Research of Nursery Greenhouse Policy: Final Research Report

Research of Nursery Greenhouse Policy

Deliverable 2.4.3. Final Research Report

Order Number: 140D0420F0036 P00002

Submitted to:

USDA-RMA

COTR: Claire White

6501 Beacon Drive

Kansas City, Missouri 64133-6205

(816) 926-5131

Submitted by:

Watts and Associates, Inc.

4331 Hillcrest Road

Billings, Montana 59101

(406) 252-7776

aofferdahl@wattsandassociates.com

Due Date: April 22, 2021

This document includes data that shall not be disclosed outside of the Government and shall not be duplicated, used, 

or disclosed, in whole or in part, for any purpose. The Government shall have the right to duplicate, use, or disclose 

the data to the extent provided in Order No: 140D0420F0036 P00003. All pages of this document are subject to this 

restriction.
Research of Nursery Greenhouse Policy: Final Research Report

Use or disclosure of information or data i Risk Management Agency

contained on this sheet is subject to the Order No: 140D0420F0036 P00003

restrictions on the title page of this report.

Table of Contents

Executive Summary......................................................................................................................... i

I. Introduction ................................................................................................................................. 1

II. Risk Analysis.............................................................................................................................. 4

II.A. CEA Production Data......................................................................................................... 4

II.B. CEA Production Risks...................................................................................................... 13

II.C. APHIS Compensation for Plant-Borne Pathogens........................................................... 16

II.D. Gaps in Production Data................................................................................................... 17

II.E. Alternative Data Sources.................................................................................................. 17

II.F. CEA Risk Frequency and Severity ................................................................................... 17

II.G. Identified Risk .................................................................................................................. 17

III. Issues Analyses....................................................................................................................... 19

III.A. CEA Inventory Methodology.......................................................................................... 19

III.B. Causes of Damage........................................................................................................... 19

III.C. Potential Unit Structure and Underwriting Issues........................................................... 20

III.D. Appropriate Approach for Loss Adjustment................................................................... 20

III.E. Price Determination Concerns......................................................................................... 21

III.F. Coverage Offered by Private Insurance Carriers and Federal/State Programs................ 22

III.G. Limitations of Nursery/CEA Policies............................................................................. 23

III.H. Alternative Policy(ies) or Option(s) to Nursery/CEA..................................................... 24

III.I. Issues Analysis Summary................................................................................................. 24

III.I.1. Inventory Timing....................................................................................................... 24

III.I.2. Price Determination................................................................................................... 28

III.I.3. Loss Adjustment ........................................................................................................ 30

III.I.4. Underwriting.............................................................................................................. 31

IV. Pilot Area ................................................................................................................................ 33

V. Listening Sessions/Interviews.................................................................................................. 34

V.A. Listening Sessions............................................................................................................ 34

V.A.1. History and Background............................................................................................ 35

V.A.2. Production, Financial and Economic Risks .............................................................. 35

V.A.3. Specific Disease - Ralstonia...................................................................................... 36

V.A.4. Other Risks................................................................................................................ 36

V.A.5. Testing and Quarantine ............................................................................................. 37

V.A.6. Biosecurity ................................................................................................................ 38

V.A.7. Value of Plants.......................................................................................................... 38

V.A.8. Inventory ................................................................................................................... 39

V.A.9. Record Keeping......................................................................................................... 40

V.A.10. Participants Perspectives of Other Insurance Products........................................... 40

V.A.11. APHIS or Insurance Programs................................................................................ 40

V.A.12. Premium .................................................................................................................. 40

V.B. Interviews......................................................................................................................... 40

V.C. Interview Summary .......................................................................................................... 41

V.C.1. Summary of Key Points and Stakeholder Perspectives............................................. 41

V.C.2. Interview Conclusions............................................................................................... 42

VI. Marketing Environment.......................................................................................................... 43

VII. Research Recommendations, Possible Design OptIons, and Impact Analyses .................... 45
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VII.A. Recommendation Overview .......................................................................................... 46

VII.B. Viability and Marketability of a Program for CEA....................................................... 46

VII.C. Crop Insurance Alternatives Considered ....................................................................... 47

VII.C.1. Whole Farm Revenue Protection............................................................................ 47

VII.C.2. Current Nursery Crop Insurance Program.............................................................. 47

VII.C.3. Nursery Value Select .............................................................................................. 47

VII.C.4. Quarantine Pilot...................................................................................................... 48

VII.D. Insurance Model Outline ............................................................................................... 48

VII.E. Potential Impacts............................................................................................................ 48

VII.F. Program Risks................................................................................................................ 49

VII.G. Program Challenges....................................................................................................... 49

VII.H. Concluding Considerations ........................................................................................... 49

List of Tables

Table 1. Data Regarding Horticultural Production Under Cover, 2017 Census of Agriculture, 

by Commodity Group........................................................................................................ 5

Table 2. NASS Census of Agriculture - Crops Grown in Greenhouses/Under Protection 

(Total Operations) ............................................................................................................. 6

Table 3. NASS Census of Agriculture - Crops Grown in Greenhouses/Under Protection 

(Sq. Ft.) (Thousands)......................................................................................................... 7

Table 4. Number of Horticultural Specialty Operations in 2014 and Legal Status for Tax 

Purposes, by Kind of Business, 2014................................................................................ 8

Table 5. NASS Census of Horticulture - Crops Grown in Greenhouses/Under Protection 

(Total Operations) ............................................................................................................. 9

Table 6. NASS 2014 Census of Horticulture - Crops Grown in Greenhouses/Under 

Protection (Sq. Ft.) (Thousands) ..................................................................................... 10

Table 7. 2014 NASS Horticultural Census Food Crop Production Under Protection 

Distribution of Square Feet in Production....................................................................... 10

Table 8. NASS Horticulture Operations by Type of Greenhouse ................................................ 11

Table 9. NASS Horticulture Operations Sq. Ft. in Production by Type of Greenhouse .............. 11

Table 10. NASS Census of Agriculture & Survey of Organics. Total Operations 

with Production. .............................................................................................................. 12

Table 11. NASS Census of Agriculture & Survey of Organics. Total Operations 

with Production. (Sq. Ft in Production) (Thousands) ..................................................... 12

Table 12. NASS Census Total Mushroom Production ................................................................. 12

List of Appendices

Appendix A. Greenhouse Links with Research Information

Appendix B. Stakeholder Information Gathering Invitation

Appendix C. Stakeholder Information Gathering Agenda

Appendix D. Greenhouse Interview Outline

Appendix E. Interview Session Outlines
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EXECUTIVE SUMMARY

The Statement of Work (SOW) for Order No: 140D0420F0036 P00003 Task Order #3 -

Research of Nursery Greenhouse Policy requested research into the greenhouse industry to 

determine the feasibility of adding provisions to the current nursery crop insurance program or 

developing a program separate from the existing program. In addition to these efforts, 

stakeholders requested research into alternative approaches to compensate plant producers for 

their losses to specific destruction orders carried out to limit the spread of potentially 

catastrophic plant diseases.

The first practical challenge to assessing the feasibility of offering a crop insurance product for 

Greenhouse/Controlled Environment Agriculture (CEA) is defining what it is (and what it is not) 

and measuring its scope when there is relatively little consensus of what to measure and how to 

measure it. Greenhouse and CEA encompass a variety of production and marketing activities. 

The National Agricultural Statistics Services (NASS) publishes two censuses beneficial for this 

project: Census of Agriculture and Census of Horticultural Specialties. Both report data for 

production “under protection.” Slightly different definitions of “under protection” are stated in 

these censuses. These definitions do not impose any conditions other than physical properties. 

Heating and cooling may be passive. A CEA structure, on the other hand, is one in which some 

or all the variables affecting plant development are controlled. It can be any type of structure, 

including ocean shipping containers or a brick and mortar building with no windows. Defining 

the type of structure required to qualify for crop insurance under a CEA policy is needed.

Collection of large volumes of independently verifiable quantitative data to evaluate risk is 

critical for conventional crop insurance development feasibility. Both NASS censuses provide 

data concerning production, sales, and other attributes of the business activity. However, the 

proportion of the data that relate to specifically delineated CEA activities is not known. The 

amount of production in enclosed brick and mortar buildings or in ocean shipping containers is 

not known. The definitions of “under cover” do not appear to include an environment in which 

all factors affecting productivity (hours of daylight/artificial light, amount of water, temperature, 

nutrients, etc.) are controlled.

As with any feasibility assessment, stakeholder input and feedback are critical components. The 

limitations on gatherings and other restrictions imposed by the COVID-19 pandemic precluded 

the listening sessions that normally would have been undertaken. Interviews with industry 

leaders and virtual sessions were used to obtain the greatest possible amount of stakeholder 

feedback. Stakeholders were very generous with their time and accommodating to the 

technology. While no on-site sessions were held, extensive and very high quality comments and 

input were collected.

The Contractor evaluated existing programs and potential models for development of a program 

for CEA, with particular interest in the Whole Farm Revenue Protection, Nursery, Nursery Value 

Select (NVS), and Quarantine Pilot Programs. Information concerning insurance risks for 

greenhouse production is limited for any of these programs, with experience under the current 

Nursery crop insurance policy being the most robust. Information concerning risks in CEA 

production is even more limited. The available evidence shows a meaningful share of CEA 

production differs from production covered by the existing Nursery and NVS policies. A portion 
Research of Nursery Greenhouse Policy: Final Research Report

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of CEA production is covered by Nursery and NVS policies for specific types/categories. For 

CEA the most important factors affecting production are controlled. The proper amount of water 

and nutrients are supplied in a CEA environment. Temperature is controlled. Lighting is 

controlled. These methods include aeroponics, a practice in which a nutrient-laden solution is 

sprayed on the roots of the plant or hydroponics, wherein plants are grown in nutrient-laden 

solution with or without a medium. The difference is the roots are in the solution or are sprayed 

with the solution. In neither case is a plant grown in a standard nursery pot or in the field. The 

plant may not be sold with roots attached. These are conditions of insurance under the Nursery 

and NVS policies. The existing Nursery and NVS crop insurance policies do not meet all the 

needs of CEA growers. For many, this is because those existing policies insure the plant, not the 

products of a plant. These policies also cover risks that are mitigated in CEA production. For 

example, hail or fire risk may be effectively non-existent for CEA. A premium rate might reduce 

the risk charge for those risks that are reduced in CEA. Many CEA operations are oriented to 

selling cuttings from or the fruits of a plant (tomatoes, cucumbers, peppers, etc.) and discarding 

the plant when its productivity declines. In many respects, much CEA production is similar to 

the production of field crops with multiple plantings/multiple harvests (sweet corn, peppers) or 

single planting/multiple harvest (strawberries). These crops are insured when produced in a 

field, but coverage is not offered for CEA production. Many of the stakeholders interviewed in 

the development of this report represent ‘young plant’ operations dedicated to rearing clones, 

cuttings, and seedlings as the first phase of a multi-segment plant development process and these 

operations are ineligible for coverage under the existing program, but expresses strong interest in 

the principles of the NVS design. Based on consideration of each existing program, the 

Contractor believes NVS provides the most appropriate model for consideration of development 

of a new program for CEA.

The Agricultural Improvement Act of 2018 (2018 Farm Bill) specifically requested information 

concerning a disease named Ralstonia (solanacearum race 3 biovar 2 (RSr3b2)). This disease 

affects the roots of certain plants, notably potatoes, tomatoes, peppers, tobacco, and eggplant

(closely related plants in the solanaceae group). The 2018 Farm Bill specifically referenced an 

outbreak in 2004 in the state of Michigan. That outbreak affected growers in 27 states. Another 

outbreak occurred in 2020, affecting 288 growers in 39 states. In both cases, the pathogen was 

introduced via imports of geranium clippings. There is no approved treatment for this disease. 

Infected or potentially affected plants must be destroyed. The Contractor could not find any 

evidence of a compensation program similar to those available for livestock that must be 

destroyed to prevent the spread of disease. It can be questioned whether this peril constitutes a 

“natural disaster” as defined in the Act (7 U.S.C. 1508(a)(1)). It is a disease that can occur

naturally and there are no specific actions or labeled products that prevent or treat the disease. 

The clippings were allowed to enter the United States at the port of entry. The Contractor 

carefully reviewed the legal authority under which Animal and Plant Health Inspection Service 

(APHIS) has compensated livestock producers following depopulation orders and the limitations 

currently imposed on the authority to compensate for plant producers. In addition to pursuing 

insurance development, the Contractor believes stakeholders may choose to address their 

concerns, in part, through requesting modifications to the APHIS authorities.

.
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I. INTRODUCTION

The SOW for Order No: 140D0420F0036 P00003 Task Order #3 - Research of Nursery 

Greenhouse Policy requested research into the greenhouse industry to determine the feasibility of 

adding provisions to the current nursery crop insurance program or developing a program 

separate from the existing program. As with any feasibility assessment, stakeholder input and 

feedback are critical components. The limitations on gatherings and other restrictions imposed 

by the COVID-19 pandemic precluded the listening sessions that normally would have been 

undertaken. Interviews with industry leaders and virtual sessions were used to obtain the 

greatest possible amount of stakeholder feedback.

The 2018 Farm Bill provides the underlying basis for this Order, as follows:

“The Agricultural Improvement Act of 2018 (2018 Farm Bill) directed RMA to: 

“offer to enter into 1 or more contracts with 1 or more qualified persons to carry 

out research and development, regarding a policy to insure in a controlled 

environment such as a greenhouse—(I) the production of floriculture, nursery, 

and bedding plants; (II) the establishment of cuttings or tissue culture in a 

growing medium; or (III) other similar production, as determined by the 

Secretary.” The 2018 Farm Bill requires “research and development described 

[above] shall evaluate the effectiveness of policies for the production of plants in 

a controlled environment, including policies that—

(i) are based on the risk of—

(I) plant diseases introduced from the environment;

(II) contaminated cuttings, seedlings, or tissue culture; or

(III) Federal or State quarantine or destruction orders associated with the 

contaminated items described in subclause (II);

(ii) consider other causes of loss applicable to a controlled environment, such 

as a loss of electricity due to weather;

(iii) consider appropriate best practices to minimize the risk of loss;

(iv) consider whether to provide coverage for various types of plants under 1 

policy or to provide coverage for 1 species or type of plant per policy;

(v) have streamlined reporting and paperwork requirements that take into 

account short propagation schedules, variable crop years, and the variety 

of plants that may be produced in a single facility; and

(vi) provide protection for revenue losses.”

The SOW states the objectives are the following:

1) To obtain analysis, determine the viability and determine issues related to 

insuring nursery crops grown in controlled environments, as outlined by the 

2018 Farm Bill. The Contractor shall produce a research report that 

determines the viability of adding provisions to the nursery crop insurance 

program offered by RMA or developing an insurance program(s) separate 

from the RMA-offered nursery crop insurance program. If the latter, the 

Contractor will recommend the most viable type of insurance program.

2) At RMA’s option, to develop a policy for nursery crops in a controlled 

environment that conform to the requirements in the 2018 Farm Bill.
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If the Risk Management Agency (RMA) decides the evidence supports development of a pilot 

crop insurance product, the Contractor is required to draft an insurance program (in a later phase 

of development) that meets the following criteria:

1) Provides meaningful and timely risk management benefits to nursery 

greenhouse producers at a national level, without distorting markets;

2) Is cost effective from the perspective of nursery greenhouse producers;

3) Is actuarially sound so that premium rates will cover expected losses plus a 

reasonable reserve;

4) Is able to be consistently administered given the structure and resources of 

RMA and approved insurance providers; and

5) Is marketable based on industry input and feedback.

The Contractor is directed to research the potential to offer a policy for crop insurance to 

greenhouses and/or their production and determine if a program is viable. The research must 

address the following risks and issues, among other risks and issues determined in the Draft 

Report. The SOW states the risks that must be addressed:

1) The risk of—

(I) plant diseases introduced from the environment;

(II) contaminated cuttings, seedlings, or tissue culture; or

(III) Federal or State quarantine or destruction orders associated with the 

contaminated items described in subclause (II);

2) Causes of loss applicable to a controlled environment, such as a loss of 

electricity due to weather;

3) Appropriate best practices to minimize the risk of loss;

4) Various types of plants under one policy or for one species or type of plant 

per policy;

5) Streamlined reporting and paperwork requirements that take into account 

short propagation schedules, variable crop years, and the variety of plants 

that may be produced in a single facility; and

6) Revenue losses.

As stated previously, listening sessions are necessary to develop fully the insurable risks and 

gaps in available insurance coverage for greenhouse growers. Available literature does not fully 

document the nature of these risks, particularly in the context of crop insurance. Direct contact 

with greenhouse operators will provide complete information. The Contractor was able to have 

three virtual listening sessions and five follow up interviews with the industry in January 2021. 

These were beneficial to determine the risks and concerns of the greenhouse industry. This 

Research Report includes analysis and results, for each section based on research conducted and 

input from crop experts, industry stakeholders, and extension specialists from land grant 

universities.

The review found published data regarding plants produced ‘under protection’ in the Census of 

Agriculture and in the Census of Horticultural Specialties. ‘Under protection’ is subdivided into 

greenhouse and shade. The Census of Agriculture defines production ‘under protection’ as 

“...plants grown under a structure (such as glass, fiberglass, plastic, or saran) for the entire 
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growing season.”1 The Census of Horticultural Specialties defines a greenhouse as an area “... 

covered by glass, rigid plastic and plastic film.”2 This census further defines a greenhouse as a 

structure with a transparent roof regardless of the material used for its sides. These definitions 

focus on the structure in which the plants are grown, not the practices used for production.

The term CEA refers to plants grown with control over one or more factors affecting growth. 

The plants might be afforded minimal protection from the elements at one end of a continuum to 

complete control of all factors affecting the physical development of the plant: the intensity and 

amount of light, temperature, relative humidity, irrigation, fertilization, etc. The structure may 

be fabricated of plastic film over wood or metal framing, a glass greenhouse, a brick and mortar 

building with no windows, a converted shipping container, a pole barn, or any structure that does 

not have a transparent roof. Plants in this environment may be produced in soil without standard 

nursery pots, in standard nursery pots, in nutrient-rich water continuously, or in spray placed on 

bare roots. There is no way to discriminate the Census data by degree of control over the 

environment in which the plants were grown.

The existing Nursery crop insurance policy3 does not define the type of structure used for the 

container grown practice. The Nursery Crop Provisions require the plants to be in standard 

nursery containers; the NVS Crop Provisions require standard nursery containers or a growing 

medium suitable for the plant (including a hydroponic tank). The plants must be intended for 

sale as plants with the roots attached. Incidental production of fruits and nuts is allowed but that 

production is not insured. CEA production encompasses vegetables (tomatoes, peppers, 

cucumbers, lettuces, and others) and other edible products that are severed from the plants and 

sold. The plants are discarded. Plants may be severed from the roots for sale as floral or other 

decorative arrangements. These differences in production methods and manner of sale render the 

existing Nursery crop insurance policies unusable for certain elements of the CEA industry.

An emerging phenomenon is denoted as “urban agriculture.” This term refers to CEA 

production within urban areas, generally within highly controlled environments. These 

operations focus on providing fresh produce to restaurants and grocers. The Contractor found no 

data specific to these operations. These operations reportedly often are highly automated with 

significant automation and control over growing conditions. The need for a traditional Federal 

crop insurance, particularly traditional weather-peril based coverage, is deemed to be very low if 

it does not also include coverage for disease and other CEA-relevant perils.

1 2017 Census of Agriculture Report Form Guide, page 29. 

(https://www.nass.usda.gov/AgCensus/Report_Form_and_Instructions/2017_Report_Form/2017_Census_of_Agriculture_Rep

ort_Form_Guide.pdf) 2 2019 Census of Horticultural Specialties Instruction Sheet, page 4. 

(https://www.nass.usda.gov/Surveys/Guide_to_NASS_Surveys/Census_of_Horticultural_Specialties/2019-census-of-hortinstruction-sheet.pdf) 3 The Nursery Value Select (NVS) crop insurance policy is substantially the same as the Nursery policy in this regard.
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II. RISK ANALYSIS

This section addresses the requirements in the SOW that the Contractor provide:

Risk Analyses – The Contractor shall define the economic perils; collect data to 

identify and quantify these perils; identify data that are unavailable, but 

necessary to quantify these risks; estimate the frequency and severity of the most 

important perils that currently are uninsured, classify each of the perils as 

insurable or uninsurable and justify the classification of the risk. The Contractor 

shall also identify man-made or created perils that can affect the crop and 

describe when and how these perils can occur. The Contractor shall also identify 

state, county and regional grading standards and USDA grading standards; 

determine the identity and independence of the grading agency and entity that 

performs the grading evaluation; provide a copy of the most recent grading 

standards; determine alternative uses for the reduced quality crop. The 

Contractor shall also report any history of disaster program payments, including 

NAP, as a result of any action for the past ten years of available data. The data 

shall be from acceptable and appropriately-cited sources.

