A Report from the:

Risk Management Agency, 

U.S. Department of Agriculture, 

regarding:

“The Department of Agriculture’s Annual Report to the 

Committee on Agriculture of the U.S. House of Representatives 

and the Committee on Agriculture, Nutrition and Forestry of the 

U.S. Senate Regarding the Progress Made in Developing and 

Improving Federal Crop Insurance for Organic Crops”

March 2015
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Contents

Introduction...................................................................................................................................................1

RMA’s March 2014 report to the Congressional Committees on Appropriations .......................................1

Data Quality Requirements.......................................................................................................................1

Organic Price Elections through the 2014 Crop Year...............................................................................2

Alternative Tools to Provide Organic Coverage.......................................................................................3

Progress for the 2015 Crop Year...................................................................................................................3

Expanded Offering of Organic Price Elections for the 2015 Crop Year. .................................................3

Modified Usage of Existing NASS Organic Survey Price Data...............................................................4

Whole-Farm Revenue Protection..............................................................................................................4

Current Organic Data Collection Efforts......................................................................................................4

IDIQ Contract for Research into Organic Crop Marketing. .....................................................................4

NASS Organic Survey for 2014................................................................................................................5

Cooperative Efforts with AMS .................................................................................................................5

Recommendations.........................................................................................................................................7

Conclusion ....................................................................................................................................................7
1

Introduction

The Risk Management Agency (RMA) provides this report, pursuant to Section 508(c)(6)(D) of 

the Federal Crop Insurance Act, as amended by Section 11023 of the Agricultural Act of 2014: 

‘‘The Corporation shall submit to the Committee on Agriculture of the House of 

Representatives and the Committee on Agriculture, Nutrition, and Forestry of the Senate an 

annual report on progress made in developing and improving Federal crop insurance for 

organic crops, including:

i. the numbers and varieties of organic crops insured; 

ii. the progress of implementing the price elections required under this subparagraph, 

including the rate at which additional price elections are adopted for organic crops; 

iii. the development of new insurance approaches relevant to organic producers; and 

iv. any recommendations the Corporation considers appropriate to improve Federal 

crop insurance coverage for organic crops.”

In this report, RMA addresses the requirements above, and provides: 1) a brief summary of our 

March 2014 report to the House of Representatives Committee on Appropriations and the Senate 

Committee on Appropriations regarding our progress in establishing organic price elections and 

alternative options for organic coverage; 2) information regarding the number and variety of 

crops for which we introduced organic price elections for the 2015 crop year; and 3) our ongoing

efforts to obtain additional data and information to aid future development of price elections for 

crops for which we do not yet offer organic price elections.

RMA’s March 2014 report to the Congressional Committees on 

Appropriations 

In March 2014, RMA provided a report (http://www.rma.usda.gov/pubs/2014/appropriations.pdf) to 

the House Committee on Appropriations and the Senate Committee on Appropriations (hereafter 

referred to as the Report), which discussed the following: RMA data quality requirements to 

develop organic price elections; our data sources; progress made in providing organic price 

elections and alternative organic coverage options; our plans to acquire quality organic price data 

in the future; and our proposal and time frame for the further development of organic price 

elections. 

Data Quality Requirements. RMA emphasized certain data quality requirements needed to 

derive actuarially sound and economically defensible price elections. Data must reflect a 

representative sample of the relevant organic producer population, and be accurate, unbiased and 

available on a recurring basis. To be used directly, the data must be volume-weighted (either 

production-weighted or coupled with sales volume). In addition, data must reflect the 

appropriate pricing location (i.e., pre-harvest/farm-gate level) to reflect prices farmers actually 
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receive. Organic price elections through the 2014 crop year were derived either by: 1) using 

organic price factors developed from Agricultural Marketing Service (AMS) data; or 2) directly 

from proprietary private data sources. 

Price factors developed from AMS data are a ratio of the organic price to the conventional price. 

The price factor is applied to the conventional price election to determine the organic price 

election. This differs from the creation of an organic price election using a data source directly. 

Specifically, creating and using a factor implies that the two markets are correlated and the prices 

trend together, which may not always be the case. 

Direct use of AMS data to establish organic price elections (as opposed to the creation and use of 

organic price factors) is limited for the following reasons: 1) daily/weekly price quotes for fruits 

and vegetables are not volume weighted (i.e., do not include sales volumes)1; 2) quotes are 

obtained at shipping point or terminal locations, far removed from the pre-harvest/farm-gate 

price level required; and 3) for some crops, only a few years of organic data are available, and/or

the data are very sparse, often due to limited movement of organic commodities through the spot 

markets that AMS typically reports on (i.e., many organic commodities are sold under contract).

