Organic Farmers Face Higher Insurance Costs

Daryl Lassila surveys his young crop of organic winter wheat. i i

Fourth-generation Montana farmer Daryl Lassila surveys his young crop of organic winter wheat on the open plains east of the state's Rocky Mountain front. Shannon Mullen hide caption

itoggle caption Shannon Mullen
Daryl Lassila surveys his young crop of organic winter wheat.

Fourth-generation Montana farmer Daryl Lassila surveys his young crop of organic winter wheat on the open plains east of the state's Rocky Mountain front.

Shannon Mullen

Organic farmers are trying to meet growing demand for chemical-free food but among their financial hurdles is paying more for federal crop insurance than farmers who use pesticides. But a provision in the farm bill tells the Agriculture Department to justify the higher price, or stop charging it.

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Organic farmers are taking aim at a cost that's been eating into their profits. When you grow organic food, you avoid using pesticides. And when you avoid using pesticides, you have to pay more for federal crop insurance. A provision to the massive farm bill that's moving through Congress right now tells the Agriculture Department to justify that higher price or I'll stop charging it.

Shannon Mullen reports.

SHANNON MULLEN: On the windy plains east of Montana's Rocky Mountains, fourth generation farmer Darryl Lucila(ph) looks relieved as he stares out over his fields of organic winter wheat. He spent nine years in his old job spraying pesticides on other people's farms, and remembers coming home with a headache every day.

Mr. DARRYL LUCILA (Organic Farmer): I hope I got out of it soon enough myself, that it won't be affecting me. But there will be something in my body that's going to give up someday from it.

MULLEN: Lucila says he would have left farming altogether if he hadn't been able to convert his family's land to growing organic crops. Now he grows wheat, peas and lentils. He estimates the switch to organic has cost him $30,000 so far.

There were hundreds of dollars in organic certification fees. He needed expensive new machinery. His fuel cost went up. And he found out federal crop insurance cost five percent more for organic farmers than their chemical-reliant counterparts because the government thinks organic might be riskier to insure. For medium to large farms like Lucila's that surcharge amounts to hundreds of dollars on top of his nearly $4,000 annual premium.

Mr. LUCILA: It's like any other business; you've got to watch every expense, and when they say we're going to raise you five percent, you got to find it from somewhere.

MULLEN: About 80 percent of U.S. farms buy federal crop insurance to cover losses from natural disasters - hail storms, bugs, diseases. But so far only nine percent of certified organic farmland is insured. Caren Wilcox of the Organic Trade Association says this business is risky by nature, not just for organic farmers.

Ms. CAREN WILCOX (Organic Trade Association): Anecdotally, they do not have a higher loss rate than other farmers. They don't have a different drought. They don't have a different flooding problem. They learn how to manage insects, just in a different way. And so of course they feel that they are being penalized by the additional premium.

Mr. BRENT DOWNE (Department of Agriculture): Our hands are tied. No matter what we would like to do, it's what we have to do.

MULLEN: Brent Downe(ph) works in a division of the U.S. Department of Agriculture that sets crop insurance prices. He says when more organic farmers started buying crop insurance in 2004, the agency started tracking their harvests to see if they vary more from year to year than conventional farms. Downe admits there's not enough data yet to know for sure, but the government has to protect itself from every risk it can.

Mr. DOWNE: We feel that at the time being our procedures for a plan of surcharge do appear to be correct. Whether or not that five percent is a correct figure is yet to be determined. I think that data over time will bear that out, what that answer is.

MULLEN: The problem is, Downe says, UFDA needs a lot more time - four to six years. Meantime, a lot more farmers need and want crop coverage, say organic advocates, and they've been lobbying Congress to lose the surcharge in this year's reauthorization of the farm bill. Both the House and Senate are considering language that tells UFDA to stop applying it unless the agency's risk analysis proves it's justified. For now, the longer organic farmers face higher costs, they say the longer their harvest will cost more at the market.

For NPR News, I'm Shannon Mullen.

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