II.A. CEA Production Data

The 2017 Census of Agriculture (2017 Census) provides a detailed compilation of data 

concerning crop production “under cover.” The term does not specifically identify the 

production area and value of crops grown with CEA practices. It simply reports production 

under cover. The 2017 Census form asks respondents to identify crops grown “under glass or 

other protection.”4 The Report Form Guide for the 2017 Census provides this information:

“Area under protection refers to plants grown under a structure (such as glass, fiberglass, plastic, 

or saran) for the entire growing season.”5 Crops covered only temporarily to be further grown in 

the open should not be included for area under protection.” Thus, crop production occurring in 

any permanent or temporary structure qualifies as grown under glass or other protection if it is 

used for an entire growing season. In addition, under the 2017 Census, any tract, whether urban 

or rural, qualifies for reporting if at least $1,000 in gross sales were realized or would have been 

realized.

The Census of Horticultural Specialties (Horticultural Census), conducted every five years 

ending two years after the Census of Agriculture, specifically defines structures that qualify as 

greenhouses in its instructions. Instructions for Section 23 Item 1 state: “Report the area (square 

feet) covered by glass, rigid plastic and plastic film greenhouses. The roof covering (glazing) 

determines the greenhouse classification. For example, a structure with a glass roof, but

insulated fiberglass sides is considered a glass greenhouse. Or, a structure that has an acrylic 

plastic roof with film plastic sides that can be rolled up in warmer weather should be considered 

a rigid plastic greenhouse.”

4 https://www.nass.usda.gov/AgCensus/Report_Form_and_Instructions/2017_Report_Form/17a100_121316_general_final.pdf, 

page 10, Accessed June 2020. 5 2017 Census of Agriculture Report Form Guide, page 29. 

https://www.nass.usda.gov/AgCensus/Report_Form_and_Instructions/2017_Report_Form/2017_Census_of_Agriculture_Repo

rt_Form_Guide.pdf. Accessed June 2020.
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As will be discussed later in this document, CEA activities also occur in brick and mortar 

buildings such as old factories or warehouses or in shipping containers. All elements, such as 

light, water, fertilizer, etc., needed to support plant growth are provided artificially in these 

applications. Neither census appears to provide for reporting such production, also known as 

“urban agriculture.”

Table 1 summarizes the data from the 2017 Census of Agriculture regarding horticultural 

production. These data are at the national level; state-and county-level data also are reported by 

the 2017 Census. Acres in production, as reported in Table 1, are derived from square feet in 

production (43,560 sq. ft. = 1 acre) as reported in the 2017 Census. The purpose of this 

calculation is to provide perspective of the size of this industry and of individual commodities or 

commodity groups relative to currently insurable crops. The column “crop insurance available” 

represents a best assessment by the Contractor regarding whether the plant classification could 

be included under the current nursery program (Nursery) or the NVS program. According to the 

Contractor’s assessment, a substantial number of commodities grown under cover (crop 

insurance flag = N) may not be insurable under the existing crop insurance policies. A question 

mark indicates that certain plants within the category may be insurable under these policies, but 

others may not.

Table 1. Data Regarding Horticultural Production Under Cover, 2017 Census of 

Agriculture, by Commodity Group

Plant Category

Operations with 

Area in 

Production (no.)

Square feet in 

production 

(1,000)

Acres in 

Production

Crop 

Insurance 

Available

Aquatic plants 331 1,308 30 N

All bedding plants 12,919 383,835 8,812 Y

Dry bulbs & corms & rhizomes & tubers 347 1,683 39 N

Cut flowers and cut cultivated greens 2,078 228,441 5,244 N

Floriculture, total 17,051 869,497 19,961 N/A

Floriculture, other 636 13,132 301 N/A

Flower Seeds 294 495 11 N

Flowering Plants, Potted 4,206 145,629 3,343 Y

Foliage plants 2,670 98,459 2,260 Y

Fruit, totals 838 11,708 269 N

Mushrooms 1,261 36,283 833 N

Mushroom spawn 46 36,281 833 N

Nursery totals 4,302 308,880 7,091 Y

Propagative material 1,356 37,174 853 N

Tomatoes 7,974 63,930 1,468 N

Transplants, tobacco 267 3,260 75 Y

Transplants, vegetable and strawberry 2,058 29,860 685 Y

Vegetable seeds 599 8,973 206 N

Vegetable, totals 10,849 112,564 2,584 N

Totals 70,082 2,391,391 54,899

Source: Contractor’s Underwriting Department, after 2017 Census of Agriculture, NASS, USDA.

Table 2 displays operations reporting crops grown in greenhouses or under protection in the 

NASS Census of Agriculture by year for the last four censuses. Most of these crops fall under 

the Horticulture and Floriculture categories. While this data provides a snapshot into the total 
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number of operations in the growing crops under protection, it is not nearly specific nor 

consistent enough to allow for the statistical analysis required for insurance policy development.

Table 2. NASS Census of Agriculture - Crops Grown in Greenhouses/Under Protection 

(Total Operations)

2002 2007 2012 2017

Aquatic Plants, Under Protection 621 364 277 331

Bedding Plant Totals, Under Protection 16,849 14,747 14,216 12,919

Bulbs & Corms & Rhizomes & Tubers, Dry, Under Protection 576 247 193 347

Cut Flowers & Cut Cultivated Greens, Under Protection 1,754 1,316 1,706 2,078

Floriculture Totals, Under Protection 21,728 18,670 18,724 17,051

Floriculture, Other, Under Protection 172 880 636

Flower Seeds, Under Protection 340 191 212 294

Flowering Plants, Potted, Indoor Use, Under Protection 6,806 5,006 4,051 4,206

Foliage Plants, Indoor Use, Under Protection 3,237 2,099 2,300 2,670

Fruit Totals, Under Protection 249 673 846

Horticulture Totals, (Excl Cut Trees), Under Protection 29,104

Nursery Totals, Under Protection 4,956 4,590 4,883 4,302

Nursery, Other, Incl Greenhouse, Under Protection 1,341

Nursery, Other, Under Protection 228

Propagative Material, Under Protection 1,066 1,114 1,356

Tomatoes, Under Protection 2,926 6,323 7,974

Transplants, Commercial, Tobacco, Under Protection 438 447 267

Transplants, Commercial, Vegetable & Strawberry, Under Protection 1,135 1,942 2,058

Vegetable Seeds, Under Protection 542 361 555 599

Vegetable Totals, Incl Fresh Cut Herbs, Under Protection 3,416 4,075 8,750 10,849

Total 91,270 57,880 67,246 68,783

Source: Contractor’s Underwriting Department, from NASS, USDA QuickStats.

Table 3 displays the number of square feet (in thousands) of crops reported to be grown in 

greenhouses or under protection in the NASS Census of Agriculture by year in the last four 

censuses. This provides a snapshot into the size of the greenhouse industry, though the actual 

production represented is difficult to gauge. The square foot measurement does not provide 

insight into the productivity of a crop, i.e. the height of the shelves, the additional management in 

greenhouse growing conditions likely leading to greater productivity, or the longer production 

season/potential for year round harvests. It does provide a relative indication of the size of the 

crop categories relative to one another for cases where significant differences can be noted.
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Table 3. NASS Census of Agriculture - Crops Grown in Greenhouses/Under Protection 

(Sq. Ft.) (Thousands)

2002 2007 2012 2017

Aquatic Plants, Under Protection 3,546 1,712 1,642 1,308

Bedding Plant Totals, Under Protection 386,963 361,051 363,168 383,835

Bulbs & Corms & Rhizomes & Tubers, Dry, Under 

Protection 4,044 2,112 1,306 1,683

Cut Flowers & Cut Cultivated Greens, Under Protection 230,314 174,340 235,151 228,441

Floriculture Totals, Under Protection 973,658 819,941 873,291 869,497

Floriculture, Other, Under Protection 0 2,049 13,974 13,132

Flower Seeds, Under Protection 1,188 320 369 495

Flowering Plants, Potted, Indoor Use, Under Protection 173,130 142,638 137,145 145,629

Foliage Plants, Indoor Use, Under Protection 183,251 139,863 123,852 98,459

Fruit Totals, Under Protection 0 0 7,951 11,708

Nursery Totals, Under Protection 187,766 221,814 258,499 308,880

Nursery, Other, Incl Greenhouse, Under Protection 16,117 0 0 0

Nursery, Other, Under Protection 0 1,431 0 0

Propagative Material, Under Protection 0 29,976 35,628 37,174

Tomatoes, Under Protection 0 43,950 55,181 63,930

Transplants, Commercial, Tobacco, Under Protection 0 3,965 4,487 3,260

Transplants, Commercial, Vegetable & Strawberry, Under 

Protection 0 20,248 21,527 29,860

Vegetable Seeds, Under Protection 1,865 838 4,801 8,973

Vegetable Totals, Incl Fresh Cut Herbs, Under Protection 64,364 61,766 98,000 112,564

Total 2,226,206 2,028,011 2,235,972 2,318,827

Source: Contractor’s Underwriting Department, from NASS, USDA QuickStats.

The total number of operations indicated in Table 1 is the sum of the number of operations 

reported for each plant classification. Hence, a producer of two or more plant classifications is 

included multiple times. For perspective, 23,221 operations reported production under cover for 

the 2014 Census of Horticulture. These data indicate the number of growers and the total area 

involved in production may exceed that of some currently insurable commodities.

Some commodities, such as tomatoes, do have crop insurance policies in existence. However, 

those Crop Provisions clearly are oriented toward field planting in soil, not grown under CEA 

conditions. For example, the Fresh Market Tomato (Dollar Plan) crop insurance policy defines 

the insured crop as “... all the field grown mature green or ripe fresh market tomato types in the 

county...” Field grown is not a defined term. It is possible that all or a portion of a tomato crop 

planted in a field may be grown “under cover” (such as shade cloth) and be insurable as a fresh 

tomato crop and be included in Census reports as being grown “under protection.” A similar 

consideration applies to other commodities identified in Tables 1, 2, and 3.

The most recent Census of Horticultural Specialties was conducted for calendar year 2014. 

Questionnaires have been mailed for calendar year 2019; data were reported in December 2020.

The 2014 Horticultural Census included operations reporting $10,000 or more of horticultural 

sales during that calendar year. These data are summarized by “Kind of Business,” whereas the 

data in Tables 1, 2, and 3 are summarized by commodity types. The number of operations 

shown in Table 4 may be a better reflection of the businesses actually operating in this 

production space. Slightly more than half of the horticultural specialty operations are family or 
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individually owned. About one-third are corporately owned, while the remainder are 

partnerships or other forms of ownership.

Table 4. Number of Horticultural Specialty Operations in 2014 and Legal Status for Tax 

Purposes, by Kind of Business, 2014

Kind of Business Family or 

Individual PartnershipCorporationOther* Total

Annual bedding/garden plants 3,157 420 1,900 66 5,543

Aquatic plants 36 8 39 1 84

Cut Christmas trees 2,083 297 465 48 2,893

Cut cultivated greens 225 15 81 1 322

Cut flowers and cut lei flowers 640 89 266 16 1,011

Dried bulbs, corms, rhizomes, and tubers 55 10 30 - 95

Flower seeds 27 3 22 4 56

Foliage plants for indoor or patio use 254 18 314 7 593

Food crops grown under protection 934 117 459 93 1,603

Nursery stock 2,437 471 3,004 51 5,963

Other *(see text) 662 80 421 26 1,189

Potted flowering plants for indoor or patio use 354 50 404 23 831

Potted herbaceous perennial plants 498 76 317 22 913

Propagative horticultural materials, bareroot, and unfinished plants 164 33 215 33 445

Sod, sprigs, or plugs 438 117 628 17 1,200

Transplants for commercial vegetable and strawberry production 112 29 80 5 226

Vegetable seeds 117 40 91 6 254

All horticultural specialty operations 12,193 1,873 8,736 419 23,221

* Cooperative, estate or trust, institutional, etc.

Source: Contractor’s Underwriting Department after 2014 Census of Horticultural Specialties, NASS, USDA.

Table 5 displays the number of operations from both the 2009 and 2014 Censuses of Horticulture 

listed as growing plants specifically categorized as grown in a greenhouse or under protection. 

Some of these totals correlate with those reported in the Census of Agriculture, while others, 

notably the vegetables, are reported by type rather than commodity totals.
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Table 5. NASS Census of Horticulture - Crops Grown in Greenhouses/Under Protection 

(Total Operations)

2009 2014

Aquatic Plants, Under Protection 284 265

Bedding Plants, Annual, Under Protection, Greenhouse 7,751 7,665

Bedding Plants, Herbaceous Perennial, Under Protection, Greenhouse, Pots 4,882 4,745

Bulbs & Corms & Rhizomes & Tubers, Dry, Under Protection 64 63

Cut Cultivated Greens, Under Protection, Greenhouse 152 197

Cut Flowers, Under Protection, Greenhouse 820 969

Flower Seeds, Under Protection 29 62

Flowering Plants, Potted, Indoor Use, Under Protection, Greenhouse 3,644 3,632

Foliage Plants, Indoor Use, Under Protection, Greenhouse, Hanging Baskets 1,085 940

Foliage Plants, Indoor Use, Under Protection, Greenhouse, Pots 1,956 1,906

Herbs, Fresh Cut, Under Protection 323 524

Horticulture Totals, Under Protection, Greenhouse 13,546 14,593

Horticulture, Other, Under Protection, Greenhouse 2,809 3,731

Lettuce, Under Protection 338 763

Nursery Totals, Under Protection, Greenhouse 3,642 3,815

Peppers, Under Protection 265 534

Strawberries, Under Protection 76 130

Tomatoes, Under Protection 1,148 1,889

Transplants, Commercial, Tobacco, Under Protection 189 183

Transplants, Commercial, Vegetable & Strawberry, Under Protection 403 543

Vegetable Seeds, Under Protection 61 80

Total 43,467 47,229

Source: Contractor’s Underwriting Department, from NASS, USDA QuickStats.

Table 6 displays the number of square feet (in thousands) of crops reported grown in 

greenhouses or under protection in the NASS Census of Agriculture by year in the last two 

Censuses of Horticulture. Crop production for several categories is significant. In addition to 

traditional nursery crop production, a significant amount of food crop production is grown under 

protection. Of these, the most notable is tomatoes and transplant stage crops (see Table 7).
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Table 6. NASS 2014 Census of Horticulture - Crops Grown in Greenhouses/Under 

Protection (Sq. Ft.) (Thousands)

2009 2014

Aquatic Plants, Under Protection 1,534 1,160

Bedding Plants, Annual, Under Protection, Greenhouse 260,797 268,430

Bedding Plants, Herbaceous Perennial, Under Protection, Greenhouse, Pots 94,206 97,763

Bulbs & Corms & Rhizomes & Tubers, Dry, Under Protection 350 332

Cut Cultivated Greens, Under Protection, Greenhouse 4,244 4,570

Cut Cultivated Greens, Under Protection, Shade Structures 152,820 167,687

Cut Flowers, Under Protection, Greenhouse 53,610 54,851

Flower Seeds, Under Protection 103 185

Flowering Plants, Potted, Indoor Use, Under Protection, Greenhouse 123,127 127,512

Foliage Plants, Indoor Use, Under Protection, Greenhouse, Hanging Baskets 17,371 18,293

Foliage Plants, Indoor Use, Under Protection, Greenhouse, Pots 41,725 48,662

Herbs, Fresh Cut, Under Protection 5,929 13,854

Horticulture Totals, Under Protection, Greenhouse 859,063 894,907

Horticulture, Other, Under Protection, Greenhouse 128,915 140,584

Lettuce, Under Protection 2,753 4,330

Nursery Totals, Under Protection, Greenhouse 178,847 174,232

Peppers, Under Protection 1,230 3,522

Strawberries, Under Protection 939 623

Tomatoes, Under Protection 39,962 42,597

Transplants, Commercial, Tobacco, Under Protection 3,760 3,775

Transplants, Commercial, Vegetable & Strawberry, Under Protection 32,286 31,582

Vegetable Seeds, Under Protection 238 135

Total 2,003,809 2,099,588

Source: Contractor’s Underwriting Department, from NASS, USDA QuickStats.

Table 7. 2014 NASS Horticultural Census Food Crop Production Under Protection 

Distribution of Square Feet in Production

Crop Distribution (Percent)

Herbs, Fresh Cut, Under Protection 14

Lettuce, Under Protection 4

Peppers, Under Protection 4

Strawberries, Under Protection 1

Tomatoes, Under Protection 42

Transplants, Commercial, Tobacco, Under Protection 4

Transplants, Commercial, Vegetable & Strawberry, Under Protection 31

Source: Contractor’s Underwriting Department, from NASS.

Like the Census of Agriculture, the Horticultural Census also includes data about greenhouses 

and shade structures: number of operations with area in production and square feet in production 

with separate tabulations for greenhouses built in the census year; and for greenhouses only, the

type of construction (film plastic, glass, or rigid plastic). Tables 8 and 9 report the data 

concerning greenhouses and greenhouse construction by type. Table 8 reports number of 

operations; Table 9 reports area in square feet. Nearly 15,000 operations (about 65 percent of all 

operations with production under cover) reported greenhouses. Total area under protection with 

structures that NASS classifies as greenhouses was more than 20,000 acres (note: the data are 

reported in square feet; the Contractor converted those data to acres (1 acre = 43,560 sq. ft.) to 

provide a perspective of the extent of this industry relative to smaller acreage crops that presently 

are insurable. The sum of the number of greenhouses by type exceeds the number of operations 

since an operation might have multiple types of greenhouses.
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Table 8. NASS Horticulture Operations by Type of Greenhouse

2009 2014

Horticulture Totals, Under Protection, Greenhouse - Operations With Area In Production 13,546 14,593

Horticulture Totals, Under Protection, Greenhouse, Built Within Current Year 868 1,002

Horticulture Totals, Under Protection, Greenhouse, Film Plastic 11,930 12,757

Horticulture Totals, Under Protection, Greenhouse, Glass 1,703 1,485

Horticulture Totals, Under Protection, Greenhouse, Rigid Plastic 2,898 3,178

Source: Contractor’s Underwriting Department, from NASS, USDA QuickStats.

Table 9. NASS Horticulture Operations Sq. Ft. in Production by Type of Greenhouse

2009 2014

Horticulture Totals, Under Protection, Greenhouse - Sq Ft In Production 859,063 894,907

Horticulture Totals, Under Protection, Greenhouse, Built Within Current Year 16,279 16,194

Horticulture Totals, Under Protection, Greenhouse, Film Plastic 624,736 640,216

Horticulture Totals, Under Protection, Greenhouse, Glass 114,037 122,502

Horticulture Totals, Under Protection, Greenhouse, Rigid Plastic 120,290 132,189

Source: Contractor’s Underwriting Department, from NASS, USDA QuickStats.

NASS also publishes an annual report on Floriculture. “This annual full-text report presents data 

on floriculture crops including cut flowers, potted flowering plants, foliage plants, potted 

herbaceous perennials, annual bedding/garden plants, cut cultivated greens, propagative 

floriculture material and special Hawaiian crops. The data includes quantity sold, percent of 

sales at wholesale, wholesale price and value of sales at wholesale for 15 program states and 

growers having $100,000 or more in sales. Additionally, the number of growers, growing area 

and operations with hired workers for growers with $10,000 or more in sales is also included in 

the report.”6

There is a large volume of information concerning quantity and value of horticultural crops 

grown under protection reported by NASS. However, the capacity of this industry dedicated to 

CEA activity cannot be isolated from this mass of data. An insurance program based on a model 

like NVS may address this lack of data since coverage is based upon each insureds past 

production and sales; a producer’s own data and elections are used to determine liability.

Tables 10 and 11 report Census and Survey of Organics data for organic crops. Table 10 

displays the number of operations with production for years where data was available for a 

category and Table 11 displays total square feet by year and category in thousands.

6 https://usda.library.cornell.edu/concern/publications/0p0966899?locale=en, accessed June 2020.
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Table 10. NASS Census of Agriculture & Survey of Organics. Total Operations with 

Production.

2008 2014 2015 2016

Food Crop Totals, (Excl Mushrooms), Organic, Under Protection 838

Nursery Totals, Organic, Under Protection 288 248 78 93

Propagative Material, Organic, Under Protection 72 56 53 69

Vegetables, Other, Incl Fresh Cut Herbs, Organic, Under Protection 666

Total 1,198 304 131 828

Source: Contractor’s Underwriting Department, from NASS, USDA QuickStats.