Increased AMS organic reporting at the shipping point level (the level of AMS reporting closest 

to the pre-harvest/farm-gate level) could assist RMA in developing additional organic price 

factors. Ideally, AMS price quotes would reflect pre-harvest/farm-gate values and would be 

accompanied by sales volumes so that RMA could use AMS data directly to create organic price 

elections without the use of price factors.

Private data sources can be crucial since they may be the only source of information available for 

determining organic prices, but locating viable sources of data is challenging. We are often 

required to maintain confidentiality of the source of the data, which inhibits transparency. We 

may also not be able to substantiate sample sizes and the degree of representation of the entire 

market that is provided by the private data sets; and we cannot guarantee future availability of 

the data sets because a private party offers data to RMA at their discretion.

Organic Price Elections through the 2014 Crop Year. In the Report, RMA listed crops for 

which we derived organic price elections: almonds (CA), avocados (CA), blueberries (all types 

in CA; Early to Late Highbush types in OR and WA), corn, cotton (non-ELS), fresh apples (ID, 

OR, and WA), fresh stonefruit (apricots, freestone peaches, nectarines and plums in CA, ID, OR,

and WA), grapes (Concord variety in OR and WA), mint (peppermint), oats, pears (OR and 

WA), processing tomatoes (CA), and soybeans. 

The Report also listed crops with insurance policies that require the crop be produced under a 

contract that includes a base price for the crop. The base price is used under these policies as the 

price election to determine liability. The requirement of a contract and base price provides the 

potential for organic price coverage since the terms of the contract can be customized for organic 

 1 AMS Market News publishes grain prices weighted by transaction volumes.
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production and thus reflect an organic price. These crops are buckwheat, camelina, green peas, 

machine-harvested cucumbers, mustard, processing sweet corn, pumpkins, and sesame. 

Alternative Tools to Provide Organic Coverage. In the Report, RMA detailed alternative 

tools developed that provide organic coverage. These include the following: 

1. Contract Price Addendum (CPA), which allows organic producers who grow crops under 

guaranteed contracts to use prices established in those contracts as their price elections in 

place of RMA’s announced prices; 

2. Actual Revenue History (ARH), which is a plan of insurance for a limited number of 

crops (cherries, navel oranges, and strawberries) that uses personal historical revenue 

documentation - including documentation for organic crops - to establish coverage; 

3. Adjusted Gross Revenue (AGR) and AGR-Lite/Whole Farm Revenue Protection 

(WFRP), which establish individualized coverage based on income information reported 

on a producer’s historical IRS tax form (Schedule “F” or equivalent forms), including 

income pertaining to organic production. WFRP replaced the AGR and AGR-Lite plans 

of insurance beginning in the 2015 crop year. 

Progress for the 2015 Crop Year

Expanded Offering of Organic Price Elections for the 2015 Crop Year. RMA introduced

organic price elections during the 2015 crop year for the following ten crops: corn silage, figs, 

flax, grain sorghum, hybrid 

corn seed, hybrid sorghum 

seed, millet, popcorn, silage 

sorghum, and walnuts. With 

the addition of these 10 crops, 

RMA now has an organicspecific price election for 25

percent of the commodities

for which we offer coverage2.

 2 Based on the distinct number of crops listed in RMA’s online Actuarial Information Browser. Crops with ARH

plans of insurance, WFRP, apiculture, nursery, clams, livestock policies, and crop policies that both require and use 

a contract price to determine liability are not included in the total. Corn silage was added to the total. For those 

commodities identified as having an organic price, it does not mean RMA offers a unique organic price for all types 

and locations of that commodity.

4% 4% 8%

15%

25%

59% 59%

0%

10%

20%

30%

40%

50%

60%

70%

2011 2012 2013 2014 2015

CROP YEAR

PERCENT OF RMA INSURED CROPS 

WITH ORGANIC PRICE ELECTIONS

Organic Specific Price Elections

Crops Covered Under the CPA
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Modified Usage of Existing NASS Organic Survey Price Data. To date, quality organic 

price data are unavailable for many RMA-insured crops. The absence of such data makes the 

development of actuarially sound crop-specific organic price elections difficult. However, RMA 

has attempted to further comply with the Congressional mandate to develop organic price 

elections for all insured crops by making use of existing National Agricultural Statistics Service 

(NASS) organic survey price data. RMA used data contained in the NASS 2011 Certified 

Organic Production Survey and the accompanying unpublished individual survey responses on a 

limited basis. In some cases, RMA set the organic price elections conservatively when 

referenced against the limited one year of data and anecdotal market information available, in 

order to avoid inducing moral hazard and market distorting behavior. Consequently, organic 

price elections developed from this process – including grain sorghum, hybrid sorghum seed, 

popcorn, and silage sorghum – may fall short of some insured producers’ organic price coverage 

expectations. These price elections will be updated as new data and information become 

available. 

