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USDA Updates Rules on to Improve Crop Insurance for Hemp Producers

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Following feedback from hemp producers around the country, the U.S. Department of Agriculture is making changes to its current crop insurance program for hemp, in an effort to strengthen and improve the current policy, according to a USDA release.

The USDA’s Risk Management Agency (RMA) is moving forward, adding flexibilities around how producers work with processors along with guidelines to improve consistency surrounding the most recent USDA hemp regulation.

RMA Administrator Marcia Bunger said the USDA takes into account that hemp is an emerging crop, therefore, they are “working with hemp producers to provide insurance options that make sense for producers and for insurance providers.” In that aim, she adds that RMA has worked to expand and refine its offerings to be “responsive and dynamic” to these and further shifts that may have to take place moving forward.

One of these shifts that was recently revised adds the flexibility to the insurability requirements for hemp under contract, meaning that producers are no longer required to deliver hemp without economic value for insurability. That said, a contract between producers and processors could still include delivery requirements.

The RMA also clarified how the amount of insurable acreage is determined, if the processor contract specifies both an acreage and production amount. The release notes that the RMA made this policy change to “ensure producers know how their insurable acreage is determined for those contracts.”

Along with these two changes, the RMA added a new requirement for producers growing direct-seeded hemp (hemp grown from seeds planted in the ground), noting that producers must have acreage inspected and must have a minimum of 1,200 live plants per acre before insurance attaches. The release states that this requirement will align direct-seeded hemp with the common farming practice for transplanted CBD, transplanting at least 1,200 plants per acre.

Finally, the new policy provides Actual Production History coverage against loss of yield due to insurable causes of loss for hemp, grown for fiber, grain or CBD oil. Hemp is defined by the 2018 farm bill as containing 0.3 percent or less of THC on a dry-weight basis; hemp with THC levels above 0.3 percent is an uninsurable or ineligible cause of loss, which means the hemp production is ineligible for production history purposes. 

The insurance updates follow a historic year in hemp production, given that, as noted by the RMA, the industry is ever-changing-and-growing. In October, the USDA mailed out surveys of all the nation’s hemp producers to gather feedback about the operations and production taking place. It marked the USDA’s first hemp survey that aimed to collect data about hemp harvests, or “information on the acreage, yield, production, price and value of hemp in the United States,” according to the USDA’s National Agriculture Statistics Service.

The survey similarly followed the 2018 Farm Bill, or the Domestic Hemp Production Program established in the Agriculture Improvement Act of 2018, which allows for the cultivation of hemp under certain conditions, reclassifying and legalizing the regulated production of industrial hemp as an agricultural commodity. 

In January 2021, the USDA also released information on its final rule on hemp production to ensure consistency, and the updates took effect on March 22, 2021. The rules included updates on the 0.3 percent THC requirement, noting that product that is less than 1 percent is no longer considered “negligent,” and the immediate destruction of hemp not meeting the standard to include composting, burial or burning. 

The rules also add the requirement of hemp testing to be conducted by DEA-registered facilities after the end of next year, hemp samples to be gathered 30 days after harvest (previously 15 days), the allowance of a performance-based sampling approach and allowing tribes to invoke their jurisdiction on their territory. 

Regarding the two-year gap it took to implement these changes, Michelle Donovan, senior counsel at law firm Clark Hill, said it was necessary in order to establish properly researched hemp farming regulations.

“It’s a process, like anything else, to legalize a new market while making sure all foreseeable hiccups are addressed at the onset of a harvest,” Donovan said.

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