Table 11. NASS Census of Agriculture & Survey of Organics. Total Operations with 

Production. (Sq. Ft in Production) (Thousands)

2008 2014 2015 2016

Food Crop Totals, (Excl Mushrooms), Organic, Under Protection 11,563

Nursery Totals, Organic, Under Protection 2,317 4,483 1,696 1,480

Propagative Material, Organic, Under Protection 862 1,173 2,793 5,775

Vegetables, Other, Incl Fresh Cut Herbs, Organic, Under Protection 10,304

Total 14,743 5,655 4,489 17,560

Source: Contractor’s Underwriting Department, from NASS, USDA QuickStats.

Reviewing Tables 10 and 11, it can be seen there have been changes in the data categories 

tracked by NASS. These tables are intended to provide an overview of the organic data available 

from NASS relevant to CEA, as well as its limitations. Notice the first line of food crop totals 

(for both tables) only shows data for 2008. The next two lines show data for the last four Census 

reports. The final line of the table named “Vegetables...” was just added to the last census. 

While most mushroom production is not reported by NASS as under protection or occurring in a 

greenhouse, most mushrooms are grown indoors in a highly-controlled environment. Mushroom 

production occurs in phases, from phase 1 composting to phase 6 “cropping.” These stages 

typically occur in different climate-controlled rooms in a production facility. Table 12 provides 

an overview of total mushroom production by operation and total square feet in the United 

States.

Table 12. NASS Census Total Mushroom Production

2002 2007 2012 2017

Mushrooms - Operations With Area In Production 462 462 712 1,261

Mushrooms - Sq Ft In Production 48,339,412 45,308,740 37,416,059 36,281,409 

Source: Contractor’s Underwriting Department, from NASS, USDA QuickStats.

Reviewing Table 12, the number of mushroom operations has increased notably over the last 

four Censuses of Agriculture. The Contractor speculates that this may be due to an increase in 

the number of specialty mushroom operations as demand for specialty types has increased. This 

theory is given particular credence if it assumed specialty operations are smaller and the fact that 

the total number of square feet in production has declined each year.

In summary, Contractor was not able to identify any comprehensive source of data regarding 

CEA production of commodities. While data that provide a snapshot of the total production of 

various CEA crops exist, no datasets with consistent production and loss observations required 

for any type of crop insurance policy development were found. Periodic survey reports and 
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censuses released by NASS do not provide sufficient disaggregation to identify CEA production. 

In addition, it is not clear from the census instructions whether production in structures without a 

glass roof is reported.

II.B. CEA Production Risks

The 2019 Global CEA Census, a joint project of Agritecture Consulting LLC and Autogrow

Systems Limited, defined CEA as the practice of “...growing of crops while controlling certain 

aspects of the environment including lighting, temperature, humidity, irrigation, fertigation and 

other factors that influence plant physiological responses.”7

 This private Census defined 

characteristics of the industry, not quantities produced. The critical words of this definition are 

“controlling certain aspects.” This infers that not all aspects of the environment need be 

controlled for a growing practice to qualify as CEA for the purposes of this census. This 

interpretation is enhanced by this source’s identification of structures in which a form of CEA 

may be practiced, as listed below.

GREENHOUSE refers to a climate-regulated structure with walls and roof made 

out of a transparent material in which crops are grown.

ROOFTOP GREENHOUSE refers to greenhouse located on top of another 

building.

SHIPPING CONTAINER refers to a climate-regulated shipping container using 

only supplemental lighting (no sunlight) for crop production.

HIGH TUNNEL refers to crops covered with a canopy for protection against the 

elements and sometimes referred to as hoop houses or tunnel houses (not small 

backyard hobby tunnels).

8

INDOOR FARM refers to crop production that utilizes artificial lighting instead

of sunlight. This can include rooms, warehouses, factories and other converted 

indoor spaces.

VERTICAL FARMING is crop production that uses the vertical space. Plants can 

be stacked horizontally or in tall towers.9

Note the definition of greenhouse as used by this organization differs from that used by the 

NASS Census reports. Under the NASS definition, only the roof needs to be transparent; the 

definition above states both walls and roof are transparent. This report also noted a lack of 

standardization of the term “greenhouse” among countries.

The Sustainable Agriculture Research and Education Program (SARE)10 identifies high tunnels 

primarily as a season-extending method rather than as a fully functional year-around controlled 

7 2019 Global CEA Census. https://gallery.mailchimp.com/9a0e5ac03df5550dddf4bd821/files/e4f08841-b086-4976-ad53-

81d613c2597c/2019_Global_CEA_Census_Report_Autogrow_Agritecture.pdf?utm_source=CEA+Census+2019&utm_campa

ign=d6dea4a854- AUTOMATION_Welcome_Message_1&utm_medium=email&utm_term=0_924fc70856-d6dea4a854-

402728638&mc_cid=d6dea4a854&mc_eid=7f7af97e92, page 8. Accessed March 2020.

8 There is debate within the academic community regarding the sufficiency of high tunnels to meet the definition of CEA

agriculture. They are included here as they are included in the referenced source material, but the reader should be aware that 

this inclusion is not representative of a broad consensus within the industry; in interviewing four experts, two included it and 

two did not. 9 Ibid, page 8. Accessed March 2020. 10 An activity based upon work supported by the National Institute of Food and Agriculture, U.S. Department of Agriculture, 

under award No. 2019-38640-29881. SARE Outreach operates under cooperative agreements with the University of Maryland 

to develop and disseminate information about sustainable agriculture. https://www.sare.org/.
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environment.11 This organization defines “High tunnels, or hoop houses, are simple greenhouselike structures over bare ground, without the elaborate heating and cooling systems of a 

greenhouse. They rely primarily on passive solar heating and passive ventilation.”12 This 

difference indicates that generic terminology (such as “greenhouse”) to identify CEA structures 

is not possible. Structures can range from plastic film covered frames to brick and mortar 

spaces. Production risks differ among type of structure and technology used. Development of a 

crop insurance policy for CEA activities will require definitions of structures within which CEA 

production can be insured. Ultimately, these definitions may vary based on the ‘zone’ in which 

the greenhouse is located, akin to the cold protection determinations used in nursery programs.

The amount of controls placed on the internal environment and the automation of those controls 

will have an impact. Production risks likely are substantially similar to those insured under the 

Nursery and NVS policies. Many of those production activities are conducted in greenhouses or 

similar structures dedicated to the growing of plants. The only difference is the emphasis of the 

coverage. Plants insured under the Nursery and NVS policies are largely ornamental in nature or 

are to be transplanted in a field to grow a crop. Much production in CEA structures is intended 

for human consumption – cut greens, hothouse tomatoes, and similar vegetables.

Some specific perils that can be postulated are:

• External temperatures that differ from the normal for the area in which the structure is 

located to such a degree that the system to regulate the temperature is overwhelmed and 

results in plant damage. 

• Failure of the electrical power supply that cannot be corrected before damage to the 

insured plants occurs.

• Introduction of infested plant material from a third party that could not be detected by 

normal and usual quality control mechanisms.

• Unavoidable introduction of a pathogen by any vector. This pathogen may or may not be 

subject to destruction orders and protocols to clean and/or prepare facilities for housing 

plant material in future seasons.

• Windstorms or snowstorms that affect the structure, which then impacts the CEA 

production and/or inventory value.

• Products produced for human consumption that unknowingly have become contaminated, 

creating liability for recalls and potential sickness of buyers.

In listening sessions, participants acknowledged the variety of observed and potential risks, but 

also noted that any list would be inherently incomplete; the concept of Multi-peril crop insurance 

is to offer coverage for a broad range of potentially insurable causes. Moreover, this list or any 

other than could be developed can be criticized based on extenuating circumstances and 

management practices. For example, failure of the electrical power supply is a risk that can be 

minimized by including a standby generator on the property that automatically starts when the 

power fails. Offering crop insurance for this risk may cause a substitution of inputs: crop 

insurance premiums in lieu of capital investment. The scale of the operation has an effect on this

11 https://www.sare.org/Learning-Center/Topic-Rooms/High-Tunnels-and-Other-Season-Extension-Techniques. Accessed 

March 2020. 12 Ibid., pages 1-2. Accessed March 2020.
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decision. Introduction of infested plant material may not be considered a natural cause of loss in 

various scenarios. Third party liability for damages caused by this peril may exist.

As an example of a production risk, APHIS “... announced on April 21 [2020] that it has 

confirmed the detection of Ralstonia solanacearum race 3 biovar 2 (RSr3b2) in a single variety 

of geranium plants located in a Michigan greenhouse. This particular type of Ralstonia, a 

bacterial plant pathogen, can cause a wilt disease in several important agricultural crops such as 

potatoes, tomatoes, peppers and eggplant. This is the first confirmed case of RSr3b2 in a U.S. 

greenhouse since 2004.”13 This is an example of unavoidable introduction of a pathogen. 

RSr3b2 affects the ability of the plant to utilize water by affecting its roots, leading to wilting 

and death of the plant. APHIS determined the disease was introduced via cuttings imported from 

a growing facility in Guatemala that were received by 288 growers in 39 states.14 The disease 

was introduced into the United States despite APHIS regulations governing the importation of 

“plants and vegetative parts that are for or capable of propagation, including buds, bulbs, corms, 

cuttings, layers, pollen, scions, seeds, tissue, tubers, and like structures.”15

This is the second introduction of RSr3b2 since 2000. An incident in 2004 affected growers in 

27 states.16 There are no known treatments for plants infected with Ralstonia. Infected plants 

must be destroyed. There does not appear to be any program to compensate growers for plants 

that are destroyed. On its website, APHIS states “APHIS makes sure that all imported 

agricultural products shipped to the United States from abroad meet the Agency's entry 

requirements to exclude pests and diseases of agriculture.”17 The disease was introduced despite 

these controls, which illustrates the risks growers face from this threat. This can be viewed as a 

loss due to a “natural cause” as required by the Act. The pathogen exists in nature, but its 

introduction into U.S. greenhouses represents a failure of the system of import controls managed 

by APHIS. Its introduction into the greenhouse falls beyond the reasonable scope of biosecurity 

management undertaken by the producer. It is envisioned this is a loss to be indemnified if 

appropriate management activities and protocols where in place. Underwriting guidelines and 

loss adjustment materials would need to include guidelines for the loss adjuster to work the claim

and verify the insurability of the proximate peril.

Quantification of these and other production risks is difficult, but not impossible to estimate. 

Very few if any data are available to establish the frequency that these production risks occur or, 

when any of these occur, the severity. There are two observations in the case of RSr3b2 in the 

last 15 years. Compensation may be provided by APHIS whenever livestock or poultry must be 

destroyed to control the spread of disease. The Contractor was not able to find a similar program 

for plants, as is detailed in the next section.

Severity is influenced by the mix of plant types growing in the controlled environment, the 

susceptibility of each plant type to the cause of loss, and the insurance structure that is created. 

For example, establishing each plant type as a separate basic unit rather than all plants in the 

13 https://www.greenhousemag.com/article/ralstonia-michigan-greenhouse-usda/, reviewed June 2, 2020. 14 https://huronhub.com/2020/05/12/usda-confirms-detection-of-destructive-plant-pathogen-in-michigan-greenhouse-geraniums/, 

accessed June 2020. 15 APHIS, Plants for Planting Manual, p. 1-3. 

https://www.aphis.usda.gov/import_export/plants/manuals/ports/downloads/plants_for_planting.pdf, accessed July 2020. 16 Ibid. 17 https://www.aphis.usda.gov/aphis/ourfocus/importexport, accessed June 2020.
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structure as a basic unit creates different risk environments. Experience from the existing 

nursery program may provide a basis for establishing initial premium rates that would be subject 

to updating as experience accrues. Analysis of the causes of loss under the nursery crop 

insurance program also may provide guidance.

By any traditional measure, the robust and detailed quantitative data that have traditionally been 

required to support a rate-making exercise for other crops (or classes of crops) do not exist for 

CEA. Loss events are infrequent and may be severe when they do occur. Previous 

developments, including that for the nursery and Whole Farm Revenue Protection programs (and 

their predecessors) provided the agency with broad discretionary authority to make rating 

assessments on often thin or broadly indicative data. This precedence offers a potential route to 

supporting ratemaking for CEA particularly if a single program to offer coverage for multiple 

species and growth processes are desired.

II.C. APHIS Compensation for Plant-Borne Pathogens

In the listening sessions and throughout the research effort, the Contractor was regularly 

confronted with questions regarding the potential for risks like those posed by Ralstonia and 

similar pathogens to be borne not by crop insurance, but instead by APHIS. APHIS staff were 

not interviewed for this report, but the Contractor obtained information that was useful in 

assessing the differences in the authority granted by Congress to compensate losses endured by 

animal and plant agriculture.

The Animal Health Protection Act (7 USC Chapter 109) states “The Secretary, in writing, may 

order the owner of any animal, article, facility, or means of conveyance referred to in subsection

(a) or (b) of this section to maintain in quarantine, dispose of, or take other remedial action with 

respect to the animal, article, facility, or means of conveyance, in a manner determined by the 

Secretary” 7 USC 8306(c). 7 USC 8306(d) states the Secretary “... shall compensate the owner 

of any animal, article, facility, or means of conveyance that the Secretary requires to be 

destroyed...” Compensation is to be based on the fair market value of the animal or thing that is 

destroyed. The amount of compensation may not exceed the difference between the fair market 

value and the amount the owner may have received from any other source. 7 USC 8316 states 

“... the Secretary may transfer from other appropriations or funds available to the agencies or 

corporations of the Department of Agriculture such funds as the Secretary determines are 

necessary for the arrest, control, eradication, or prevention of the spread of the pest or disease of 

livestock and for related expenses.”

The Plant Protection Act (7 USC Chapter 104) provides the Secretary authority to “... 

quarantine, treat, or apply other remedial measures to any premises, including any plants, 

biological control organisms, plant products, articles, or means of conveyance on the premises, 

that the Secretary has reason to believe is infested with the plant pest or noxious weed...” (7 

USC 7715(a)(2). This authority is substantially the same as that granted by the Animal Health 

Protection Act. However, the Plant Protection Act states the Secretary “may pay compensation” 

(7 USC 7715(e)) rather than “shall compensate” as stated in the Animal Health Protection Act. 7 

USC 7716(a) allows a grower to bring an action for just compensation but only if “... the owner 

establishes that the destruction or disposal was not authorized under this chapter.” 7 USC 7771 

“Except as specifically authorized by law, no part of the money appropriated under this section 
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shall be used to pay indemnities for property injured or destroyed by or at the direction of the 

Secretary.”

The Contractor found the Animal Health Protection Act provides a framework for actions needed 

to provide compensation to growers whenever private property must be destroyed to prevent the 

spread of diseases. The Contractor found discussions of reasons for compensation for animal 

producers on the APHIS website.18 No discussions regarding the lack of compensation for 

growers of plants were found. Since destruction of plants such as necessitated by the 

introduction of Ralstonia in 2020 is in the public interest, Congress may consider amendments to 

the Plant Protection Act to authorize compensation for growers of plants who are affected by 

depopulation orders.

II.D. Gaps in Production Data 

Since the Census of Agriculture and the Census of Horticultural Specialties each occur every five 

years, there is not a continuous annual history of production grown under protection. The 

Census of Agriculture occurs for years ending in 2 and 7; the Census of Horticultural Specialties 

occurs for years ending in 4 and 9. In both cases, the data are published several months after the 

end of the calendar year covered by the respective census. The Contractor was not able to 

identify any other source of data that would fill these gaps. As noted previously, the share of the 

production reported “under cover” in either census that qualifies as CEA is unknown.

II.E. Alternative Data Sources

An exhaustive search of the internet failed to identify any viable alternative data source.

Attached in Appendix A are the numerous sites reviewed for usable state, regional, and national 

crop insurance data. None was found that would provide sufficient data to meet sufficiency 

standards for quantitative risk assessment.

II.F. CEA Risk Frequency and Severity

The lack of continuous reliable data concerning CEA production at a micro level makes it 

difficult to properly assess risk frequency and severity. As indicated previously, the most likely 

source of reliable data is the experience database for the Nursery Crop Insurance Program.

Several research institutions have dedicated resources to study CEA. The focus of this research 

revolves around the mechanics of producing crops in this manner and the applicability of the 

process to urban agriculture. Among these institutions are the Controlled Environment 

Agriculture Center at the University of Arizona (https://ceac.arizona.edu/); the Controlled 

Environment Agriculture (NEMALI Lab) at Purdue University 

(https://www.purdue.edu/hla/sites/cea/); the SARE organization previously cited; and others.

II.G. Identified Risk

Insurable weather risks that can affect CEA production result from infrequent climatic and 

meteorological events such as hurricanes, tornadoes, extreme events of heat or cold, and similar 

18 See, for example, “Why Compensation?” 

https://www.aphis.usda.gov/animal_health/emergingissues/compensation/downloads/appraisalclass_ycomp0209.ppt, accessed 

February 2021.
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causes. Other causes beyond the control of the producer involve unavoidable introduction of 

contaminated materials or pathogens via unknown or uncontrollable disease vectors. The latter

perils may be insurable under crop insurance. The introduction must be due to an unavoidable

natural cause under the terms of the Act.
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III. ISSUES ANALYSES

Since CEA as defined herein is conducted within buildings rather than in the open as is the case 

with most agricultural production, there is substantially lesser exposure to catastrophic events 

such as droughts. Exposures to windstorms are lessened but the degree of reduction is a function 

of the type of structure. The potential for collapse of the structure due to high winds or snow 

load is a function of the type of structure. A brick and mortar building such as a converted 

manufacturing facility provides much greater protection than a plastic film greenhouse. Many 

risks associated with the collapse of a structure are insurable with private sector insurance 

policies, but the damage to CEA plants within the building are not insured.

III.A. CEA Inventory Methodology

The 2019 NASS report previously cited identifies 19 different types or classes of products 

reported by respondents. Most are perishable products for direct human consumption of the 

entire plant (excluding roots) such as leafy greens, herbs, and mushrooms. However, some 

commodities are harvested fruits or seeds. The inventory methodology most likely differs 

among commodities. Leafy greens (various lettuces, arugula, etc.) are short-season commodities 

intended for consumption shortly after harvest. Growers likely have “crops” of more perishable 

commodities in various stages of growth to supply product continuously, especially if the CEA 

facility is in an urban area with a steady clientele. Tree nuts and similar commodities may tend 

to be of a seasonal nature, requiring a different inventory methodology. The Contractor was not 

able to find a discussion of inventory methodologies for CEA activities.

III.B. Causes of Damage 

As with most other elements of this report, the Contractor was not able to unearth literature 

regarding specific causes of damage that may affect CEA activities. A CEA facility is an 

atmosphere within which the grower can control some or nearly all aspects of plant growth. 

Causes of loss most likely are similar to those covered by the Nursery and NVS policies, though 

may have a reduced frequency and potentially lesser severity. Causes of loss insured under the 

cited crop policies are: adverse weather conditions, fire, wildlife, earthquake, or volcanic 

eruption. Some of these have limitations or conditions upon applicability. In addition, loss in 

plant values is insured under specified conditions, as are failure of the irrigation water supply and 

loss of or reduction in power. Disease or insect infestation may be covered if there is no 

effective control measure. In practice, this also means the disease or insect infestation is covered 

if the control measure was applied but was rendered ineffective by a covered cause of loss, and 

re-application was not possible or allowed by the Environmental Protection Agency license 

before damage occurred. Damage due to cold temperatures is a covered cause of loss provided 

adequate cold weather protection has been provided but was not effective for reasons stated in 

these policies. Damage to plants due to collapse or failure of buildings or structures is covered if 

such damage was due to a cause of loss specified in the crop provisions. Damage to the structure 

itself is not insured under Federal crop insurance policies although commercial insurance is 

available.

These causes of loss have varying degrees of applicability for CEA production. Production in a 

masonry building with full control of all elements of plant growth will have relatively few 

applicable causes of loss. Production in a seasonal structure with more limited means of 

controlling all elements of plant growth will face greater potential for loss.
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III.C. Potential Unit Structure and Underwriting Issues

The production practices employed by the CEA industry are comparable in most respects with 

those employed by the nursery industry. Indeed, NASS classifies nursery as a subset of 

horticultural specialties in its reports. The Nursery and NVS crop insurance policies define a 

basic unit as all plants in a practice, where practice is defined as container- or field-grown. Each 

of these basic units may be subdivided into additional basic units representing each insured plant 

type, where plant type is either defined as a specific grouping of identified plants (Nursery) or as 

plants with a specific scientific classification (NVS). In practice, since no additional premium 

cost exists for the choice of additional basic units, the grower is free to sub-divide the large basic 

unit (all plants of all insured plant types) into separate basic units each consisting of a specific 

group of plants.

