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Oat and rye farmers eligible for revenue protection in 2023
Farmers raising oats and rye are now eligible for revenue protection, a crop insurance option available through USDA.
Based on producer feedback, the Risk Management Agency (RMA) expanded Small Grains Crop Provisions to now include revenue protection for oats and rye for crop year 2023. It is already offered for barley and wheat.
Revenue protection policies insure producers against yield losses due to natural causes such as drought, excessive moisture, hail, wind, frost, insects, and disease, as well as revenue losses caused by a change in the harvest price from the projected price.
“We are always striving to offer risk management options and opportunities that are in the best interest of the producers, and extending revenue protection to include our oat and rye farmers helps us come closer to that goal and offers more equality among our small grain producers,” says RMA Administrator Marcia Bunger.
Prior to this program change, RMA established prices for oats and rye up to 11 months prior to harvest. For the 2021 and 2022 crop years, oat prices increased about 30% during that time period, leaving oat producers with insurance coverage valued below the actual value of their crop. With this expanded revenue protection, the insurance coverage price would have risen to follow the higher oat prices, providing coverage that better reflects the value of the crop.
Insight from an agriculture economist
The insurance products offered for oats and rye in the past only covered yield risk. This new insurance product helps a farmer protect themselves from dramatic price swings during the growing season.
"The swings that farmers worry about most is when they plant high, and the price drops by harvest," explains Iowa State University economist Chad Hart. "Now oat and rye farmers can be protected from that."
He adds, "This coverage will cost more in premiums, but you'll have more protection. That's what farmers will have to weigh. We have seen in other crops that farmers do like that extra level of coverage."
Agriculture industry reaction
“It’s great to see RMA adding more crop insurance options for rye and oats,” said Lydia English, who manages a small-grains cost-share program for Practical Farmers of Iowa, a farmer-led non-profit based in Iowa focused on promoting regenerative agriculture. “These crops are key components of more diverse rotations which ultimately make agriculture more economically and environmentally resilient. Reducing farmers’ risk with better insurance products is an important step towards diversifying agriculture.”
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