Hey everyone, my name is John DeReamer. I’m a Customer Service Specialist at Anavii Market, a UK College of Agriculture grad, and a CBD hemp producer.
And today, I want to share my knowledge on hemp crop insurance and why it is good for everyone from the farmer to the consumer.
For folks interested in hemp farming, sustainable agriculture, and anything under the sun – I encourage you to keep reading!
What is Hemp?
Before I get into crop insurance, let’s talk hemp. Hemp is defined as Cannabis Sativa, and it contains 0.3% or less delta 9 tetrahydrocannabinol – a long phrase for THC – on a dry weight basis.
Keep in mind – hemp is completely legal. The 2018 Farm Bill actually reclassified hemp, removing it from the controlled substances list. Because of this monumental legislation, hemp can be grown, processed, and sold in all 50 states.
And with the huge hemp win of the 2018 Farm Bill, we’re excited to see more hemp acreage being grown on American farms.
Now that hemp is legal, hemp producers will have access to many traditional USDA programs through the Farm Service Agency, Natural Resources Conservation Service, and Risk Management Agency.
This will help the emerging hemp industry start to mature, legitimize, and truly take flight.
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Hempin’. Ain’t. Easy.
From my personal experience as a hemp producer under the Kentucky Industrial Hemp Pilot Program in 2017 and 2018, I stand by those three words – hempin’ ain’t easy.
Why? HIGH RISK. Amidst the developing market, hemp farmers in this new industry face a higher risk than you’d think – putting their crop and money on the line.
But how is being a hemp farmer so risky?
Before the 2018 Farm Bill, hemp producers had no access to federal crop insurance.
Excessive rain, high winds, hail, you name it. Not to mention the volatility of a developing market.
Hemp producers had little opportunity to protect their crop from extreme (and more typical than you think) weather – weather that has inflicted devastating crop losses.
I was one of the many hemp farmers in the southeast in 2018 that endured a loss due to excessive rain.
Thankfully, the 2018 Farm Bill finally allowed for the development of federal crop insurance for hemp. Because of this, American hemp farmers can insure their hemp like any other crop.
What Are the Different Types of Crop Insurance?
Essentially, there are two kinds of crop insurance: crop-hail crop insurance and multi peril crop insurance. Let’s break them down:
1. Crop-hail insurance
These policies are directly issued to farmers by private insurance companies.
Keep in mind, these are not part of the federal crop insurance program. But, why hail?
Hail has the unique ability to wipe out an entire crop. However, the unlikely yet devastating nature of this sort of weather makes it affordable to privately insure.
All in all, it doesn’t do much for folks looking for protection from any other type of weather conditions, such as excess rainfall from hurricanes.
2. Multi peril crop insurance
Multi peril crop insurance (MPCI) is federal crop insurance administered by the Risk Management Agency arm of the USDA.
Essentially, MPCI is there for farmers when their crops are negatively affected by weather issues or commodity prices.
And because farming is inherently risky, the government subsidizes over 60% cost of multi peril insurance policies to be able to offer affordable insurance to farmers.
In 2018, 300 million acres were enrolled in the federal crop insurance program. And with the passing of the Farm Bill in late December of 2018, I’m excited to see more crop insurance options for farmers like myself!
Looking to the near future, there’s a lot of potential.
Whole-farm revenue protection insurance, for example, will be available to hemp growers in 2020.
AgriLogic Consulting, a firm based out of Texas, is working on an actual production history insurance plan for hemp.
A plan like this will help farmers protect against financial losses caused by a dramatic drop in historical yield.
Why is Crop Insurance Necessary?
Crop insurance for hemp is necessary for a variety of reasons, some including:
- Stabilizing markets, such as the CBD market
- Empowering American farmers
- Protecting hemp production
Ultimately, without crop insurance, hemp farmers like myself aren’t protected – which makes it more difficult to bring more American farmers into the market and stay in the market.
Without hemp farmers, there is no hemp – which means no CBD.