The Contractor has not found any information that suggests the appropriate approach for CEA 

would differ from the precedent established by the Nursery and NVS policies. Unlike any other 

current Federal Crop Insurance program, seasonality of CEA production may be entirely 

independent of the conventional calendar. Plantings, growth, harvest, and resetting of the 

production cycle may occur simultaneously for different production cohorts of the same crop on 

any given day of the year in some CEA environments. While Nursery and NVS allow for 

continuous enrollment, there is unquestionably a seasonality in production cycles that would not 

necessarily apply to CEA. This provides special, but not insurmountable, challenges in 

integrating with RMA systems and procedures.

III.D. Appropriate Approach for Loss Adjustment

Since production under CEA conditions substantively is similar to nursery, it follows that the 

principles established for the Nursery and NVS crop insurance policies should guide 

determinations regarding loss adjustment for CEA.

The Nursery crop insurance policy requires the loss adjuster to determine the value of the plants 

in the basic unit prior to the occurrence of the loss event and the value of those same plants after 

the damage has occurred. Values per plant before damage occurs are based on the catalogs used 

by the grower to market the plants but that value cannot exceed the amount established by the 

Plant Price Schedule, a document published by RMA. The loss procedures require the loss 

adjuster to assign each plant in the basic unit to one of ten groups, ranging from no damage to 

total destruction to determine the value after damage has occurred. Over- and under-report 

factors must be established if the value of the plants before damage differs from the value 

established when insurance attached or as that value was increased by supplementary reports 

filed by the insured. The indemnity amount is the difference between the two values (pre- and 

post-loss) determined by the loss adjuster, with adjustments for over- or under-reporting.

NVS requires the grower to assign a total value to the plants in each basic unit. The loss adjuster 

determines the value of the plants in a unit before damage. The loss adjuster selects a random 

sample of the plants in each basic unit with damage and assigns each plant in the sample to one 

of four categories. The NVS procedure gives the grower the opportunity to determine that a 

damaged plant can be rehabilitated or that it cannot be rehabilitated. After agreement between 

the loss adjuster and the grower about the amount of damage, the amount of loss is determined.

The overall percent of damage to the unit is determined from the samples. The indemnity is 
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based on the damage percentage determined by the loss adjuster and the lesser of the value of the 

plants declared by the grower or the pre-loss value the loss adjuster determined to exist.

While both are somewhat more complex than this general description infers, the process for 

Nursery is much more time-consuming.

The NVS procedure presently is in trial status since Crop Year 2021, the first year the plan has 

been offered. Based on the evidence obtained regarding production practices under CEA, the 

Contractor believes that a process similar to that used for NVS will be appropriate for CEA. 

Certain adjustments in the methods most likely would be needed since the plants may not be in 

individual pots or in individual plantings in-ground.

III.E. Price Determination Concerns

There are numerous plant crops within each category identified in Tables 1 and 2. For example, 

Agricultural Marketing Service (AMS) reports shipping point and wholesale market prices for 

fourteen different types of lettuce.19 Lettuce presumably is included in the category “cut 

cultivated greens” included in Tables 1 and 2. The category most likely includes more than 

lettuce. Spinach, kale, and other greens likely also are included, each of which also are likely to 

include several sub-types. The sheer number of products to be priced precludes any 

consideration of a standard Actual Production History (APH)-type policy wherein RMA is 

required to establish a price election prior to the sales closing date. Accordingly, the Contractor 

considered other approaches to establish an insurance guarantee.

There are no futures market for the commodities grown in the CEA environment. A marketbased approach for projected and harvest prices such as that used for the Revenue Protection 

plan of insurance is not possible.

Another option considered is the Whole Farm Revenue Protection policy (WFRP). This 

insurance plan depends on the Schedule F filed with the filer’s Internal Revenue Service (IRS)

Form 1040. Under this insurance plan, prices are not needed to establish the insurance guarantee 

or to determine the amount of losses. According to IRS Publication 225, “You are in the 

business of farming if you cultivate, operate, or manage a farm for profit, either as owner or 

tenant. A farm includes livestock, dairy, poultry, fish, fruit, and truck farms. It also includes 

plantations, ranches, ranges, and orchards and groves.” The principal agricultural activity codes 

used to identify the type of farming business include 11400, “Greenhouse, nursery, & floriculture 

production.”20 The principal business codes for Schedule C of the IRS Form 1040 do not 

include these business groups.21 Thus, CEA activities appear to be included within the filers 

who must use Schedule F to report the profit and loss from farming activities.

While WFRP would be available to CEA operators, major modifications are needed to make it 

usable. The plan is oriented toward diverse farming operations within which a variety of crops 

present different risk profiles, increasing the potential for reduced indemnities due to the losses 

from one crop being offset by sales values greater than the guarantee from other crops. 

19 https://www.marketnews.usda.gov/mnp/fv-nav-byCom?navClass=VEGETABLES&navType=byComm, accessed July 2020. 20 https://www.irs.gov/pub/irs-pdf/f1040sf.pdf, accessed July 2020. 21 https://www.irs.gov/instructions/i1040sc#idm140229426649440, accessed July 2020.
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restrictions on the title page of this report.

Nursery/Greenhouse is a WFRP commodity code with a Rating Commodity Name Nursery (FG

and C) (sic). Hence, all plants in a nursery/greenhouse are a single commodity with no 

diversification possible. Nursery operators have not expressed interest in WFRP.

The Nursery policy depends on a Plant Price Schedule (PPS) that establishes the maximum value 

of a specific plant whenever the grower’s catalog establishes a higher price. The NVS policy, on 

the other hand, allows the grower to establish a stated amount of insurance for all plants within 

each insured plant type while the loss amount is based on the actual value of the plants that exist 

at the time of loss or the stated amount of insurance established by the grower. The grower is 

allowed to establish an amount of insurance based on a value less than the actual value under 

NVS whereas a penalty is assessed for loss adjustment purposes if the actual value at time of loss 

is less than the insurance value under the Nursery crop insurance program. Under NVS, sales 

invoices are the preferred method to establish the value of the plants when a loss occurs. 

However, for Nursery, the value is the lesser of the price (less the maximum possible discount) 

the producer lists in the nursery’s catalog or the price contained in the PPS.

The method used for Nursery is costly to implement (developing the PPS), costly for establishing 

the guarantee, and costly for establishing the amount of loss. The approach used for NVS 

simplifies the process. It is less costly to deliver since the actual value of the inventory is 

established only at the time of loss, not twice as required by the Nursery policy.

The Actual Revenue History plan of insurance allows the grower to establish the insurance 

guarantee on the basis of historical earnings from sales of the commodity. The process for 

establishing the insurance guarantee is based on the grower’s records of acreage planted or in 

production, quantity produced, and the value of sales. At issue with CEA is the measurement of 

a variable equivalent to acreage. The Contractor could not identify a variable that would reliably 

supplant acreage.

Another plan of insurance recently introduced is Production and Revenue History (PRH). This 

plan, effective for crop year 2021, is based on a per acre average of historical production or 

revenue. Again, the Contractor could not identify a variable for greenhouses that would reliably 

supplant acreage to apply across a range of potential insurable operations.

The information developed to this point of the project supports NVS as the basic model for 

insuring CEA as a crop insurance program.

III.F. Coverage Offered by Private Insurance Carriers and Federal/State Programs

Private insurance coverage is available for many of the business needs of the CEA industry. One 

policy in particular is described as follows. Hortica© a brand of the Sentry Insurance Group, 

offers a Business Package Policy that includes property coverage among other insurance 

coverage such as commercial liability, workman’s compensation, etc. A spokesperson stated 

“The property coverage covers greenhouses, buildings, and what the company refers to as 

“business personal property,” such as fixtures, equipment and the plants themselves... Plants are 

perishable, so growers need coverage for utility interruptions and equipment breakdowns to 
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protect them...”22 This description does not clearly state if damage to the structure or failure of 

utilities is required before damage to plants is insurable. Damage due to introduction of infected 

plant material may not be covered.

III.G. Limitations of Nursery/CEA Policies

A meaningful share of the commodities grown using CEA are produced using aeroponics, 

aquaponics, or hydroponics and, in some cases, by planting in soil.23 These production 

techniques can be defined as follows:

• Aeroponics - the growing of plants by suspending their roots in the air and spraying them 

with nutrient solutions.

24

• Aquaponics - a system of growing plants in the water that has been used to cultivate 

aquatic organisms.

25 In many systems, water is first used to produce fish.

• Hydroponics - a specialized method of growing plants in a soil-free solution that 

provides all the nutrients necessary for growth.26 Alternatively, “growing plants without 

soil & controlling the root zone conditions (water, nutrients, oxygen, temperature) using a 

complete nutrient solution with every watering (water + mineral nutrients) with or 

without an aggregate medium to support the roots (aggregates include sand, gravel, 

perlite, rockwool, coco coir, etc.).”27

Commodities grown under CEA conditions include lettuces and other greens for salads, 

cucumbers, tomatoes, many other fresh vegetables, cut flowers, fruits, and others as 

demonstrated by Table 1. Many of these are severed from either the roots or the plant itself (e.g., 

tomatoes) when sold. The existing Nursery policies require the plants to be sold with roots 

attached. The existing Nursery programs do not attach to the product of a plant, such as a 

cucumber, a flower seed, a tomato, etc. Products of the insured plants under Nursery or NVS 

may be harvested and sold but insurance never attached to those products. The fundamental aim 

of these existing policies is to insure entire plants meant for sale.

The current nursery policies insure the container grown practice and the field grown practice. 

Container grown for the purposes of the Nursery policy is defined as “A nursery production 

practice in which plants are grown in standard nursery containers: above the ground; placed in 

the ground; or when placed in another standard nursery container in the ground (i.e., pot-in-pot).” 

Container grown for the purposes of the NVS policy is the same as the Nursery policy except the 

words “... or in an appropriate medium for production of nursery plants (e.g., in a hydroponic 

tank ...)” are inserted following the reference to standard nursery containers. Standard nursery 

containers are defined as “Rigid containers that have a minimum dimension greater than or equal 

to 5/8 inch, unless otherwise provided by the Special Provisions, at the widest point of the 

container interior, above-ground fabric grow bags, and other types of containers specified in the 

Special Provisions that are appropriate in size and provide adequate drainage for the plant. Inground fabric ‘grow bags’, balled-and-burlapped, and trays (flats) without individual cells are not 

considered standard nursery containers.” Insurable plants cannot be “... produced in nursery 

22 https://www.greenhousemag.com/article/main-types-insurance-greenhouse-operations/, accessed March 2020. 23 2019 Global CEA Census, pages 23-24. 24 https://www.merriam-webster.com/dictionary/aeroponics 25 https://www.merriam-webster.com/dictionary/aquaponics 26 https://ceac.arizona.edu/Node/28 27 https://ceac.arizona.edu/sites/default/files/Chapter%201_0.pdf, page 1.1.
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containers that contain two or more different genera, species, subspecies, varieties or cultivars.” 

The plants must be “... grown in an appropriate medium.” (Nursery Crop Provisions, section 

8(h)).

The plants insured by the current nursery policies must be sold with the roots attached and the 

plants must be offered for sale, among other conditions. Many plants are grown in the CEA 

environment to produce fruit and vegetables. The plants are not offered for sale.

Because of these substantive differences in production practice and the products offered for sale, 

substantial revisions to the terms of either the Nursery or the NVS crop insurance policies would 

be needed to extend coverage to CEA production.

III.H. Alternative Policy(ies) or Option(s) to Nursery/CEA

An option to the existing Nursery and NVS policies essentially would be a re-write of many 

terms and conditions of those policies. Those policies are oriented toward production of plants 

grown in a planting medium with the goal of marketing the plant itself. The Nursery and NVS 

policies allow harvesting of mature fruits from the plants, but that production is not insured. 

Only the plant itself is insured and it must be intended for sale as a living plant. Much CEA 

production does consist of plants for sale (e.g., lettuces) but the roots may be severed when 

harvesting occurs. Other plants, such as tomatoes or cucumbers, are harvested for the fruit and 

then discarded. The terms and conditions of the existing Nursery and NVS policies preclude 

coverage for many types of CEA production.

Insurance coverage for many CEA crops will be more closely related to existing crop insurance 

policies for fresh market production such as strawberries, fresh market tomatoes, peppers, fresh 

market sweet corn, and similar crops. The existing Nursery or NVS Crop Provisions have no 

correspondence to the Crop Provisions for these fresh market crops.

The Contractor does not believe CEA agriculture can be included in existing coverage through 

something as simple as an option or endorsement to either Nursery or NVS. Those policies are 

very specific to insuring plants for sale. Substantial changes would be needed to convert these to 

policies with flexibilities to insure either plants for sale or production of fruits and vegetables. 

Amending either to cover types of plants for sale other than those presently covered might be 

possible. Based on these analyses, it appears that a new plan, modeled conceptually on NVS, 

provides the greatest prospect for meeting the risk management needs of CEA agriculture 

through the Federal Crop Insurance program.

III.I. Issues Analysis Summary

There are four generally applicable areas into which insurance policy development for inventorybased coverage may be categorized: Inventory Timing, Price Determination, Loss Adjustment, 

and Underwriting.

III.I.1. Inventory Timing

The Contractor was not able to identify a written source that analyzed inventory methods used by 

the CEA industry. Available information does support informed judgements concerning this 

topic. The 2017 Census of Agriculture identifies 17 “commodities” grown under protection in 
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its report. Quotes around the term commodity denote that the classification is at an aggregate 

level. The commodities produced under protection as identified in the census report are:

• Aquatic plants

• Bedding plants

• Bulbs & corms & rhizomes & tubers, dry

• Cut flowers and cut cultivated greens

• Floriculture

• Flower seeds

• Flowering plants, potted

• Foliage plants

• Fruit

• Mushrooms

• Mushroom spawn

• Nursery

• Propagative material

• Tomatoes

• Transplants (tobacco)

• Transplants (commercial, vegetable and strawberry)

• Vegetable seeds

Note that nursery is a commodity included in these data. The crop insurance program has 

several decades of familiarity with the nursery industry and is aware of the diversity of 

operations and inventory management practices within it. There is no reason to believe 

producers of commodities produced under protection will have greater homogeneity of 

production and inventory management practices than has been observed with nursery.

Table 15 of the Horticultural Census (2014) identifies lettuce, all as a food crop grown under 

protection. Lettuce is a perishable crop with a short growing cycle and consists of multiple types 

(iceberg, romaine, green leaf, etc.). Producers harvest the entire plant when the stage of growth 

achieves the volume or weight wanted by retail grocers, restaurants, or other clients. The plant 

as sold may not have roots attached depending on the form in which the sale occurs (e.g., living 

lettuce has attached roots). The inventory of these plants likely consists of plants in varying 

stages of growth intended to produce a supply of finished product dictated by a harvesting 

schedule established by orders placed by buyers. Production may be relatively constant yeararound or it may exhibit seasonal variations.

Transplants likely are for sale during a relatively short period at the beginning of the growing 

season appropriate for the region. The inventory first would consist of seeds planted into 

individual cells that evolve into plants that ultimately become ready for planting. Once the 

planting season has passed, there is no inventory until it is time to plant new seeds to produce the 

transplants for the next growing season. A grower who produces multiple crops in the operation 

may have multiple inventory management systems, each appropriate for the individual crop.

There is no one size fits all inventory plan for the CEA industry. The heterogeneity of plants and 

of marketing seasons dictates that an enterprise follow an inventory plan consistent with the 
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growing cycle of the finished product and the nature of consumer demand during a specific 

twelve month cycle. It is unlikely that the specific twelve months chosen by crop insurance as 

the crop year will perfectly fit every CEA horticultural operation.

How does the concept of inventory fit into a crop insurance model? A definition states 

“Inventory, often called merchandise, refers to goods and materials that a business holds for sale 

to customers in the near future.”28 The purpose of crop insurance is to compensate the grower in 

part (after the deductible) in the event one or more causes of loss beyond the control of the 

grower result in a reduction of the amount of goods produced (inventory). Hence, there is need 

to estimate the amount of goods that can be produced under normal conditions (such as the 

approved yield) so the inventory actually produced can be measured against that baseline.

Inventory management has been an issue for federal crop insurance coverage of multiple crops 

that do not fit the one planting/one harvest model common to major field crops or the fixed 

acreage/one harvest model common to perennial crops. Under those models, the average 

productivity per acre or similar measure multiplied by the chosen coverage level, the price 

election or expected price, the number of acres, and share establishes the insurance guarantee. 

This model is straightforward because it uses a standardized measure of production potential: 

the planted acres (tree acres in the case of tree crops).

Crops that do not fit these inventory models have presented issues for establishing the insurance 

parameters on an equitable basis for the insurer and the insured. Crop insurance has used several 

“work-arounds” to deal with these issues.

Consider field-grown fresh market crops that have multiple plantings/multiple harvests in a 

twelve-month period. The insurance plans for fresh market tomatoes, for example, define two or 

three planting periods for the crop. The grower must report all acreage planted during each 

planting period on or before the acreage reporting date for that planting period. The acreage 

reporting date is after the end of the planting period. Under the dollar plan, RMA establishes the 

insurance value of each acre planted (total dollar value of the expected yield on a per-ace basis)

and does so before the beginning of the crop year. Under the production plan, RMA establishes 

the insurance value (price) per carton of production before the crop year begins. The APH plan 

establishes the average productivity per acre. The expected values of these variables may vary 

by planting period. The grower may not know the exact acreage that will be planted for each 

season at the time of the sales closing date, but the insurance value is fixed at that time.

As another example, consider the Nursery crop insurance program. The grower must provide the 

“basic unit value” for each month of the crop year at least 30 days before insurance will attach. 

The basic unit value is declared by the grower, and it must be supported, at the option of the 

insurer, by “... A detailed plant inventory listing that includes the name, the number, and the size 

of each plant, ...” (Nursery Crop Provisions, Section 6(c)(2)(i)). The grower’s catalogs establish 

the price, but that price cannot exceed a price established by RMA in its Plant Price Schedule. 

The grower has two opportunities to increase the basic unit value during the crop year.

28 https://www.myaccountingcourse.com/inventory
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The NVS crop insurance program requires the grower to establish the expected dollar value of 

the inventory for each basic unit for each month of the crop year at least 30 days before the 

insurance attaches. This value may not be greater than the highest expected monthly inventory 

value. This insurance plan also provides two opportunities to increase the expected inventory 

value during the crop year.

The intent of these differing crop insurance designs to handle differing inventory issues is to 

avoid adverse selection against the insurer while treating the insured fairly. The goal of crop 

insurance is to provide a guarantee consistent with expected crop value (value of expected 

inventory). The insurance plan must establish the parameters for the guarantee before either 

party can reasonably predict the potential for an indemnity. This is the reason the nursery crop 

insurance programs require establishment of the amount of liability thirty days prior to the date 

insurance attaches. It also is the reason the sales closing date for most crops occurs several 

weeks before planting.

Which of these crop insurance designs best fits the variety of inventory management models 

followed by the CEA industry? Would an entirely new design be more appropriate?

The Nursery model is extremely expensive both in cost and in time. It requires an approved 

plant list and a Plant Price Schedule. Both are extremely detailed documents with thousands of 

entries. The agent and the grower must spend substantial amounts of time to complete a report 

of the value of the plant inventory for each month of the crop year. The result of multiplying the 

number and size of each plant that will be in the inventory by the approved price for that plant 

and size are needed to complete this report. If the grower files a claim for loss, the loss adjuster 

must create the valuation of the plants actually present in the inventory just prior to the loss event 

and the value after that event. The cost and complexity of these processes render the plan 

unpopular.

NVS, a new approach to establishing the value insured, eliminates the complexity of establishing 

the insured valuation by asking the grower to provide the expected dollar value of all plants in 

the basic unit for each month of the crop year. It does not require the detailed information 

specified in Section 6(c)(2)(i) of the Nursery Crop Provisions to establish coverage. The grower 

then may choose a dollar amount of valuation that is less than or equal to the maximum monthly 

value. The declared value determines the amount of premium. Indemnities are limited to the 

amount determined by multiplying the smaller of the declared value or the value of the inventory 

actually in existence at the time of the loss. This process simplifies the procedure for 

establishing the amount of insurance. The process for establishing the amount of indemnity is 

similar to Nursery although some steps of the process are simplified.

