And, adding to the unfairness, when organic farmers must collect on their insurance policies, they are compensated at the price of the conventional crop, not the higher organic price."
"The inequities of the crop insurance system are a key impediment to more farmers converting their land to organic production," Wilcox said. In order to remedy the situation for current and future organic farmers, OTA, the membership-based business association for organic agriculture and products in North America, proposes legislative language that would amend the Federal Crop Insurance Act by adding a new subsection entitled "Contracts for organic production coverage improvements."
Wilcox said with increasing data being gathered at the USDA concerning organic pricing at the wholesale and retail levels and organic loss data being collected along with loss data for non-organic crops grown in the same localities, it should be possible for the Federal Crop Insurance Corporation (FCIC) to begin to prepare appropriate studies of risk and loss experience of organic crops. With those studies, crop insurance products can be created that will be actuarially sound and will be available on an expanding basis to organic farmers.
"We believe that such studies will lead the Department to be able to eliminate arbitrary price disparities. As data collection continues to be more comprehensive, the Department should review incoming data – at least annually beginning in the 2008 crop year – so that the FCIC can make determinations and eliminate the surcharges and pay on actual losses in a timely manner," Wilcox said.
She added, "The new system is very dependent on the Congress and USDA creating and supporting comprehensive data collection specifically about organic crops."
The OTA legislative proposal also would require that the FCIC continue and expand its interagency agreement with the Agricultural Marketing Service (AMS) to facilitate the collection and dissemination of segregated retail and wholesale price information for organic production at relevant shopping points, points of entry, wholesale markets, and retail markets, including the funding of all phases of the pilot and implementation stages of this project until the resulting price collection facility has been established on a nationwide basis.
In addition, OTA called for the development of an insurance product with coverage that would protect the producer of an organic crop against the risk of that crop (including dairy and livestock) becoming contaminated, through no fault of the producer, in a manner that would cause that crop to lose its access to organic markets and prices.
Finally, OTA's legislative proposal would require that the FCIC report annually to the House Committee on Agriculture and to the Senate Committee on Agriculture, Nutrition, and Forestry on its progress in developing and improving federal crop insurance for crops grown in compliance with standards issued by the Department of Agriculture providing for the certification of such crops under the National Organic Program, including the numbers and varieties of organic crops insured, the development of new crop insurance approaches, and the progress of the initiatives mandated under this proposal. Such an annual report would also include FCIC's recommendations on how it can continue to improve this insurance coverage.
The Organic Trade Association (OTA) is the business association representing the organic agriculture industry in North America. Its 1,600 members include growers, shippers, processors, certifiers, farmers' associations, distributors, importers, exporters, consultants, retailers and others. OTA encourages global sustainability through promoting and protecting the growth of diverse organic trade.
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