NAU Country News

NAU Country announces the Hemp Actual Production History (APH) Program

Let NAU Country help protect your coverage against yield loss due to insurable causes of loss for hemp grown for fiber, grain, and/or Cannabidiol (CBD) oil. Contact your NAU Country Marketing Representative or NAU Country Agent today, to find out more!

Eligibility

To be eligible for hemp coverage, growers are required to have a minimum of one year of documented growing experience, and be compliant with all applicable regulations and with regulatory agencies governing hemp production for their area. In addition, the crop must be grown under an acceptable processor contract and other rules as defined in the Hemp APH MPCI policy provisions.

Hemp crop insurance coverage

The Hemp insurance program will provide Actual Production History (APH) coverage for eligible producers in specific counties in Alabama, California, Colorado, Illinois, Indiana, Kansas, Kentucky, Maine, Michigan, Minnesota, Montana, New Mexico, New York, North Carolina, North Dakota, Oklahoma, Oregon, Pennsylvania, Tennessee, Virginia, and Wisconsin.

Important dates

Sales Closing (2020) ...……………….…………..March 15
                       (2021 and later)…February 28 or March 15 (reference actuarials)
Acreage Reporting……………….………….…….August 15
Cancellation………………......……………………February 28 or March 15

Hemp coverage details:

  • The following hemp types are available to insure:
    The following hemp types are available to insure:
    (reference actuarials for specific counties)
  • Coverage Levels range from 50% to 75%.
    • Different coverage levels can be elected by type (CBD, Grain, and/or Fiber).
    • Catastrophic (CAT) coverage is available (50% coverage at 55% price). If CAT is selected, this coverage must be applied to all hemp acres of ALL types.
  • Basic (BU), Optional (OU), and Enterprise (EU) units are available in select hemp counties. Premium discounts apply for Basic and Enterprise units. Additional subsidy is available for Enterprise units. EUs by Irrigation Practice, FAC/NFAC, and Multi-County are not available.
  • The amount of insurance is determined by your approved yield multiplied by the coverage level selected. (E.g. 500 lbs. approved yield x 70% coverage level = 350 lb. guarantee).
  • Hemp crop insurance does not offer trend yield adjustments, yield exclusions, yield cups, yield floors, or yield substitution. The program does not offer written agreements, high risk land coverage, or New Producer yield benefits.

Claim details:

The hemp crop insurance coverage insures loss of production due to multiple natural perils (listed below). However, coverage for replant, late or prevent planting, or required destruction of the crop due to tetrahydrocannabinol (THC) levels above what is allowed by regulators will not be provided by the crop insurance program.   

Mandatory destruction of the crop due to THC levels in excess of governing authority regulations is not a covered cause of loss.

Insurable Causes of Loss

  • Adverse weather conditions, including natural perils such as drought and excess precipitation;
  • Earthquake;
  • Failure of the irrigation water supply, if caused by an insured peril during the insurance period;
  • Fire;
  • Insects and plant disease, except for insufficient or improper application of pest or disease control measures;
  • Wildlife; or
  • Volcanic eruption.

We will not insure against:

  • Levels of tetrahydrocannabinol (THC) in excess of 0.3% on a dry weight basis, in accordance with the Agriculture Improvement Act of 2018 and applicable Federal regulations;
  • Failure to follow requirements contained in the processor contract;
  • Any harvested production infected by mold, yeast, fungus, or other microbial organisms after harvest; or
  • Any damage or loss of production due to the inability to market the hemp for any reason other than actual physical damage to the hemp from an insurable cause of loss.

Indemnity examples:

Hemp (Grain)

You have 100% share in a unit of grain containing 65 acres with a production guarantee/acre of 1,260 lbs. (1,800 lbs. approved yield/acre x 70% coverage level). Your production guarantee for the unit is 81,900 lbs. (65 acres x 1,260 lbs./acre guarantee). Your price election is $0.50/lb. Your production to count is 50,000 lbs.

  • 65 acres x 1,260 lbs. production guarantee/acre
    = 81,900 lbs. production guarantee.
  • 81,900 lbs. production guarantee x $0.50 price election

    = $40,950 value of the production guarantee.

  • 50,000 lbs. production to count x $0.50 price election

    = $25,000 value of the production to count.

  • $40,950 value of production guarantee – $25,000 value of production to count

    = $15,950 preliminary indemnity.

  • $15,950 x 1.000 share = $15,950 indemnity.

Hemp (CBD)

You have 50% share in a unit of transplant-whole plant CBD containing 40 acres with a production guarantee/acre of 1,050 lbs. (1,400 lb. approved yield/acre x 75% coverage level). Your production guarantee for the unit is 42,000 lbs. (40 acres x 1,050 lbs./acre guarantee). Your price election is $5.00/lb. Your production to count is 30,000 lbs.

  • 40 acres x 1,050 lbs. production guarantee/acre
    = 42,000 lbs. production guarantee.

  • 42,000 lbs. production guarantee x $5.00 price election
    = $210,000 value of the production guarantee.

  • 30,000 lbs. production to count x $5.00 price election
    = $150,000 value of the production to count.

  • $210,000 production guarantee – $150,000 production to count
    = $60,000 preliminary indemnity.

  • $60,000 x 0.5000 share = $30,000 indemnity.

Resources:


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