In summary, the inventory management practices of the CEA industry are substantially the same 

as those followed by the nursery industry. Seasonality of demand for certain products, 

differences in growing cycles, and other factors, result in varying inventory management 

methods. No standardized measure of production potential (such as planted acres and yield per 

acre) exists for CEA activities. What is the yield potential of a square foot (or indeed a cubic 

foot in the case of stacked production practices) of hydroponic production space? This depends 

on many factors, such as the nutrients provided in the water. The Contractor believes the 
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concepts of the NVS crop insurance policy are most compatible with the needs of the CEA 

industry. In addition, the conceptual basis of the NVS policy is compatible with the directive in 

the 2018 Farm Bill that a crop insurance policy for the industry “... have streamlined reporting 

and paperwork requirements that take into account short propagation schedules, variable crop 

years, and the variety of plants that may be produced in a single facility...”

III.I.2. Price Determination

There are numerous plant crops within each commodity identified by USDA reports. For 

example, AMS reports shipping point and wholesale market prices for 14 different types of 

lettuce.29 Lettuce is a crop produced under protection as well as in the field. Production of 

spinach, kale, and other greens also occurs under protection. Each of these global names 

includes several sub-types such as baby spinach. The sheer number of products for which prices 

must be determined precludes any consideration of a standard APH-type policy wherein RMA is 

required to establish a price election prior to the sales closing date. The sheer number of crops 

grown under protection and spotty availability of reliable price data at a local level would 

overwhelm available staff.

There are no futures markets for the commodities grown in the CEA environment. A marketbased approach for projected and harvest prices such as that used for the Revenue Protection 

plan of insurance is not possible. In addition, crops produced under CEA conditions are not 

contained in the list of market orders administered by AMS.30 Market orders provide the basis 

for Revenue Protection for dry beans and dry peas.

Another option that has been explored is WFRP. This insurance plan depends on the Schedule F 

filed with the filer’s IRS Form 1040. Under this insurance plan, only historical income 

establishes the insurance guarantee and is the base to determine the amount of losses. According 

to IRS Publication 225, “You are in the business of farming if you cultivate, operate, or manage 

a farm for profit, either as owner or tenant. A farm includes livestock, dairy, poultry, fish, fruit, 

and truck farms. It also includes plantations, ranches, ranges, and orchards and groves.” The 

principal agricultural activity codes used to identify the type of farming business include 11400, 

“Greenhouse, nursery, & floriculture production.”31 The principal business codes for Schedule 

C of the IRS Form 1040 do not include these business groups.32 Thus, CEA activities appear to 

be included within the filers who must use Schedule F to report the profit and loss from farming 

activities.

The description of WFRP states: “Whole-Farm Revenue Protection (WFRP) provides a risk 

management safety net for all commodities on the farm under one insurance policy and is 

available in all counties nationwide. This insurance plan is tailored for any farm ... including 

farms with specialty or organic commodities (both crops and livestock), or those marketing to 

local, regional, farm-identity preserved, specialty, or direct markets.”33 The commodity listing 

for WFRP identifies certain crops, such as lettuce, bok choy, tomatoes, and others, as WFRP 

29 https://www.marketnews.usda.gov/mnp/fv-nav-byCom?navClass=VEGETABLES&navType=byComm, accessed July 2020. 30 https://www.ams.usda.gov/rules-regulations/moa/commodities, accessed August 2020. 31 https://www.irs.gov/pub/irs-pdf/f1040sf.pdf, accessed July 2020. 32 https://www.irs.gov/instructions/i1040sc#idm140229426649440, accessed July 2020. 33 https://www.rma.usda.gov/en/Policy-and-Procedure/Insurance-Plans/Whole-Farm-Revenue-Protection, accessed August 2020.
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restrictions on the title page of this report.

commodity codes. However, Nursery/Greenhouse is a single WFRP commodity code. If the 

crops lettuce, bok choy, and tomatoes are grown in a field, the diversification index would be 

based on three different commodity codes. If grown under CEA conditions (i.e., 

nursery/greenhouse), there is one commodity code. This lessens the attraction of WFRP as an 

alternative insurance plan. Although a grower may have multiple crops under production in the 

CEA environment, it appears all will be considered as one commodity nursery/greenhouse.

The Nursery policy depends on a Plant Price Schedule (PPS) that establishes the maximum value 

for a specific plant and size whenever the grower’s catalog establishes a higher price. The NVS 

policy, on the other hand, allows the grower to establish a stated amount of insurance for all 

plants within each insured plant type while the amount of any loss is based on the actual value of 

the plants that exist at the time of loss or the stated amount of insurance established by the 

grower. The grower may establish an amount of insurance based on a value less than the actual 

value under NVS whereas a penalty affects loss adjustment if the actual value at time of loss is 

smaller or larger than the insurance value under the Nursery crop insurance program.

The method used for Nursery is costly to implement (developing the PPS), costly for establishing 

the guarantee, and costly for establishing the amount of loss. The approach used for NVS 

simplifies the process. It also is less costly to deliver since the actual value of the inventory is 

determined only at the time of loss, not two or three times as required by the Nursery policy.

The Actual Revenue History plan of insurance allows the grower to establish the insurance 

guarantee using historical earnings from sales of the commodity. The insurance guarantee is 

determined from the grower’s records of acreage planted or in production and the value of sales. 

These data determine the guarantee per acre, allowing variations in acres from year to year when 

determining the total guarantee. An issue with CEA is the measurement of a variable equivalent 

to acreage due to the existence of multiple production methods. The Contractor could not 

identify a variable that would reliably supplant acreage.

The information developed to this point of the project supports NVS as the basic model for 

insuring CEA if development of a crop insurance program were to proceed. Quarterly updating 

of the inventory value might be a simplification. The process could work in this manner. The 

first quarterly report is due 30 days prior to the attachment of insurance. This report includes the 

expected inventory values as of the first day of each month in the first quarter. As is the case 

with NVS, the grower would name the insured inventory value, which must be less than the 

largest monthly inventory value for the quarter. The grower would owe premiums for the entire 

crop year for this amount of insurance. Thirty days prior to the start of the next quarter, the

producer may file expected inventory values for each of those three months and increase the 

amount of insurance. The producer would pay premium on the increase in value for the 

remainder of the crop year. The same actions would repeat for the next two quarters. The values 

established for the previous quarter continue for the remainder of the crop year if revised values 

are not filed for any quarter.

The concept outlined above does not require estimates of expected inventory values 12 months 

into the future. This process could prove to be more accurate due to the greater knowledge of 

likely current activities. It would supplant the two inventory adjustments authorized under 
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Nursery and NVS. It also would be less daunting in terms of the amount of information required 

to establish the initial guarantee.

III.I.3. Loss Adjustment

The loss adjuster must perform several actions when the insured files a notice of loss or damage. 

Among these important activities are:

• Verify that an insured cause of loss occurred;

• Determine the loss guarantee, which may differ from the premium guarantee;

• Examine the damage (plants, acres, etc.) to determine any damage due to uninsured 

cause(s) of loss; and

• Determine the damage amount.

Verification of the cause of damage is paramount. Any damage to the insured crop(s) must be 

due to a cause of loss as identified in the crop insurance policy. Loss adjusters must be able to 

use weather records and other public sources of information to determine that a specific cause of 

loss has occurred. The Contractor found nothing unique about CEA. Causes of loss are similar 

to those affecting the Nursery and the NVS crop policies. The Contractor believes adjusters will 

be able to verify whether an insured cause of loss has occurred.

Determining the loss guarantee replicates the parameters needed to establish the premium 

guarantee for most crops. The exception is NVS. Whereas the grower “names” the insured 

value under NVS (subject to conditions), the loss adjuster must establish the complete inventory 

of insured plants and establish a price for each specific plant. This process is the same as 

Nursery with the exception that the source of prices may differ. The Contractor believes CEA 

will be similar to NVS. Thus, this NVS loss function will present meaningful and helpful 

guidelines to the loss adjustment process.

Examining the damaged plants for uninsurable causes of loss is similar to many other crops. 

Again, the Contractor believes this function will follow NVS structure.

Determining the damage amount will require specific rules to establish the condition at which a 

plant is totally destroyed, partially destroyed but salvageable, or undamaged. This will vary 

according to the plants included in an insurance plan for one or more CEA crops. Plants such as 

lettuce and other salad greens will present one set of issues. Often a small amount of damage 

that adversely affects the appearance of the plant renders it unmarketable. Other crops, such as 

tomatoes and cucumbers planted to produce harvestable fruits introduce the issues associated 

with loss of potential production if the plant suffers damage. This differs from inability to 

market the plant, which is the foundation of Nursery and NVS. Damage to a plant that produces 

marketable product requires determinations of the amount of potential production not produced 

due to the damage. A plant that has not yet produced fruits is totally lost in terms of potential 

production. On the other hand, a plant that is at or nearing the end of its productive cycle will 

have little or no remaining value. These same issues exist regarding field-grown insurable crops 

such as strawberries. Loss determination procedures for this crop require establishment of the 

number of times the plant will be harvested under normal circumstances and the number of 

harvests lost due to damage. The percentage of a normal total harvest that is lost must be 

determined based on the expected versus remaining harvests since plant productivity lessens as 
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the plant ages. Plants in a CEA environment may behave differently than plants in a field 

environment.

Each type of plant produced in a CEA environment will introduce unique circumstances that the 

insurance developer must consider to determine any remaining value. However, the Contractor 

does not consider this an insurmountable obstacle although it likely will be time-consuming.

III.I.4. Underwriting

The CEA industry is substantially the same as the nursery industry that currently has crop 

insurance. The primary difference is that the nursery crop insurance policy does not designate 

any particular structure or, indeed, any structure to house the plants. Plants insured under the 

Nursery Crop Provisions can be grown in the open, under shade cloth, or in a greenhouse. The 

most restricting condition is that appropriate cold protection must be provided. The CEA 

industry produces its inventory within a structure that permits control of most or all of the 

variables that affect plant growth. The CEA operation may or may not use standard nursery pots, 

a requirement for the container grown practice under the Nursery Crop Provisions. The NVS 

Crop Provisions allow hydroponics as a growth medium.

Both the Nursery and the NVS Crop Provisions establish a basic unit as all insured plants in the 

nursery operation. Growers may insure certain groups of plants as defined in the Crop 

Provisions and not insure other groups. This definition of the basic unit is consistent with all 

other crops: all acreage of the crop in the county.

Both the Nursery and NVS Crop Provisions allow sub-division of the defined basic unit into 

additional basic units. Each insured group of plants is a basic unit if so elected by the insured. 

For most crops, sub-division of the policy basic unit creates optional units that cost an additional 

11.1 percent of premium. There are differences among crops that justify this treatment. Most 

crops are homogeneous across planted acres. Production could be transferred from one unit to 

another. Nursery crops differ in botanical characteristics. It is not possible to move a plant from 

group A to group B. Hence, this potential for abuse does not exist.

The Contractor did not find any evidence that suggests CEA crops should be treated differently 

than nursery crops with regard to unit definition and unit division. Therefore, the unit division 

definition and unit division procedures of the Nursery and the NVS crop policies are appropriate 

for CEA.

Written agreements are a process that allows insurance to attach under circumstances not 

included under the terms of the Crop or Special Provisions. The Nursery Crop Provisions allow 

written agreements to extend the insurance coverage to plants not listed in the Eligible Plant List 

and Plant Price Schedule. The NVS Crop Provisions do not allow written agreements under any 

circumstances. This is justified because NVS allows insurance to attach to all plants in the 

inventory of each plant classification. Therefore, no plants are unlisted. Consistent with our 

recommendation that any insurance coverage developed for CEA be modeled along the lines of 

NVS, the Contractor recommends no written agreements be allowed. This is consistent with 

general policy that written agreements are not allowed for pilot crop insurance policies.
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restrictions on the title page of this report.

The Basic Provisions define the term person in detail. A person is “An individual, partnership, 

association, corporation, estate, trust, or other legal entity, and wherever applicable, a State or a 

political subdivision or agency of a State. “Person” does not include the United States 

Government or any agency thereof.” Any person who has an insurable interest in an insurable 

crop may purchase crop insurance unless that person is disqualified for specific reasons such as

debt on a crop insurance policy. The Contractor found no issues with covered entities. This 

definition of person is adequate.

A common issue that arises with regard to Federal crop insurance is assuring liability for policies 

with the Catastrophic Risk Protection Endorsement is not excessive. The grower pays only a 

fixed administrative fee regardless of the amount of liability reported by that grower. There is 

concern that this can result in wasteful spending since the premium is totally subsidized. The 

Nursery Crop Provisions limit the insurable value for CAT coverage to 110 percent of the larger 

of: 1) greatest amount of plant sales during the three previous crop years, or 2) the actual 

inventory value on the date insurance attaches for the current crop year. The NVS Crop 

Provisions limit the insurable value to the lesser of: 1) 110 percent of the greatest inventory 

value during the previous three crop years, or 2) the greatest monthly expected inventory value 

for the current crop year. The Contractor recommends inventory values as the appropriate 

variable to determine maximum insurable value. An operation that is growing and marketing 

crops with short growing cycles (such as lettuce) will have substantial turnover of inventory 

during a crop year. Annual sales will be several multiples of the value of commodity that is 

growing at any time during the crop year. From the other perspective, an operation growing 

commodities that require more than a single growing season to become marketable likely will 

have total inventory greater than annual sales. Accordingly, inventory values are a more 

appropriate variable for limiting insurable value for CAT policies.
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restrictions on the title page of this report.

IV. PILOT AREA

The current various definitions to what is a greenhouse and what are greenhouse crops preclude 

from choosing a possible pilot area. Pilot areas will be determined once the Contractor has 

discussed with RMA the greenhouse structures and greenhouse crops they want further research 

on for possible pilot crop insurance program. In the conduct of the listening sessions and based 

on the stakeholder feedback, there is certainly strong interest in including operations and the 

states of Michigan, Illinois, and Florida, but the nature of introduced disease perils is such that 

spatial diversification has little meaningful effect on losses incurred in any given year. A 

nationwide pilot may be appropriate if development is approved.
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restrictions on the title page of this report.

V. LISTENING SESSIONS/INTERVIEWS

This section addresses the following from the SOW:

Interviews/Listening Sessions Data – The Contractor shall contact leaders 

representing nursery greenhouse producers at the state and national levels to 

determine the potential interest in a crop insurance program for nursery crops 

grown in controlled environments that offers coverage mandated by the 2018 

Farm Bill. Identify what insurance programs they are interested in and why. 

Examine their perceptions of any potential conflicts and difficulties. The 

Contractor shall not conduct surveys and listening sessions in such a manner that 

they could be construed as a survey.

V.A. Listening Sessions

Listening sessions are critical to collecting information from industry participants about the risks 

in their industry such as plant diseases, production, and price risks. The input assists in

determining what type of product or program the industry needs and to review options with 

actual potential program participants. In previous contracts, the sessions have been held on-site 

with in-person participation. This year travel and on-site sessions were suspended due to the 

COVID-19 pandemic. As a substitute, listening sessions were completed as virtual listening 

sessions, conducted electronically. The Contractor worked closely with local and national 

producer groups to coordinate times and dates to maximize potential participation in sessions. 

Potential participants were then individually invited by the grower organizations and the 

Contractor to participate in one or more of three scheduled meetings (the text of the invitation 

sent to all identified stakeholders is provided in Appendix B). All listening session participants 

who logged in were able to view an agenda on their computer screens (the agenda used in the 

listening sessions is provided in Appendix C), chat in their questions or comments in written 

form, or participate in live dialog either through video conferencing or though dialing in to a 

concurrent conventional audio bridge conference. RMA staff participated in all three listening 

sessions.

The Contractor conducted three listening sessions with the industry, with participants

representing all plant production stages of the greenhouse industry. This gave 

information encompassing all phases of production from cloning/grafting/rooting or seed 

development through to final wholesale sale of greenhouse plants and products. Sessions 

were conducted, based on grower organization input, on January 14, 2021, January 19, 

2021, and January 22, 2021. In addition to the sessions themselves, six additional follow 

up discussions were conducted with individuals who could either not attend the scheduled 

sessions, or who did attend, but felt more comfortable providing input in a confidential 

one-on-one environment.

Listening Session 1 Listening Session 2 Listening Session 3

CEA Representatives 5 12 4

Follow up Phone Interview 2 3 2

RMA Staff 7 4 5

W&Q Staff 2 2 2
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restrictions on the title page of this report.

Listening Sessions Notes

Stakeholders were provided several opportunities and venues to provide input and feedback. 

While many participants provided information in scheduled sessions, the Contractor scheduled 

dedicated calls with a number of industry experts and took careful notes from a number of 

unsolicited stakeholder calls regarding the project. The following sections are intended to 

provide a summary of the major themes that emerged from the stakeholder input. The notes are 

written to capture the consensus views of the participants, providing comments directly as they 

were shared, where appropriate. Where there are factual inconsistencies that could be identified, 

the Contractor has acknowledged these, but, in the interest of representing all views, has left all 

important comments and themes within the summaries.

V.A.1. History and Background

In 2004, a major Ralstonia outbreak occurred in the United States. This disease was devastating 

for many in the greenhouse industry. The costs for the disease were tremendous. Some 

greenhouses lost all their plants, all input costs into growing the plants, and destruction costs of 

the plants. This impact was born solely on the industry; there was no insurance available to CEA 

producers and no government programs were offered to assist them. Some greenhouses had to 

destroy all the plants they had in their greenhouses. Some greenhouses went bankrupt. The two 

organizations that began working on government programs for greenhouses after the 2004 

Ralstonia outbreak were American Horticultural Society and Michigan Greenhouse Growers 

Council, which was formed in the aftermath of the 2004 outbreak. Both were involved in getting 

contract language for review of risk management products for greenhouses in the 2018 Farm 

Bill. The contract for this study was offered based upon that language. Both organizations 

consider development of programs to support the industry from the damage related to disease 

pathogens like Ralstonia to be a critical objective of the CEA insurance feasibility study.

V.A.2. Production, Financial and Economic Risks

Many natural and weather-oriented risks that affect other segments of agriculture are addressed 

by the nature of the CEA industry. Growing indoors keeps plants in a stable environment and 

CEA plants are not generally subject to the outside weather which can damage plants and retard 

growth. The biggest risk discussed by the participants was disease risk. The other risks 

referenced by participants include wildfires in western and southern United States and hurricanes 

in Florida and Texas. By far, disease (and in particular Ralstonia) was consistently raised as the 

biggest concern and the persistently identified need was for the greenhouse industry to obtain 

tools to mitigate that risk and compensate growers who are effected by an outbreak.

Plant pathogens and diseases can come from offshore or within the United States. There is a 

substantial amount of plant material that comes from other countries especially during early 

stages of plant growth. Overseas counter-seasonal production is a critical component of CEA 

agriculture. Diseases can be viral, bacterial, or fungal. The fungal diseases can generally be

addressed by labeled crop protection products and appropriate biosecurity processes; these are 

not perceived as much of a concern. Bacterial and viral pathogens are much harder to control. 

Viral diseases, such as Ralstonia, may require destruction of the plants in a manner mandated by 

the government (APHIS). A disease may threaten or impact other types of plants, and not just 

the plants that were diseased. Ralstonia is particular is a threat to production of essential food 

crops in the Solenacea family (nightshade plants, including tomatoes, tobacco, peppers, and 
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potatoes). When diseases are considered a threat to the essential food supply, regulation can go 

beyond APHIS to engage the Department of Homeland Security and other emergency response 

agencies.

Even if all biosecurity, surveillance, and sanitation steps are followed, a disease outbreak may 

occur at no fault of the operation. Insurance should require all best management practices be 

implemented appropriately. If management practices are followed and the disease shows up,

there should be insurance coverage and indemnification for losses. Producers believe diseases

can just show up no matter how strong their biosecurity of testing and cleanliness.

Producers believe a key point where disease can spread is at the USDA inspection points where 

different plants from different companies can get cross contaminated.

34 Diseases are not 

generally apparent until plants reach their destination or sometime after arriving. These plants 

can have a clean Phytosanitary Certificate, complete with full biosecurity compliance and the 

diseases can show up. ‘Cross contamination at the USDA site can happen when boxes broke 

open in transit and then touched by inspectors.’

35

Cleanliness and biosecurity are the key tools that greenhouses use to limit disease. The 

participants want to note there are no labeled products for greenhouse use to disinfect hands and 

surfaces that will kill those diseases, particularly viral ones.

V.A.3. Specific Disease - Ralstonia

There have been several outbreaks of Ralstonia disease in the industry, including notable 

outbreaks in 2004 and 2020. Ralstonia outbreak costs escalate rapidly when it does occur.

Ralstonia is first and main concern on the disease list. It can impact many plants. Geraniums are 

the top plants it can impact. Ralstonia can infect many other plants once it manifests itself. It 

can impact food plants which is why the United States Department of Homeland Security (DHS)

may sometimes become involved. Federal destruction orders generally include the facility where 

the outbreak is detected as well as potential upstream and downstream segments of the plant 

development chain. The method(s) to destroy and clean facilities (including potential idle layout 

periods) is determined by the federal agencies involved.