Whole-Farm Revenue Protection. RMA developed the new WFRP plan of insurance, which 

was approved by the FCIC Board of Directors in May 2014. WFRP provides whole-farm 

insurance protection covering all commodities on the farm (including organic commodities). 

The program improves upon many features of the previous AGR and AGR-lite policies, with a 

goal of providing producers an improved whole-farm risk management product. Beginning with 

the 2015 insurance year, the WFRP product replaced the AGR and AGR-Lite plans of insurance.

RMA sought input from parties across the U.S. who were interested in whole-farm insurance, in 

order to help define the target markets for the WFRP product. The feedback centered on the risk 

management needs of producers and focused on sustainable agriculture and specialty 

commodities, including organic commodities. This led to the identification of two key markets, 

both of which are composed primarily of specialty crop growers: 1) highly diversified farms 

where shallow and/or isolated commodity losses might be sufficiently absorbed by the operation, 

but that may benefit from a risk management safety net that provides insurance for larger losses; 

and 2) farms growing two to five commodities and selling to wholesale markets. These farms 

tend to need higher coverage levels in order to insure their risk for commodity losses. It was 

noted that the previous AGR and AGR-lite products did not provide high enough coverage levels 

for the wholesale farm producers’ needs or low enough coverage for the highly diversified 

producers’ needs.

Current Organic Data Collection Efforts 

Contract for Research into Organic Crop Marketing. RMA entered into a contract with a 

private firm, Agralytica, titled, “Indefinite Delivery, Indefinite Quantity (IDIQ) for Pricing 

Reviews and Information” with a total budget of approximately $980,000. The work required 

under the contract involves: 1) identifying, contacting, and working with producers and pointof-first-sale purchasers to gather information; 2) constructing cost of production budgets; and 

3) compiling and analyzing results of the research. 
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On March 20, 2014, RMA issued Task Order 1 to compile point-of-first sale market information 

for the following crops: fresh and processing apples (CA and AZ); table grapes and raisins 

(CA), as well as cost of production budgets for apples (ID, OR, WA, and CA). The information 

contained within the report provides background and source information on market participants 

willing to cooperate with RMA’s organic data collection efforts. This information will be used 

to pursue 2016 crop year organic price elections for the researched crops. 

RMA plans to issue Task Orders 2 and 3 under the IDIQ contract. Task Order 2 will be issued to

compile point-of-first-sale market information for sweet corn (CO, FL, and NY), tomatoes (FL), 

peppers (FL) and dry peas and lentils (MT, ND, and WA). It will also construct cost of 

production budgets for the following crops in the state of Florida: peppers, sweet corn, and 

tomatoes. RMA seeks representative cost of production budgets for organic production of these 

crops because they are covered under Dollar Plan policies where the insurance coverage is based 

on the cost of growing the crop. Task Order 3 will be issued to conduct research and gather 

market information for organic wheat. 

NASS Organic Survey for 2014. As mentioned in the 2014 report, RMA previously 

contracted with NASS through a partnership agreement to collect organic acreage, production, 

and sales data from certified organic growers. Under this agreement, NASS constructed a 

survey, compiled aggregated values from the responses, and published a report titled 2011 

Certified Organic Production Survey. This report complimented a previous NASS report, 2008 

Organic Production Survey, a supplement to the 2007 Census of Agriculture.

RMA funded a $1.4 million contract with NASS to collect 2014 crop year organic price data 

from certified organic growers. This survey seeks to update and expand data collected in the 

2011 USDA Certified Organic Production Survey. For the 2014 crop year, NASS is surveying

all producers who identified themselves as producing some amount of organic production in the 

2012 Census of Agriculture. The initial survey mailings were sent on January 5 and January 15, 

2015. The expected publication date of the results is September 2015. 

For the 2014 organic survey, RMA worked with NASS to improve the survey methods. For 

example, NASS is expanding data collection to include specific crop types and varieties not 

listed in previous surveys. The NASS data from this survey, combined with data from the earlier 

surveys, will provide three non-sequential years of organic price data over a span of seven years. 

Once analyzed, the results of the 2014 survey could result in new or more accurate organic price 

elections beginning no later than the 2017 crop year. 

Cooperative Efforts with AMS. RMA and AMS are working cooperatively to determine 

additional ways in which AMS can collect expanded organic price data that RMA can use to 

develop additional organic price elections. AMS and RMA held several meetings during which 

RMA carefully explained its data requirements and the type of data needed to create additional 

organic price elections. 
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In some cases, RMA currently uses AMS shipping point data to create price factors and derive 

organic price elections. The table below lists the fruit and vegetable crops currently covered by 

AMS organic data reporting and compares those crops with RMA’s organic crop insurance 

coverage. 