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Hemp Farming Risk, Explained
Farming is inherently risky. Emerging industries are also inherently risky. Combine the two and you have an industry where market participants face an extremely high level of risk.
To get an operating loan, farmers typically put the value of their crop up as collateral if they default on their loan.
Since hemp farmers have not had access to crop insurance, they have had to put up their own capital as collateral for their operating loans.
And this is where stuff gets risky for us farmers. Why?
Putting your tractor up as collateral, for example, doesn’t make sense if you need it to make a living. Same goes with your home, farm dwellings, other machinery, and so on.
As operating loans are tricky to take out, a lot of hemp farmers operate entirely on cash – which is even more troublesome, understanding the production cost of the crop itself.
How much does it cost to produce an acre of CBD hemp, you ask? Approximately $2,000 - $10,000 an acre – with the highest cost being the clones or cuttings of CBD genetics. Clones can cost anywhere from $2 - $5 for each plant.
Knowing all this risk in production, CBD farmers are in a tight spot. And let me tell you, it can be extremely stressful having your personal capital invested in your crop – and that cash being entirely exposed to risk.
I was one of those American hemp farmers in 2018 that suffered a crop loss due to weather.
It all happened when a hurricane dumped over a foot of water (combined with high winds, no less) onto my crop – 50% of which, in less than 24 hours, was wiped out.
History of Crop Insurance
The history of crop insurance dates back longer than you’d probably think.
After the Dust Bowl left farmers completely devastated, the Federal Crop Insurance Act was passed in 1938.
But before this legislation, the farming industry itself was culminating into an unfettered force, practically inviting chaos.
Literally everyone wanted to be a farmer in the 1930s – picture it as some sort of agricultural gold rush situation powered by tractors and agricultural mechanization.
During the decade, wheat prices soared, and the midwest experienced farming-favorable weather.
More and more farmers joined the lucrative agricultural market, including ‘suitcase farmers’ – folks with little to no farming experience looking to make a buck.
Real estate opportunists also took advantage of the situation, selling farmland better suited for cattle grazing to prospective farmers guaranteeing them that the rain would follow the plow!
Some of these opportunists would end up in prison for fraud charges.
Enter the Dust Bowl. Without rain, the hastily plowed ground that had once been home to the drought resistant native grasses simply turned to dust, forming huge dust storms that stripped the paint off cars.
Though tragic, the Dust Bowl left us with a better understanding of soil conservation practices, sustainable farming, price stability, and the need to insure crops against devastating losses – including hemp!
Looking Towards the Hempy Future
Although the Dust Bowl may seem like a distant memory, there are many parallels to be drawn between our past and our future.
We must remember the importance of sustainable farming and management of risk. Especially while the hemp industry is currently experiencing a Green Rush situation.
A parallel? Many hemp farmers today are starting up with no farming background totally exposed to risk with no crop insurance available.
Also, hemp overproduction – one that will outpace both market development and demand – is pretty inevitable, actually. Combined with Green Rush-similar hype and fraud, it’s starting to look like the wheat boom of the 1930s.
This is why hemp crop insurance is critical. Crop insurance makes sure that one devastating loss does not and cannot ruin a farmer’s life – that they can continue to farm year after year.
Because without a farmer, there is no crop. And without a crop, there’s no CBD. But now it’s time to help farmers grow this great crop again.
With the right risk management tools, regulation, and ethics we can ensure consumer safety and grow a sustainable industry.
We look forward to our nation’s hemp producers being able to benefit from the same programs that they participate in for any other legal commodity or specialty crop.
Because hemp is the healing of the nation – even our founding fathers knew this.
And when it comes to your CBD decision-making, I recommend that you only purchase CBD from a trusted source like Anavii Market.
Anavii carries trusted brands, ones that are working together to build a sustainable industry – as opposed to other brands looking to profit off a vulnerable industry with no care for what’s in the ground or what’s in the bottle. Shop smart, shop sustainable, shop Anavii.
The products sold on this site and these statements herein have not been evaluated by the FDA. This product is not intended to diagnose, treat, cure, or prevent any disease.