V.A.4. Other Risks

Florida greenhouses perceive fewer concerns with diseases due to their growing conditions and 

climate. They are concerned about hurricanes and other big storms that may cause destruction

and that the structure of the Nursery, NVS, and WFRP programs exclude much of their CEA 

production based on the structure and rules for those programs.

Another risk that just came up last year in Florida was the discovery of genetically-modified 

organism (GMO) petunias among imported young plant stock; which had to be destroyed. GMO 

plants are not accepted at the consumer level (yet). The greenhouse that bought the plants did

not know they were GMO when purchased and found out later. They destroyed all GMO plants

they had purchased. They asked if this would be covered. We do not see how we can insure 

34 The Contractor was unable to identify any incidence or evidence of outbreaks or cross contamination occurring at a USDA 

inspection point. 35 The Contractor was unable to identify any evidence to support this stakeholder assertion.
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GMO contamination when it is not accepted by the industry. This is a situation that must be 

handled between the buyer and the seller and not covered by the authority granted under the Act.

Georgia had issues with drift from farmers spraying cotton fields. It was explained that drift is 

not covered by Federal Crop Insurance and the impacted business must try to collect from the 

farmer who had the crop sprayed or the custom sprayers. In some instances, the manufacturers 

of the plant protection products have been held liable for drift damage.

Mites and pests can show up and cause losses. These are (generally) easily sprayed to prevent

damage and there are products labeled for management if these pests are present. As is true of 

all crop insurance programs, if all appropriate management steps were followed and preventive 

spraying was made, then resulting damage would be insurable under the authority of the Act.

V.A.5. Testing and Quarantine

Nearly all plants are identity-preserved through their production process. Plants can be traced

back to their origins or previous owner. Massive amounts of money (sic) are spent on testing 

these plants at different stages of the production cycle. Tests are for hundreds of diseases and 

pests are conducted in an ongoing active surveillance effort.

Participants indicated the following are the steps for testing and surveillance are undertaken.

1. Testing by the greenhouse when plants come into their facility. Testing is also done at

the first stage of being sold.

2. If a disease is found, the greenhouse notifies government and, if sold, to whom plants 

were sold.

3. The USDA/APHIS inspects and tests. DHS may become involved if/when the disease 

can jump to a critical food product.

4. The government agency will confirm the disease and may issue a quarantine and/or 

destruction order.

5. Next the agency gives quarantine instructions to the greenhouse.

6. Greenhouse does not destroy until USDA says to destroy and by the means mandated in 

the order.

The government agency is in charge once the greenhouse notifies them of a possible disease. 

The agency inspects and tests the plants. They identify the disease then issue a quarantine order. 

The agency determines if plants can be treated and then shipped or sold (or if they must be 

destroyed). If the order is for destruction, the government states which plants must be destroyed 

and how they are to be destroyed. This destruction order may include plants that do not have the 

disease, but were exposed (or are suspected to have been exposed) to infected plants and may get 

the disease. The destruction method is generally burying or burning. The agency in charge 

decides the method and mandates the process. The destruction costs are paid for by the 

greenhouse and there is currently no Federal compensation program available. Insect pests have 

not historically been subject to quarantine orders in the CEA industry. It is the perception of the 

industry participants that insect pests can be sprayed (with currently available appropriately 

labeled products) to prevent or to treat infestations.
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The participants repeatedly asked for insurance and/or a compensation program to cover 

destruction costs. This is not done in most Federal Crop Insurance programs, but there is 

precedent for programs of this type. For example, California avocado farmers have been offered 

a Quarantine Endorsement that provides for indemnification for fruit lost to destruction orders as 

the result of the presence of the quarantine pest.

V.A.6. Biosecurity

Most growers practice biosecurity at their facilities. The greenhouse can impact whether or not

some diseases can come in and limit the nature and degree of losses with their practices. 

Suppliers to greenhouses (upstream young plant propagators) are more active in biosecurity than

downstream and retail growers due to the impact a biosecurity breach can have; if suppliers get a 

disease it can have a much broader impact than a local greenhouse. Listening session 

participants requested that an insurance program require a certain level of biosecurity to cover 

risks with insurance and want to make sure no payouts are caused by management decisions.

Underwriting rules can be put in a crop insurance program to require a certain level of 

biosecurity. Participants stated not all greenhouses would participate in a program due to those 

requirements, but believe that biosecurity is a key to a successful insurance program. Most large 

and medium businesses have these biosecurity measures in place. The Act requires that insured 

producers adopt and maintain best management practices appropriate for their crop and 

production environment.

V.A.7. Value of Plants

A key part of an insurance program is determine the value of the plant. The plant cycle is set at 

stages where it is sold to the next level to another company or kept and grown at the same 

company.

36 Different practices of industry and for insurance could be:

1. Stage 1: Seeds, roots, cuttings or liners

2. Stage 2: Young plants

3. Stage 3: Finished plants

One participant captured the consensus impressions of the stakeholders well with the following 

testimony, “Valuation is key. Cuttings can be valued at $0.50 and sold to be grown as young 

plants. The young plant greenhouse may have spent $4.00 in costs to get it for sale as a young 

plant. If a disease hits it the wholesale/supplier may credit back to the buyer the 50 cents of the 

original cost. This is called a credit back. Credit back is not standard or required practice in the 

industry. It varies with each situation and company. The other issue is the diseased plant value 

as a young plant is valued at $4.50, but now that it is identified as diseased it is unsaleable and 

must be destroyed. The greenhouse only receives a credit for the 50 cents. But is out the $4.00 

input costs and must pay the destruction costs. Insurance must take into account all the costs: 

Original plant, input costs and destruction costs.” There are important considerations in 

36 In Federal Crop Insurance, the concept of stages in the context of insurance guarantees is well established. Many programs 

provide differential value for crops at varying levels of development based on the input costs invested up to the given 

development phase when the crop was damaged or destroyed.
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evaluating how to insure appropriately, but not over insure. CEA Producers believe their 

destruction cost need to be considered as insurable costs for a program.37

In previous outbreaks, there have been examples of young plant companies paying for the gross 

value of destroyed cuttings, but not for the destruction cost for the inputs put on plants since they 

were received. If a plant is rooted and planted and then the disease is identified, young plants

may have 4-6 weeks of input costs in them. Under current informal supplier compensation/credit 

schemes, diseased plants are limited to the value of the input (cutting, seed or other) and not the 

value that was spent on inputs before disease showed up. Credit back is not standard practice. It 

varies with each situation and company.

Participants noted that USDA/NASS does an annual survey that gives value of some classes and 

types of finished plants. There are regional cost differences in plant values. Participating 

greenhouses have historical prices for all stages in their records and these would likely provide 

the best basis for staged valuation.

Based on the provided input, different stages of valuation for insurance could be:

1. Seeds, roots, cuttings, clones, or liners 

2. Young plants

3. Finished plants

Stage 1(First Seller) Stage 2 (Intermediate 

Seller)

Stage 3 (Final Seller)

Seeds, roots, cuttings or 

liners

Young Plants/Pre-finish:

(50% costs of finished 

plants are here when sold

to next stage.

Finish Plants 100% costs 

are in.

All production at all levels are sold through brokers who will have access to detailed records of 

the valuation and wholesale pricing for plants at each stage of development.

V.A.8. Inventory 

Many greenhouses remain as full as they can throughout their regionally-appropriate production 

season. Greenhouses say this is called “always filling.” This means they bring in plants when 

other plants are sold and space opens up. This is similar to a grain elevator that puts through 

three times the amount of grain that it can store. Even short-season greenhouses refill 2-4 times 

a year their total floor space.

Participants asked specifically about Easter lilies not sold due to COVID-19. Greenhouse sales 

missed the marketing window due to conditions beyond their control. The session moderators 

noted that losses of this nature (where the production itself is undamaged, but the market ceases 

to exist) are viewed as a business interruption loss and are not eligible for insurance coverage 

37 Although it is not a perfect precedence, there are Federal Crop Insurance programs (Downed Rice is one example) that provide 

additional payment of increased input costs as the result of insurable damage events. The Act does not specifically address 

authority to indemnify losses for costs incurred under Federal destruction orders.
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under the Act, but if sale of inventory were delayed as a result of an insurable peril, the loss of 

valuation from delayed sale may be insurable in some situations.

V.A.9. Record Keeping

Record keeping must be a pre-requisite for insurance. Participants report that most greenhouses 

have records for all levels of the production cycle and can determine value at the weekly level. 

All will have some sort of record keeping. Smaller and downstream greenhouses generally 

maintain less rigorous records than larger and upstream operations. Greenhouse record keeping 

is done by most greenhouses at all stages/practices. Greenhouses report that they have electronic 

records and can make hard copies of inventory, contracts, invoices, prices, and plant numbers.

V.A.10. Participants Perspectives of Other Insurance Products

The participants were asked if they were familiar with other products that insure related 

industries, specifically Nursery, NVS, and WFRP insurance plans. Most were unfamiliar with 

WRFP. A few are familiar with Nursery and NVS since they have some part of their CEA 

operation that is eligible for NVS and they insure it. Most views on crop insurance is it only 

pays at a catastrophic level.

When the moderator reviewed the Nursery and (particularly) the NVS program, participants 

were interested in a similar type program based on the NVS model. They like the idea of 

insuring a value in their greenhouse for the types and categories they choose. There are concerns 

about the restrictions in the NVS program limiting or prohibiting eligibility for many of the CEA 

segments of interest.

V.A.11. APHIS or Insurance Programs

Nearly every listening session participant expressed strong interest in and support for an APHISbased program to indemnify losses as a result of a quarantine destruction order. As was detailed 

in Section II.C., APHIS does not currently have the legal authority to compensate for destruction 

orders in plants as it does in livestock agriculture, but the changes to existing language to grant 

the authority would be needed (if such a program is deemed appropriate by Congress) are minor.

V.A.12. Premium

All groups were asked about a premium level they could pay. At the 3-5 percent of gross 

liability level, the consensus opinion was that 3 percent may draw interest, but 5 percent would 

likely be prohibitive. At current standard subsidy rates, a 3 percent producer retail premium 

implies a gross pure risk rate of roughly 7 percent, which would represent a very conservative 

premium in light of the low frequency of historical losses.

V.B. Interviews

The Contractor conducted interviews with four individuals who agreed to be identified 

and formally interviewed for this report. These individuals represent widely differing 

perspectives. As stated in the beginning of the report, the COVID-19 concerns 

eliminated most travel for many interested parties in this greenhouse research. These 

four interviews are conducted in addition to the follow up interviews from the listening 

sessions.
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The list of topics for each interview was the same to assure consistency and 

comprehensiveness in each interview. The Contractor, with RMA input, drafted those 

topics (see Appendix D). Each interview has a sheet drafted that covers the discussion. 

A summary of those full interviews is provided below.

V.C. Interview Summary

The Contractor set up interview times to discuss the interview topics with the greenhouse 

stakeholders. All interviews were informative and helpful to the project. The key points from 

each interview and their responses to the ten key issues are shown for each interview at the end 

of this section. The original notes from a sampling of interviews are included in Appendix E, 

with minor edits to remove personally identifying information.

V.C.1. Summary of Key Points and Stakeholder Perspectives

Disease, specifically Ralstonia is the main concern raised by stakeholders. Ralstonia outbreaks 

have not occurred frequently, but each event makes a severe impact upon on greenhouses. The 

overall cost to those greenhouses hit by it is massive. Greenhouses lose the value of what they 

would have sold the plants and/or their production. The last time a Ralstonia outbreak occurred

(a stakeholder commented that there was an outbreak in 2018, but the APHIS materials report the 

date as 2020), the wholesalers credited back the value of the lost plants to keep greenhouses 

operational. The greenhouses still had to handle the destruction costs and destruction protocols 

were based on very specific USDA APHIS instructions to either burn or bury potentially 

compromised material.

Stakeholders believe it is doubtful that wholesalers will attempt to (partially) cover the cost of a 

future outbreak. One wholesaler bought private insurance for the 2020 year, but will not buy it 

next year; the premium cost was just too high. Not many private insurance companies want to 

insure that peril, due to its high cost (severity) when it happens. The consensus was that 

greenhouses will be offered no buffer by wholesalers going forward and affected operations are

unlikely to survive the event.

Government payments are unusual in the nursery and (especially) greenhouse industry. The 

recent narrowly defined greenhouse payments made under the Coronavirus Food Assistance 

Program (CFAP) are the first for which they have been included. These are considered disaster 

payments. Another possibility stakeholders have weighed is asking APHIS (likely through 

Congress) to build a program for greenhouse diseases.

The greenhouse industry does have well detailed accounting records for price, volume, and date 

of sale. These records are down to weekly level for many operations. Some of the companies 

sum these to monthly and quarterly.

A key item the greenhouse industry is looking for is a risk that has not historically been covered 

by crop insurance due to limitations to authority in the Act. That risk is the missing of sales due 

to event beyond the greenhouse control. A good example is COVID-19 shut down many 

business such as greenhouses and they could not sell their product. This is called business 

interruption insurance. It is not a coverable risk by the Act.
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This risk is increased due to the business nature of greenhouses. Many greenhouse sales 

windows for most of their plants they grow for a year can have an optimum sales window only 

for a month or two. Sometimes 50 percent of annual sales are impacted by a 2 to 6-week delay 

on certain plants. That happened this year with the COVID-19 shutdown in many areas. April 

through June are key times for sales for seasonal operations, particularly in the northern twothirds of the country. In 2020, shutdowns crippled both production and markets. While there 

were reports of exceptional demand in some areas of the country, the stakeholders all reported 

terrible setbacks related to shutdowns.

V.C.2. Interview Conclusions

Each stakeholder offered valuable perspectives about the nature of risk they face, the tools that 

are currently available and the need for additional protection It is clear that the authority 

currently offered under the Federal Crop Insurance Act is an imperfect fit for the specific needs 

of controlled environment producers; the primary risk peril is catastrophic disease outbreaks, or 

more specifically of operation-wide depopulation controls imposed in light of disease outbreaks. 

As we have found previously in livestock and in quarantine studies, the low frequency, indirect 

effect, and overwhelming severity of these events also make it difficult for private markets to 

appropriately serve producers. Each of the stakeholders interviewed is highly motivated to see 

some form of protection made available and each believes that government should play a central 

role in offering or facilitating that coverage. It is the Contractor’s interpretation, which has been 

corroborated by USDA legal counsel, that 2018 Farm bill language authorizes a “greenhouse” 

policy that can insure in addition to crop insurance risks already identified, diseases introduced 

into the facilities and contaminated cuttings.
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VI. MARKETING ENVIRONMENT

This section of the report addresses the SOW stating:

“Data Availability and Price Methodologies – The Contractor shall conduct a 

search for price, and yield data at the national level and in each of the research 

study areas. Identify viable data series and formulate all reasonable alternative 

methods other than contract price or nursery greenhouse producers’ published 

catalog/price list prices to develop expected prices for each commodity. These 

methods shall include determinations of preharvest prices and the effects of 

quality deficiencies on prices.”

From the AMS Market News Website: “Specialty Crops Market News disseminates detailed 

information on marketing conditions for hundreds of agricultural commodities at major domestic 

and international wholesale markets, production areas, and ports of entry. Using direct contacts 

with sales persons, suppliers, brokers, and buyers, Market News reporters collect, validate, 

analyze, and organize unbiased data on price, volume, quality and condition, making it available 

within hours of collection at no cost to you.” In addition, “USDA Market News provides price, 

volume, and other related information for commodities and products that have been grown, 

processed and certified to USDA’s National Organic Program standards.”

Limited price information is available for greenhouse production. For example, the AMS market 

reports for tomatoes on September 8, 2020 include prices for greenhouse production delivered at 

terminal markets in Baltimore, Boston, Chicago, Columbia, Dallas, Detroit, Las Angeles, New 

York, Philadelphia, and San Francisco. Ontario, Canada is the predominant origin of the 

tomatoes for the eastern terminal markets. California and British Columbia, Canada are 

identified for the western part of the country. Mexico is a source of greenhouse tomatoes in 

several markets, both eastern and western. Maine is a source of greenhouse production delivered 

to the Boston market. Prices include tomatoes packed in single layers, double layers, loose, on 

the vine, heirloom, and 5, 10, and 15 kilogram cartons, and others. Prices include mature green, 

immature green, vine ripe, 85 percent U.S. #1, grade unspecified, and others.

Information for greenhouse-raised tomatoes is the most extensive of the commodities. There is 

limited information for greenhouse production of bell peppers and a few other crops. These 

reports present prices as a range with limited information regarding quantities sold at those 

prices. Packaging is a variable affecting the price for many commodities. In summary, pricing 

data for greenhouse-produced crops is very limited.

The extent of contract marketing is unknown. No literature on this topic discusses the extent that 

contracting plays a role in marketing of the output of CEA operations. A publication from 

PennState Extension discusses “Fruit and Vegetable Marketing for Small-Scale and Part-Time 

Growers.”38 While not specific to greenhouse production, this document provides salient 

observations that pertain to small-scale production of any commodity. For example, “As a 

small-scale fresh fruit and vegetable grower, you may consider selling directly to retailers. 

Although some chain stores and independent retailers have buy-local programs for fresh 

produce, such stores and programs are not common. You must develop your own marketing 

38 https://extension.psu.edu/fruit-and-vegetable-marketing-for-small-scale-and-part-time-growers, accessed September 2020.
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system. In effect, you must become the grower, packer, and wholesaler.” In this context, 

marketing of greenhouse commodities becomes a value-added operation in that packaging and 

marketing costs must be included in the sales price. Damaged or destroyed production not sold 

is over-priced if a loss is valued at the price that sales occurred. Estimating and eliminating the 

amount of mark-up contained in the sales price would be a challenge.

Critical marketing periods depend on the commodity and location. An operation producing 

transplants has a critical marketing period immediately prior to the onset of planting the crop. 

Production of the transplants must be staged so the seed or slips that are planted are ready for 

sale at that time. It is impossible to determine a critical marketing period. This depends on the 

commodity produced, the clientele purchasing that commodity, the season, and other variables.

Many plants grown in greenhouses are planted in standard nursery containers and are produced 

to sell the entire plant to buyers. Most of these are insurable under the Nursery or NVS crop 

insurance policies. Commodities produced using aeroponics, aquaponics, or hydroponics are not 

insurable under Nursery policy but hydroponics is allowed by the NVS policy. Many 

commodities produced by these methods are foods intended for direct human consumption. 

These include lettuces, peppers, cucumbers, tomatoes, and several others. These commodities 

include products consumed in the form that was produced (lettuce) or are the fruits of a plant 

harvested and sold apart from the plant (peppers, cucumbers, and tomatoes). Disposition may be 

to a retailer that supports a “buy-local” philosophy, to restaurants, directly to consumers, and 

others. Utilization of greenhouse produced commodities ranges from ornamental uses to 

upstream production (transplants) to direct human consumption (harvested fruits and vegetables). 

The Contractor did not find literature that identified quantities sold via any specified end-use.
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VII. RESEARCH RECOMMENDATIONS, POSSIBLE DESIGN OPTIONS, AND 

IMPACT ANALYSES

The SOW states the following for this section:

Research Recommendations, Possible Design Options and Impact Analyses – The 

Contractor shall make recommendations on the viability and marketability of new 

product development or adding to the existing nursery crop insurance program. 

The Contractor shall provide a comprehensive discussion of crop insurance 

alternatives with an explanation of why the alternative is best. The Contractor 

shall include an outline of the model for the basis of the guarantee, preliminary 

premiums, formulate expected prices, methods of determining yields; recommend 

a year of implementation; units of exposure; types; practices; insurance dates; 

initial insurability requirements; pilot counties; insured causes of loss; uninsured 

causes of loss; a description of what triggers a loss and how indemnities will be 

calculated; and the availability of loss adjustment procedures. The Contractor 

shall identify and evaluate the potential impacts on nursery greenhouse 

producers, taxpayers and the market of any crop insurance programs which 

nursery greenhouse producers express an interest. The Contractor shall identify 

the risk of program fraud, abuse, and moral hazard faced by the Government. The 

Contractor shall identify any challenges associated with development of such a 

program and any areas or plants for which the program may not be suitable.

The Contractor, when recommending whether the items listed above are expected 

to be viable, needs to keep in mind the following criteria:

1. The insurance product must conform to RMA’s enabling legislation, 

regulations, and procedures that cannot be changed;

2. The nursery greenhouse insureds and their agents must be willing to pay 

the appropriate price for the insurance;

3. The insurance product must provide coverage that is effective, meaningful 

and reflects the actual risks of the nursery greenhouse producers;

4. The perils affecting production must be identified and categorized as 

insurable and non- insurable;

5. The insurance product must be ratable and operable in an actuarially 

sound manner;

6. The insurance product must contain appropriate and reliable 

underwriting, rating, pricing, loss measurement, and insurance contract 

terms and conditions;

7. There must be an appropriate geographic distribution of production to 

ensure a sound financial insurance program;

8. There must be enough interest for the risk to be spread over an acceptable 

pool of insureds;

9. Customers must not be able to select insurance only when conditions are 

adverse;

10. Moral hazards must be avoidable or controllable;

11. There must be no change of beneficial gain; and

12. There must be no change in market behavior or market distortions that 

change the quantity supplied or shift the supply curve.
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VII.A. Recommendation Overview

The Federal Crop Insurance program has grown from a humble set of yield-based offerings for 

wheat in a handful of states to the largest and most diverse component of American agricultural 

policy. Following ARPA (2000), RMA has worked diligently to increase the number and variety 

of offerings available to serve an ever-growing set of crops and agricultural production systems. 

While these efforts have been wildly successful, the program has also already developed and 

offered programs for all the crops and sectors that can be easily served (and a number of sectors 

that are not easily served). As a result, the proverbial ‘low hanging fruit’ has already been 

picked. The CEA agriculture industry most assuredly does not represent low hanging fruit; as 

the report details, there are particularly meaningful challenges to aspects of industry structure, 

program design, legal authority with regard to insurable perils, availability of data for application 

to ratemaking, and best management practice standards. There is not even a broadly accepted 

consensus definition of CEA.

For the purposes of this report, the Contractor will offer a frank appraisal of the challenges and 

opportunities for insuring the CEA risks associated with plants, with particular interest in the 

disease perils identified as critical both in the Farm Bill language upon which this contract was 

based and the industry feedback collected throughout this effort. The intent of these 

recommendations is both to affirm the fraught challenges detailed throughout the report and also 

provide actionable steps that might be undertaken by those who have dedicated so much time, 

effort, and energy into attempting to obtain risk mitigation tools for CEA.

To be clear, any development intended to serve CEA will be difficult and will require the same 

sort of initial flexibility regarding quantitative assessment of risk that has been applied to other 

new programs intended to serve specialty and nascent industries for which data are limited 

and/or largely proprietary. While the Federal Crop Insurance Corporation (FCIC) has extended 

this sort of flexibility to new programs like Hemp and WFRP, each prospective program must be 

considered independently and on its own merits. These recommendations are made with the 

assumption that unknown variables, including the success of future quantitative data collection 

efforts, and the verification of the application of authority to insure quarantine/disease perils will 

be achieved as part of a development effort.

VII.B. Viability and Marketability of a Program for CEA

Throughout the listening sessions, stakeholder feedback interviews, and discussions with 

industry experts, the desire for risk cover for catastrophic disease risk was discussed. These 

discussions were not limited to Federal Crop Insurance products and stakeholders expressed a 

high degree of flexibility regarding the venue and framework for such risk transfer. Stakeholders 

were specifically asked to assess their own willingness and ability to pay premiums for the risk 

cover, provided a range of retail premium rates between 3 percent and 5 percent of the potential 

insurable liability (implying rates at 75 percent coverage levels that are substantially higher than 

offers currently available in NVS, nursery, and dollar-based fresh vegetable programs). The 

stakeholders acknowledged the challenges rates in the 4 percent or 5 percent range would pose, 

but expressed strong interest if producer-paid rates were in the 3 percent range or less. Among 

those who provided feedback (a population that is unquestionably subject to survivor bias –

disinterested parties are far less likely to respond at all), there was universal acceptance and 

interest in participation in a new risk mitigation tool.
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VII.C. Crop Insurance Alternatives Considered

The crop insurance alternatives considered are detailed at length in the body of this report, but 

can be summarized to include models based on the WFRP program, the current Nursery program 

and the NVS program, with additional special consideration given to the quarantine program 

offered for avocados and citrus in California and parts of Arizona. Each of these programs is, for 

various reasons, unconventional relative to the vast majority of the offers in the Federal Crop 

Insurance portfolio and it is these unconventional attributes that offer the potential to addressing 

the many challenging idiosyncrasies of CEA.

While each of the considered alternative models offered potentially useful attributes, NVS was 

identified as having the greatest potential application as a model for CEA.

VII.C.1. Whole Farm Revenue Protection

The WFRP program has been heralded as a potential one-size-fits-all tool to address diverse and 

specialty operations. The program’s offer is remarkably broad and specifically considers the 

implications of multiple crop/livestock enterprises within an operation. WFRP, however, draws 

premium rates from comprehensive tables of risk premiums for specific identified (and therefore 

explicitly rated) crops. Moreover, WFRP relies on tax records that would be very difficult to 

parse in CEA to segregate insurable segments of the value chain, and impose unacceptable 

delays in indemnification of losses. Finally, the WFRP program relies on complex and detailed 

underwriting controls that would have to be comprehensively reconsidered for application to 

CEA.

VII.C.2. Current Nursery Crop Insurance Program

The current nursery program provides broad inventory-based coverage for diverse operations 

including thousands of plant species. The program has been offered for decades and provides a 

wealth of (imperfectly applicable) experience data from which risk can be considered. 

Unfortunately, Nursery relies upon specific and comprehensive price listings for valuation of 

liability and requires insurance for all plant type/categories within a given operation, both of 

which render the program infeasible as a model for CEA.

VII.C.3. Nursery Value Select

NVS is a new program that was designed specifically to reduce the challenges posed by the 

existing nursery program. NVS is highly flexible, depending upon grower’s own records for 

valuation and providing choices in plant categories to be insured. This flexibility allows an 

NVS-based design to potentially accommodate the unique attributes of CEA, making it the best 

potential model considered. The NVS model is not without shortcomings however; the program 

is new and no insurance experience will be available for more than a year from the date of this 

report; moreover the flexibility extended by NVS could also be interpreted as a potential 

program vulnerability without specifically targeted and well-designed underwriting controls

which can be developed. The basis of the NVS design does nothing to address the paucity of 

quantitative data from which rates may be estimated or the challenges of the authority under the 

Act to compensate farmers for losses due to quarantine-based disease perils.
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VII.C.4. Quarantine Pilot

The Quarantine Pilot Program was introduced as an endorsement to existing yield-based 

programs for citrus and avocados in California and Arizona in 2009 for a limited number of 

counties. The program offers a limited modification to the crop provisions to include losses as a 

result of deterioration or destruction of the crop based on a quarantine action.39 This program 

does offer a precedence for providing coverage to losses as a result of a quarantine action, but it 

must be noted the coverage is structured as an endorsement to existing coverage and offers no 

stand-alone liability of loss adjustment process; this program does not provide a model for 

insuring a crop or industry for which no underlying coverage is already in place.

VII.D. Insurance Model Outline

The proposed basis for coverage of development for CEA is the NVS program, and therefore 

major aspects of the design have been conceptually tested. The guarantee would be based on the 

value of inventory present at the time of loss, subject to seasonal peaks, established deductibles, 

and liability limit elected by the insureds. Premiums cannot be estimated without a 

comprehensive data collection effort as an early phase of the development. Expected prices 

would be based on historical sales records and current contract values and ‘yields’ would be 

assessed as current value relative to pre-loss value at the time of a loss event. The year of 

implementation is unknown, but given the effort anticipated would likely be no earlier than 2024 

and could readily adopt dates and unit structure based on category as is used in the NVS 

program. Insurable causes of loss would be a particularly critical aspect of the design as most 

natural weather perils are not applicable to CEA and the predominant risk (destruction orders as 

a result of a quarantine-actionable disease outbreak) is only currently offered coverage on a very 

limited basis under the existing authority of the Act.

VII.E. Potential Impacts

The potential impacts of a new program for CEA are difficult to estimate with confidence given 

the hypothetical nature of the design and the lack of precedence in this market. The cost of 

developing and maintaining a new specialized program will be meaningful given its specialized 

nature. While interest among stakeholders is very high, the risks of greatest interest display very 

low frequency and high severity characteristics and the target market is composed of producers 

who historically have not purchased crop insurance at all. Over time, Nursery growers have 

migrated their participation to CAT coverage, which has very high subsidy rates, but little 

premium, which would reduce both agents and insurance providers’ interest in promoting, 

supporting, and marketing the new program. In most years the program can be expected to have 

loss ratios of zero, but in the infrequent years when quarantine-based disease depopulation orders 

are made, loss ratios for the program will be extreme (a large loss divided into a very small 

annual premium) and it will take an extended number of years to establish meaningful 

experiential updates to premium rates. The pool of individual producers who could benefit from 

this coverage is limited but growing, and RMA has a mandate to extend coverage wherever 

practicable, but it can be expected that the cost of servicing each insured with a new specialized 

program will be substantially higher than that of conventional crop programs.

39 Additional information is available here: https://www.rma.usda.gov/en/Fact-Sheets/Davis-Regional-Office-FactSheets/Quarantine-Avocado-and-Citrus-2018-CA, accessed February 2021.
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VII.F. Program Risks

In past research into quarantine pests, particularly boll weevil in cotton and avian influenza in 

broilers, there was extensive discussion of the potential for inappropriate incentives in 

indemnifying producers for quarantine-based losses. For instance, if the identification of a 

weevil resulted in the automatic destruction of surrounding crops for a 10,000 ft. radius of the 

site of discovery, but compensation were only offered to the unit in which a weevil was found, 

producers in surrounding fields would have an incentive to assure that weevils were found in 

their units as well. In the case of plant borne diseases like Ralstonia, the risks to critical food 

crops (potatoes, tomatoes, and others) are acute and the potential implications of an outbreak 

reaching the food supply are severe. Care must be taken in program design to assure producers 

have a strong incentive to maintain very high biosecurity standards, to conduct active 

surveillance of their operations, and to aggressively report vectors if and when they are found. If 

compensation is inadequate, producers would have short-term financial incentives to fail to 

report perils. If compensation is too generous, producers would have short-term incentives to 

relax biosecurity standards and fail to actively prevent outbreaks. Historically, in the absence of 

any compensation program, the industry has borne these responsibilities itself, at sometimes 

catastrophic cost to individual participants in past outbreaks. The most important risk in 

program design is development of appropriate incentives to prevent outbreaks to the greatest 

extent possible and fully and fairly compensate producers for the losses they are unable to 

prevent.

VII.G. Program Challenges

As has been noted throughout the report and this summary, the challenges to development of a 

new program for CEA are daunting. Good quantifiable data regarding the expected frequency 

and severity of disease outbreaks is currently unavailable and would either require an ambitious 

data collection effort or the application of an alternative rating approach like which was used in 

the Quarantine Pilot Program or the Adjusted Gross Revenue program (the predecessor to 

WFRP). The legal authority to insure losses that have been incurred based on destruction orders 

is largely untested, with only a single known and limited offer in this space currently available. 

The NVS program upon which the most promising insurance concepts are based is also untested 

and is now in its first year of availability.

VII.H. Concluding Considerations

The feasibility standard for a new insurance program has been developed over many years and 

represents a balance between the mandate to expand coverage to as many crops and sectors as 

practicable while carefully maintaining the interest of taxpayers and stakeholders. The needs of 

CEA agriculture are unique and serving this industry with a crop insurance program will require 

new approaches and applications of untested concepts. The contract outlined twelve attributes of 

feasibility and each warrant specific consideration.

1. The insurance product must conform to RMA’s enabling legislation, regulations, 

and procedures that cannot be changed;

The proposed NVS-based concept would offer coverage based on the change in value 

of the inventory of a CEA operation following an insurable loss event, to include 

destruction mandated by an appropriate authority. This appears to conform with the 

authority of the Act (a program that offers such coverage is currently available, but 

only on a limited basis) and regulations.
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2. The nursery greenhouse insureds and their agents must be willing to pay the 

appropriate price for the insurance;

Stakeholders indicated a willingness and ability to pay producer premiums in the 3-5

percent of insurable liability range; actual rates cannot be known prior to 

development.

3. The insurance product must provide coverage that is effective, meaningful and 

reflects the actual risks of the nursery greenhouse producers;

The proposed concept is specifically targeted to the needs identified in feedback 

sessions and in the Agricultural Act of 2018.

4. The perils affecting production must be identified and categorized as insurable 

and non-insurable;

All anticipated risks are believed to be insurable under the Act under appropriate 

circumstances, but the Contractor concedes this element of interpretation has little 

applicable precedent.

5. The insurance product must be ratable and operable in an actuarially sound 

manner;

The paucity of available quantifiable data implies that conventional ratemaking is 

unlikely to be practical. In previous development of specialty programs, special 

dispensations were made for ratemaking (Delphi processes, reference crops, etc.) to 

accommodate introduction of coverage to new sectors.

6. The insurance product must contain appropriate and reliable underwriting, 

rating, pricing, loss measurement, and insurance contract terms and conditions;

The most feasible program design is based on the newly introduced NVS program, 

which is specifically designed to offer the flexibility that would be needed to 

accommodate the special needs presented by sectors like CEA. The program is new 

and untested, but appears to be sound and appropriate in these respects.

7. There must be an appropriate geographic distribution of production to ensure a 

sound financial insurance program;

For the particular nature of the primary risk drivers of the anticipated program, 

geographic distribution is not a relevant variable.

8. There must be enough interest for the risk to be spread over an acceptable pool of 

insureds;

The number of young plant operations is relatively limited, but CEA represents an 

important and growing segment of U.S. agriculture. Assuming typical adoption 

curves, the Contractor anticipates an acceptable pool of insureds could be achieved 

within five years of program introduction.

9. Customers must not be able to select insurance only when conditions are adverse;

Given the nature of the perils involved, the Contractor recognizes no unique 

opportunities for adverse selection.

10. Moral hazards must be avoidable or controllable;

Given the nature of the perils involved, the Contractor recognizes no unique 

opportunities for moral hazard if indemnification criteria can be designed 

appropriately.

11. There must be no chance of beneficial gain;

Deductibles and program design limit opportunities for beneficial gain.

12. There must be no change in market behavior or market distortions that change 
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the quantity supplied or shift the supply curve. 

Currently no private coverage is available for these risks; when risks strike the 

affected parties endure sharp losses and/or exit the business. The program can be 

expected to stabilize the industry, but should not be expected to induce new entrants 

or expansion of current operations.

In addition to these considerations, the Contractor feels it is appropriate to acknowledge 

in its conclusions that APHIS currently offers indemnification of losses for quarantinebased disease vectors and depopulation for livestock. While that authority does not 

currently exist for plants, the changes that would be required to support the authority to 

compensate plant losses to depopulation are minor, as detailed in Section II.C.
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Appendix A

Greenhouse Links with Research Information
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National Links

National Horticulture The AmericanHort Mission is to unite, promote, and advance our industry 

through advocacy, collaboration, connectivity, education, market 

development, and research.

Research done through “Horticultural Research Institute”

https://www.americanhort.org

National Greenhouse 

Manufacturers Association

NGMA is a professional trade organization for the manufacturers and 

suppliers of greenhouses and greenhouse components. Contains complete list 

of all state groups.

https://ngma.com/industry-links/

National Greenhouse Co.® National Greenhouse Co.®, a division of Nexus Corporation.®, is a proven 

leader in the design and manufacture of greenhouse kits and other enclosed 

environments - not just for the home, yet also for schools, universities, and 

businesses across the U.S. and Canada. With over 80 years of experience, 

Nexus Corporation's greenhouses are designed and manufactured to stand the 

test of time. National Greenhouse Co. has earned a reputation as the leading 

supplier of quality home greenhouses and hobby greenhouse kits in the United 

States and Canada.

https://nationalgreenhouse.com/

Southern Nursery Association On January 1, 2014, AmericanHort was born by the consolidation of the 

American Nursery & Landscape Association and OFA – The Association of 

Horticultural Professionals

https://sna.org/

* Information is quoted from each website’s page.
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State Links

California: Plant California 

Alliance

The Plant California Alliance is an association of professionals who bring 

plants and landscape supplies to Californians and the world.

http://www.plantcalifornia.com/

Florida: Florida Nursery, 

Growers and Landscape 

Association

Nation's largest state nursery and landscape association, FNGLA represents 

Florida's environmental horticulture industry which generated $21 billion 

total output sales in 2015 and directly employed 232,000 people. Through 

FNGLA's efforts, the entirety of Florida's nursery and landscape industry 

benefits!

http://www.fngla.org/

Oregon: Oregon Association of 

Nurseries

The Oregon Association of Nurseries includes all members of the 

greenhouse industry for Oregon.

http://nurseryguide.com/ 

New York: New York State 

Nursery and Landscape 

Association

New York State Nursery and Landscape Association is a statewide 

professional trade association. NYSNLA is dedicated to advancing New 

York's nursery and landscape industries through promotion of sound 

business practices supported by education, relationships and advocacy.

https://nysnla.com/

Washington: Washington State 

Nursery & Landscape 

Association

The WSNLA works with its members to protect, promote and educate the 

horticulture community in Washington State. 

https://www.wsnla.org/default.aspx

North Carolina: North Carolina 

Nursery & Landscape 

Association

The North Carolina Nursery & Landscape Association is a 501(c)(5) nonprofit membership organization of firms interested in the welfare of North 

Carolina's green industry with emphasis on the nursery and landscape 

industry

https://www.ncnla.com/

Pennsylvania: The Pennsylvania Landscape & Nursery Association (PLNA) is the leading 

trade association representing Pennsylvania's $6.8 billion green industry. 

Founded in 1904, its member landscape contractors, retail garden centers, 

wholesale nurseries and greenhouses produce outdoor living environments 

that improve economic value, air quality, water quality and human health. 

https://www.plna.com/default.aspx

Texas: Texas Nursery & 

Landscape Association

The Texas Nursery & Landscape Association’s Mission is to enhance 

Members’ business success through legislative/regulatory advocacy, 

education, networking, and promotion of professionalism.

https://www.tnlaonline.org/

Michigan: Michigan Nursery & 

Landscape Association

MNLA Represents: A wide range of Michigan Green Industry businesses on 

legislative and regulatory issues, education and events, certification 

programs, marketing and promotion, and member-only money saving 

programs.

https://www.mnla.org

Ohio: Ohio Nursery & 

Landscape Association

Ohio Nursery and Landscape Association has a rich history of supporting 

and promoting Ohio businesses. Established in 1908 as the Ohio 

Nurserymen's Association, ONLA has grown to be Ohio's only state 

association that encompasses and welcomes the many businesses that make 

up the green industry.

https://www.onla.org/default.aspx
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Colorado: Colorado Nursery and 

Greenhouse Association

CNGA helps elevate and strengthen independent nursery and greenhouse 

businesses in and around Colorado. We provide unparalleled education, 

legislative advocacy, fellowship, certification, training and operational 

support.

https://www.coloradonga.org/

Maryland: Maryland Nursery, 

Landscape and Greenhouse 

Association

The Maryland Nursery, Landscape, and Greenhouse Association (MNLGA) 

has a distinguished history of supporting, promoting, and providing services 

and assistance to member businesses since 1934.

https://www.mnlga.org/

* Information is quoted from each website’s page. 
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Regional and Additional Links

Greenhouse Grower with top 

100 grower list

Greenhouse website and magazine: Greenhouse Grower

Greenhouse Grower® and GreenhouseGrower.com represent the best 

interests of the commercial controlled environment growing industry with a 

focus on the knowledge and tools to sustain and enhance the sector’s vitality 

and profitable growth. Our readers are growers of ornamental crops, 

greenhouse vegetables, cannabis, hemp, and other floriculture crops.

https://www.greenhousegrower.com/

Top 100 growers by name and state

https://www.greenhousegrower.com/management/2020-greenhouse-growertop-100-ornamentals-growers-the-complete-list/

Vegetable Growers News The Vegetable Growers News is a monthly magazine that covers all aspects 

of the industry. 

https://vegetablegrowersnews.com/

Horticulture Daily Hortidaily.com is an online meeting place for the international horticulture 

industry. The website is updated daily with interesting news from around the 

globe. HortiDaily intends to provide as much information as possible, which 

could help growers with the management of their horticultural enterprise.

https://www.hortidaily.com/

New Mexico Vegetable 

Production

Resource for Greenhouse vegetable production in New Mexico.

https://aces.nmsu.edu/pubs/_circulars/CR556/

Michigan Greenhouse Growers 

Council

As a statewide organization, Michigan Greenhouse Growers Council 

(MGGC) realizes the importance of having a strong, cohesive association that 

represents the grower segment of our industry and focuses on public policy, 

legislation and keeping Michigan growers informed about relevant issues.

https://mggc.org/

North East Greenhouse Northeast Greenhouse grower conference and expo is an annual meeting and 

expo for the Northeastern states.

https://www.negreenhouse.org/

Multiple Groups List of additional groups in the greenhouse industry.

https://hbin.tamu.edu/greenhouse-firms/

NGMA List The National Greenhouse Manufacturers Association

Representing and advancing the interests of the greenhouse industry through 

education, networking and communication.

https://ngma.com

* Information is quoted from each website’s pages.
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Appendix B

Stakeholder Information Gathering Invitation
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Virtual Listening Session

Feasibility of Insuring Greenhouse and Controlled-Environment Agriculture

You are invited to participate in a virtual listening session with Watts & Associates (W&A), 

which is working under contract for USDA’s Risk Management Agency (RMA).

