New Olive Crop Insurance Program Approved by USDA | The Olive Oil Source

New Olive Crop Insurance Program Approved by USDA

By Caroline J. Beck
January 01, 2012

Last month, the U.S. Department of Agriculture's (USDA) Risk Management Agency (RMA) announced a new a pilot insurance program for table and oil olives in 12 California counties. Producers interested in participating in the subsidized program must secure insurance by January 31, 2012 in order to participate for the 2012 crop year.

According to RMA spokesperson, Shirley Pugh, the pilot Olive Crop Insurance program was developed by AgriLogic Inc. and the Olive Growers Council of California, submitted for approval to the FCIC Board of Directors under section 508(h) of the Federal Crop Insurance Act and approved in December 2011.The program is an Actual Production History product that insures a grower's yield. The two-year, production-based policy features a new approach for addressing alternate bearing commodities like olives, where production can vary significantly with years of low production, or "off" years, typically followed by years of high production, or "on" years.

The program will be available in Tulare, Tehama, Glenn, Madera, Fresno, Butte, Kern, San Joaquin, Shasta, and Colusa counties for table olives and in Tulare, Tehama, Glenn, Madera, Fresno, Butte, San Joaquin, Colusa, Yolo, and Sutter counties for oil olives. Coverage levels from the catastrophic level to 75 percent are available.

“Premiums will vary by county and type of olives grown, but generally the cost will represent about 10% of the total liability. The premium is subsidized by the government and the producer pays less than half of the total premium”, reported Pugh.

Producers elect a coverage level and price percentage that remains in effect for the two-year life of the policy. Because production is reported annually, however, the approved yield is recalculated, adjusting to account for cases where the unit is expected to be either "on or off" for the following year. Any losses incurred will be indemnified on a year-to-year basis. RMA has published the pilot Olive Crop Insurance Program provisions and related documentation on its website.

The following calculation provides an example of approximate costs to a grower electing to take the insurance:

AssumptionGrower has a 5 acre orchard, an average yield of 1.7 tons per acre, and selects the 75% coverage level
Liability5 acres x 1.7 tons per acre x $627 per ton x 75% coverage = $3,997 on 5 acres
Total Premium$3,997 x 10% premium rate = $400 for 5 acres
Producer Premium$400 x .45 subsidy = $180 for 5 acres (or about $36 per acre)

This is a yield-based plan of insurance and coverage will be offered for table olives and oil olives in 12 counties in California. There is an adjustment factor that will be applied to the average yield to account for the alternate bearing tendency of olives. There is a minimum acreage requirement of 3 acres.

While the government is the primary underwriter of Federal crop insurance, the companies also use commercial underwriters for some of the policies. Interested growers should consult the USDA’s Risk Management website for a list of insurance companies and agents who may sell Federal crop insurance.