AMS Organic Reporting Compared with RMA Organic Crop Insurance Coverage

Crop Reported Shipping Point Reported RMA Organic Coverage

Apples and Pears Washington Yes1

Blackberries California -not insuredBlueberries Oregon, Washington, California Yes1

 Georgia No3

Cantaloupes California -not insuredHoneydews California -not insuredLemons California No3

Oranges California and Arizona No3

Strawberries California Yes2

Watermelons California and Arizona -not insured1. RMA offers an organic price election using a factor developed using AMS data.

2. Crop is insured under an ARH plan of insurance which allows for organic coverage.

3. Data are currently being reviewed for a possible 2016 organic price factor.

AMS reports organic prices at the shipping point level for apples and pears in Washington; 

blackberries, cantaloupes, honeydews, and strawberries in California; blueberries in Oregon, 

Washington, California, and Georgia; lemons in California; oranges in California and Arizona;

and watermelons in California and Arizona. Of these crops, RMA currently offers organic price 

elections for blueberries in Oregon, Washington, and California, and apples and pears in 

Washington. Strawberries are insured under an ARH plan of insurance which allows for organic 

coverage. RMA currently does not insure watermelons, cantaloupes, honeydews, or 

blackberries. RMA is currently reviewing AMS organic shipping point data for lemons in 

California, oranges in California and Arizona, and blueberries in Georgia for the possibility of

deriving factors for additional organic price elections in 2016.

As already mentioned, the direct use of AMS data to establish organic price elections (as 

opposed to price factors) is limited. Consequently, AMS would need to pursue new types of 

reporting for RMA to use AMS data directly for additional organic price elections. In response 

to RMA, AMS is currently planning a pilot study to collect pre-harvest/farm-gate level prices for 

one or more crops. In lieu of pre-harvest/farm-gate level data, expanded AMS organic reporting

at the shipping point price level, on a sustained basis could assist RMA in developing additional 

organic price elections. RMA has provided AMS with a list of crops for expanding shipping 

point price level organic data for the fruit and vegetable category. RMA has also conveyed the 

need to enhance existing organic grain price reporting, particularly for wheat, to increase the 

number of observations reported by type. AMS is currently pursuing a plan to address RMA’s 

request for increased reporting at shipping point for organic commodities. AMS also continues 

to explore opportunities to address reporting for certain commodities (e.g., those with 

confidentiality issues due to thin markets from a very limited number of shippers, i.e., Florida 
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organic citrus) and capture data from contractual arrangements in addition to data from the spot 

market (e.g., organic wheat). 

Recommendations

The most efficient way to facilitate RMA’s progress in developing and maintaining additional 

price elections is one in which an organic survey is conducted by NASS on an annual or even

biennial basis to establish a recurring data source, which will build statistical confidence and 

ensure accurate price elections. Due to the nature of these surveys (farm-gate level season 

average production-weighted prices, and comprehensive survey coverage), they are the exact 

type of data RMA requires and are a valuable tool to evaluate other sources of organic price data. 

If insurance will be offered with organic prices, it is imperative that a sustainable data source be 

available to assure organic prices offered can be updated to reflect current market values. 

Inaccurate prices can have devastating impacts on commodity markets, particularly for specialty 

commodities that have limited markets. The cost of the NASS Organic survey that RMA has 

funded for 2014 is $1.4 million. RMA has funded the last two organic surveys NASS conducted;

however, there is not dedicated funding available for this survey work, which means the future 

availability of NASS data cannot be guaranteed to be available from year to year. To ensure 

NASS is able to continue conducting these surveys on an annual or biennial basis, a designation 

of funds specifically for organic data collection would be necessary. 

Conclusion

RMA continues to strive to develop and implement organic price elections for all crops covered 

by Federal crop insurance programs, as mandated in the Federal Crop Insurance Act. New 

organic price elections are developed whenever appropriate organic price data are available. 

Organic price data that meets RMA standards are scarce, and without such data, developing 

organic price elections in a manner consistent with pricing principles needed for actuarially 

sound products is not possible. RMA’s efforts to obtain additional organic price data over the 

past year are extensive and include:

• $980,000 for organic research (IDIQ contract awarded to Agralytica); 

• $1.4 million for the 2014 crop year organic survey (NASS);

• Cooperation with data collection agencies (i.e., AMS) for enhanced and/or increased 

organic data reporting; and

• On-going RMA efforts to find new data sources not expressly identified above.

In addition, the Whole Farm Revenue Protection plan of insurance, which insures organic 

production at organic prices, was implemented for the 2015 crop year. 
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RMA continues efforts to locate and analyze new sources of data. Every crop is evaluated 

annually to determine if there are new or updated sources of organic information sufficient to 

develop organic price elections. This frequently involves contacting University Cooperative 

Extension agents and/or working with private sector groups and companies to locate organic data 

and other pertinent market information. RMA will continue to pursue opportunities for the 

acquisition of additional organic price data and information as we are able, given funding 

constraints. We will continue to work toward developing crop-specific organic price elections

consistent with our data quality requirements.