Why? As part of the 2018 Farm Bill, Congress required RMA to study the feasibility of 

offering a new crop insurance program for controlled environment agriculture.

The feedback we receive will assist in determining if a crop insurance product or other program 

can be developed for growers who operate greenhouses and controlled-environment agriculture.

Who? The virtual listening sessions are primarily for growers who operate greenhouses and 

controlled-environment agriculture and their representatives in the federal crop insurance 

industry. 

When? There are several sessions, which will be held in the next few weeks. You are invited 

to choose from the following sessions. 

January 14th, Thursday 11:00 EST

January 19th, Tuesday 11:00 EST 

January 22nd, Friday 2:00 EST

Listening sessions are critical to collecting information from industry participants about the risks 

in their industry such as plant diseases, production and price risks. Input at these meetings helps 

determine and support any changes that RMA may consider. We appreciate your participation at 

one of the sessions.

What is a Virtual Listening Session? It is a method to connect and talk with you via 

phone and/or an internet connection. If you are interested in participating in one or more of the 

sessions, please contact us for details about accessing the listening session:

Eric Henry at Watts and Associates 

406-252-7776, Ext. 3006

EHenry@WattsandAssociates.com
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Appendix C

Stakeholder Information Gathering Agenda
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Greenhouse/Controlled Environment Agriculture

Crop Insurance Study

Virtual Listening Session Agenda

• Introductions

 Watts and Associates, Inc.

 Attendees

• Purpose

 Gather stakeholder input in regard to the possible crop insurance 

approaches for Greenhouse/Controlled Environment Agriculture 

industry.

• Background

 Paperwork Reduction Act constraints

 Contract requirements and current status

• Stakeholder Input

 Interest in new programs 

 Production, financial and economic risks

 Naturally occurring production risks-diseases

 Disease control methods including governmental requirements ( 

APHIS, others)

 Different production practices

 Inventory values

 Record keeping

 Catalog values and discounts

 Views about Nursery/NVS and WFRP insurance plans

 Questions about insurance programs: guarantees, underwriting, prices 

and premiums

 Commercial insurance limitations.

 Other issues raised by the attendees
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Appendix D

Greenhouse Interview Outline
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Greenhouse/Controlled Environment Agriculture (CEA)

FCIC Multi-Peril Crop Insurance

Interview Session Outline

• Introductions

 Watts and Associates, Inc. (Dr. James Driscoll and Eric Henry)

 Interviewee

• Purpose

 Gather input to obtain views and comments regarding production risks 

affecting operators of Greenhouse/CEA and prospects for crop insurance 

tools to address and mitigate these risks.

• Background

 2018 Farm Bill

 Contract Requirements

 Development Process/Timing – Data Needs

• Stakeholder Input

• Naturally Occurring Risks Affecting Industry 

• Production Risks and Mitigation Options – Practices

• Prevalence of Disease with no Control Measures, e.g., Ralstonia

• Availability of Commercial Insurance

• Gaps in Commercial Insurance 

• Considerations for APHIS or other Catastrophic Disease Compensation 

programs

• Inventory Valuation

• Record Keeping

• Views about Nursery/NVS and WFRP Insurance Plans

• Willingness and ability to pay premiums

• Other issues raised by the attendees

• Questions
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Appendix E

Interview Session Outlines
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Company 1 

Greenhouse/Controlled Environment Agriculture (CEA)

FCIC Multi-Peril Crop Insurance

Interview Session Outline

Stakeholder:

Interviewee owns and operates a multi-state CEA operation specializing, among other activities, 

in cloning, seeding, and young-plant development and propagation.

Interview Conducted: October 23, 2020

Notes and Key points:

They request risk management for diseases. Disease outbreaks do not happen often (such as 

Ralstonia), but when it does occur it is very expensive. For example in 2017 a petunia viral 

disease hit hundreds of growers in the United States. Besides the plants not reimbursed, the 

destruction and clean-up costs were tens of thousand dollars (burn or bury depends on disease)

paid by the greenhouse who bought the plants. The destruction is overseen by federal and state 

agencies. Sometimes diseased plants are burnt. Sometimes diseased plants are buried at landfill, 

but must find landfill that will accept bio disease.

They request insurance should cover plant costs (value), costs to destroy. Not just cost of the 

plant the greenhouse pays.

They recommend the following to develop risk management or insurance coverage:

1. Insure the cost up to the expected value of the plants. Allow greenhouse to buy a dollar 

amount of coverage then apply a deductible.

2. Base the greenhouse program on template of the NVS program.

3. Make insureds have some skin in the game. This is accomplished by a deductible and 

producer paid premium.

4. Offer a catastrophic level policy to cover the rare but expensive large events.

5. The time period for insurance coverage must be spread out over a time period such as at 

least a quarter of a year (3 months) up to a year. Do not allow to insure only the big 

value times. Sometimes a greenhouse selling cycle for certain plant can be as short at 2-4 

weeks.

6. Discus possible program with all participants of the industry.

7. A key point is to offer the right coverage at the right time to make the coverage 

meaningful.

8. Three possible programs that this greenhouse sees. First could be a program based off 

the NVS type. Second, a disaster payment to the greenhouse. Third, is to have APHIS 

expand and cover diseases for greenhouses similar to what they do for other crops and 

livestock they cover now.

9. Must not over insure the value. Deductible must be less than 100 percent.

10. Require greenhouses to have coverage for the building and equipment. Otherwise 

growers could manufacture losses by not keeping up the buildings such as a glass roof 

and the roof breaks and damages the plants.
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11. Greenhouse risk management needs to recognize the industry is cyclic in nature. For 

example if certain plants are only sold in one month of the year, would the greenhouse 

pay for coverage the entire year, when it only has risk for part of it.

12. Inventory and catalogs vary by company and by their part of industry. Some greenhouses 

may sell 50 percent of their stock in one month.

Risk management valuation for insurance can be difficult since the coverage of the plants can

be different sizes, seeds, cuttings, wholesale plant or retail plant.

The chart below is one example of differences in the industry. A box truck can hold many 

more beginning plants compared to the much lower number of finish plants. Value of plants 

in the truck varies by the plants type and age.

A full 26-foot box truck can hold:

Plant Value

Beginning plants $30-50,000

Whole sale in 

April/May

$10,000

Finished in Aug $5-10,000

This organization is a supplier who imports the plant and does the role of the broker between the 

buyer and the seller. Most brokers charge 50 cents a plant if the plant value is $15 when sold. 

With Ralstonia, they as middleman and importers responsible for entire costs.

They stated that the general consensus is with a disease the supplier of the plant credits back the 

price of the plant when sold to greenhouse. But there is no guarantee or anything in writing to 

force it. Many suppliers are outside of the United States. There is nothing in writing to cover 

the cost.

The industry believes sellers will not credit the cost of the plant back when future disease issues 

arise. The greenhouses expect if a disease hits their stock, the greenhouse will not be reimbursed 

for the cost of the plant and will pay for all costs to destroy those plants. For example, in 

Ralstonia, this company credited back the cost of the plant to the greenhouse. The expense was 

massive. This company credited back the cost of the plant. They stated they will not be able to 

do that again due to costs. For 2020, they purchased insurance to cover that exact type of 

situation. The insurance policy was bespoke and one-off underwritten specific coverage for 

Ralstonia in case of quarantine and destruction order. The cost was extremely high and will not 

purchase that policy. Note: This was not a general policy offered to all. It was built specific for 

disease for that company.

Insurance timing for revenue type program are short windows to time. Many greenhouses do 

most business as finished retail plants in the 4 weeks of April 30 to May 31. Strong sales may be 

2, 4, or 6 weeks. Some do 50 percent of their business in those four weeks. The value of the 
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plant varies since the starter plants are not worth as much as the ready to sell retail plants. This 

company does 50 percent business for cuttings that are sold January through March and is 

cuttings which is 50 percent. April through June is 50 percent of their retail sales.

Stakeholder Input

1. Naturally Occurring Production Risks Affecting Industry

Disease.

2. Production Risks and Mitigation Options – Practices

Industry mitigation is they are naturally spread out from each other.

3. Prevalence of Disease with no Control Measures, e.g., Ralstonia

Ralstonia disease is largest concern.

4. Availability of Commercial Insurance

None for plants.

Available for buildings.

5. Gaps in Commercial Insurance

No coverage for plants.

6. Considerations for APHIS or other Catastrophic Disease Compensation programs

Could APHIS add greenhouses to the program? Crop insurance would be better coverage.

7. Inventory Valuation –

Yes inventory is valued weekly, monthly and quarterly. Much of their business happens by 

quarter.

8. Record Keeping

Yes. They keep records. See #7 above.

9. Views about Nursery/NVS and WFRP Insurance Plans

Familiar with NVS, but not WFRP.

10. Willingness and ability to pay premiums

Yes. Believes the greenhouse industry must have risk for it to work. Deductibles are part of 

this.

11. Other issues raised 

See Key Points above.
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Company 2

Greenhouse/Controlled Environment Agriculture (CEA)

FCIC Multi-Peril Crop Insurance

Interview Session Outline

Stakeholder:

The stakeholder is a senior manager for a horticultural firm with operations in five states and 

distribution base on import, propagation, and resale of plant materials from several foreign and 

counter-seasonal sites.

Interview Conducted: October 22, 2020

Key points: This company is from the producer/distributor side. They grow seeds, cuttings and 

other materials to sell to greenhouses. They have a merchandising company that is the 

distributor (broker). For, example, they bring in cuttings from their Nicaragua location and sell 

to greenhouses in the United States.

Interview discussion identified risks they request risk management for:

1. Diseases are the first risk. There is no coverage from APHIS for plant cost, plant value,

or destruction costs. These plants were USDA approved with Phytosanitary certification. 

For example with recent Ralstonia outbreak this risk is on all greenhouses that purchased 

the plants or plant cuttings. Insuring these risks will help them with operating bank 

loans.

2. Sales timing risk is substantial in the greenhouse industry. If they do not sell the plants in 

the forecasted time and at their normal volume during sales periods, they cannot make up 

those sales. Some plants only sell during May/June or just the three weeks for mums 

each year, those missed sales do not come back later in the year.

3. Historically greenhouses do not receive disaster payments that other farm programs 

receive. This year a limited amount of CFAP payments were received by some in the 

nursery industry. They request that greenhouses receive more disaster type payments.

4. Revenue coverage is a possible program they would like. It would be a revenue coverage 

similar to NVS for greenhouses.

Stakeholder Input

Naturally Occurring Risks Affecting Industry

Disease.

Production Risks and Mitigation Options – Practices

Wholesale risk is a 1-2 percent damage of plants through shipping. Wholesalers reimburse full 

cost of plant to buyer (retailer). It is credited back. Industry does this to keep customers. 

Almost all wholesalers do this.

Prevalence of Disease with no Control Measures, e.g., Ralstonia

At the Ralstonia outbreak, this company covered all losses to the greenhouses they sold to for the 

value and destruction of the product. Very costly. This company does not believe they can do 
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the same next time. They grow product in numerous counties and import into the United States. 

They grow U.S. production too.

Many other diseases that cause plant damage happen each year. They say greenhouses are just 

like hogs when it comes to diseases. A disease can wipe out an entire building of hogs quickly. 

Same for greenhouse plants. Many diseases can wipe out a certain type of plants and can lead to 

a preemptive depopulation event.

Diseases can be bacterial or viral. The vector and treatment protocol varies by plant type. 

Example: This year geraniums had a disease (type of rust). Greenhouses isolated plants from 

others and were sprayed. Cannot sell those sprayed plants for 2-3 weeks. Some plants, such as 

mums, only have a 2-3 week selling period each year. If mums had the disease, they would have 

missed the marketing window for mums.

Availability of Commercial Insurance

Gaps in Commercial Insurance

Bought liability insurance for this coming year for diseases mainly for Ralstonia. Hard to get 

and extremely costly. Won’t buy again after next year. It may not be offered next year.

Considerations for APHIS or other Catastrophic Disease Compensation Programs

Said no APHIS programs exist for them.

Inventory Valuation

Weekly inventory accounting is available.

Record Keeping

Have data on volumes of plants to sell or produce. Records are kept on prices for all plants.

Views about Nursery/NVS and WFRP Insurance Plans

Familiar with NVS not WFRP. NVS Doesn’t work since their main industry is wholesale and 

sell seeds and cuttings. They merchandise that production to greenhouses.

Willingness and Ability to Pay Premiums

Yes, understand there would be premiums for coverage.

Other Issues and Comments

Received a small amount of CFAP, first time ever. But it was limited in scope.

Want an insurance product, but do not want an insurance product that interferes with purchases 

from wholesalers/growers and greenhouse retailers.

Other risk to view that they have. One example, a hail storm breaks glass. Plants underneath 

cannot be sold due to glass exposure. Plants must be destroyed. Their glass breakage is covered 

by building insurance policy. But nothing insures the damaged plants.

Greenhouses are not monoculture. Risk is spread out among many plants. 
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Greenhouse may only have a 1⁄4 acre of one type of plants or acres with millions of plants of one 

type. (Mums is prime example.) One massive grower in United States, then many smaller ones. 

A positive point for insurance is greenhouse industry is spaced apart from each other and disease 

and pest risk is spread out.

Ralstonia the previous year cost them millions of dollars.

Specific comment on COVID this year: The greenhouses that sold to big box retailers had 

record sales since those places remained open. Small to medium independent greenhouses were 

not allowed to open and may not recover financially.
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Company 3

Greenhouse/Controlled Environment Agriculture (CEA)

FCIC Multi-Peril Crop Insurance

Interview Session Outline

Stakeholder:

Stakeholder is a senior manager at a multi-state nursery and CEA operation with an emphasis on 

horticultural production and germplasm.

Interview Conducted: October 21, 2020

Key Points:

No disaster payments have been made available for the greenhouse industry. This year got a 

narrowly defined CFAP payment for limited greenhouse production. Company requests 

greenhouses be made eligible for disaster payments.

There are many positives to supporting payments or subsidizing a crop insurance program for 

greenhouses. Following is a list benefits greenhouses offer: Captures carbon, employs large 

number of people, have set prices levels and a pre-determined selling schedule that is consistent 

year to year. The exception is this year’s COVID impact. This year highlights some of the 

greenhouses risk management that they need addressed.

Inventory tracking for an insurance greenhouse revenue product: This company does an

inventory each week based on expected sales for the year. Sales will be value at the following 

calculation: pots sold x internal contract price to customers.

The key for developing an insurance program is the industry have prices, production and sales 

recordkeeping for all their greenhouse production.

Their risks are:

1. Not selling planned production in the planned marketing window due to COVID.

2. No reimbursement for disease that USDA allowed through with a clean Phytosanitary

certification and no payment for destroying same production. Destruction costs vary 

depending on amount and if USDA states the plants are to be burned or buried at landfill. 

Greenhouse incur all costs for the plants destruction.

1. Naturally Occurring Risks Affecting Industry:

Plant diseases.

2. Production Risks and Mitigation Options – Practices

Risks are revenue loss if timing of sales is impacted and plants are not sold in the plants 

selling season (holidays for some). Example is certain flowers and plants with high sales 

only for Mother’s Day. They do not sell after that holiday. COVID impacted them this year 

(possibly will in future years). Their retailers were shut down and no government programs

to counter the unexpected losses. Cannot keep plants because costs as inventory, and sales 

never go back to what was missed.
Research of Nursery Greenhouse Policy: Final Research Report

Use or disclosure of information or data E8 Risk Management Agency

contained on this sheet is subject to the Order No: 140D0420F0036 P00003

restrictions on the title page of this report.

3. Prevalence of Disease with no Control Measures, e.g., Ralstonia

This year example of Ralstonia outbreak at one of their locations. Ralstonia damage in 

geraniums. USDA gave Phytosanitary Certificate to importing of geraniums from other 

country. Ralstonia shows up later. No fault of anyone, except maybe country selling it, but 

they can’t be positive where it came from. APHIS came out to inspect. Taped the area of 

damage. Then required them pile and burn the diseased plants which also took additional 

time and money. This company believes APHIS should cover the loss and the destruction 

costs. Greenhouse companies believe reimbursement should be the price it was contracted to 

be sold at, plus destruction costs for destroyed plants.

4. Availability of Commercial Insurance

There is building insurance available for greenhouses. Some companies have outside nongreenhouse plants that meet Nursery and NVS insurance (and buy it) on allowable nursery 

crops.

5. Gaps in Commercial Insurance

• No insurance for missing marketing window.

• No insurance for greenhouse production.

• No insurance for disease outbreaks that are beyond their control.

6. Considerations for APHIS or other Catastrophic Disease Compensation Programs

• See #3 above.

7. Inventory Valuation

Yes, they keep inventory records.

8. Record Keeping

Yes, have detailed inventory and prices for all greenhouse production. Contract prices are 

internal but may be used under confidential requirements.

9. Views about Nursery/NVS and WFRP Insurance Plans. Are you familiar with those 

programs? Both cover value.

Yes. Familiar with NVS. See #4 above.

10. Willingness and Ability to Pay Premiums

Yes. Understand there is a cost to them for coverage.

11. Other Issues Raised

None
Research of Nursery Greenhouse Policy: Final Research Report

Use or disclosure of information or data E9 Risk Management Agency

contained on this sheet is subject to the Order No: 140D0420F0036 P00003

restrictions on the title page of this report.

Company 4

Greenhouse/Controlled Environment Agriculture (CEA)

FCIC Multi-Peril Crop Insurance

Interview Session Outline

Stakeholder:

The stakeholder is the owner and operator of a specialized horticultural propagation operation 

based in Michigan.

Interview Conducted: October 26, 2020

Key Points:

Biggest risk for their company is diseases. Some diseases such as bacterial and fungi are 

treatable. Virus disease outbreaks are not treatable and plants must be destroyed.

Disease can happen even though plants are tested and monitored. For example, Ralstonia is 

tested by wholesalers, distributors and buyers, but it can still show up. Some diseases such as 

Ralstonia can infect many other types of plants including potatoes. That is why the DHS 

becomes involved Ralstonia outbreaks due to the potential impact to the food supply.

A new risk became known this year. The COVID shutdowns impacted importing of product 

from Costa Rica, Canada and Mexico. Border shutdowns impacted volume available and prices. 

COVID is also a risk for greenhouses who sell at the retail level. Their retail outlets were shut 

down this year due to COVID rules. Weather is a not a direct risk. It can be secondary such as 

the breaking the glass roof and their plants are damaged by the falling glass. Labor can be an 

issue since greenhouse industry is labor intensive at certain peaks during the year. Greenhouses 

have busy times of the year, where additional labor is needed and other times little labor is 

needed.

Stakeholder Input

1. Naturally Occurring Production Risks Affecting Industry

Diseases. See key points above.

2. Production Risks and Mitigation Options – Practices

Testing is done to determine if diseases are present. They test the following method. There 

are three levels.

1st level is (Ralstonia is this) test every shipment with multiple samples from shipment.

2nd level takes a sample from each shipment.

3rd level is tested once a month. 

3. Prevalence of Disease with no Control Measures, e.g., Ralstonia

Ralstonia disease is always a concern since there is only one option to fight it and that is 

destroy the plant. It is an aggressive disease that spreads quickly.
Research of Nursery Greenhouse Policy: Final Research Report

Use or disclosure of information or data E10 Risk Management Agency

contained on this sheet is subject to the Order No: 140D0420F0036 P00003

restrictions on the title page of this report.

4. Availability of Commercial Insurance

Have insurance for buildings, roofs (or covering material) and other greenhouse equipment. 

Do not have insurance for the plants they grow and sell.

5. Gaps in Commercial Insurance

Current insurance will pay for a new roof if hail destroys it, but the damage to the plants by 

the roof, hail or other plant damage is not covered by insurance. They view this as a possible 

risk that insurance could cover.

6. Considerations for APHIS or Other Catastrophic Disease Compensation Programs

No APHIS or catastrophic disease insurance is available to them.

7. