The Farm Service Administration (FSA) recently announced changes to the Noninsured Crop Disaster Assistance Program (NAP). But before discussing those changes, lets first discuss what NAP is.
Simply, NAP provides an insurance option for farmers who grow crops that are not eligible for crop insurance. In fact, if a farmer can obtain crop insurance, including the Risk Management Agency’s multi-peril crop insurance (MPCI), NAP is unavailable. NAP only covers those crops that are non-insurable and is intended to help farmers farm another year in the event of a catastrophic event.
So what are the changes?
Previously, NAP would cover only 50% of a crop and then pay out up to 55% of the crop’s value. Now, NAP includes a buy-up provision to cover up to 65% of a crop and pay out up to 100% of the crop’s value.
The 50% coverage cost remains at $250. Any coverage beyond 50% requires the farmer to pay an additional formula-based premium, or 5.25 times the level of coverage. The premium is capped at $6,562.00 and it applies towards an individual or entity’s $125,000 NAP payment limitation.
Beginning, Socially Disadvantaged, and Limited Resource Farmers:
First, the $250 service fee is waived for beginning and socially disadvantaged farmers. This is an expansion of the fee waiver; previously, it applied only to limited resource farmers. If a beginning farmer has paid the service fee for the 2015 crop year, a refund will be issued.
Additionally, beginning, socially disadvantaged, and limited resource farmers are now eligible for a 50% premium reduction when purchasing buy-up coverage.
Organic and direct market prices:
The state FSA office can provide farmers with the option of insuring crops at the organic market price, rather than conventional or direct-to-consumer price. However, sufficient data must be available for FSA to establish those separate price points.
Other issues of potential interest:
The NAP changes include a sodsaver provision that is relevant to Nebraska farmers. If NAP coverage is sought for newly broken cropland, the farmer must pay 200% of the normal premium, not to exceed $6,562.00.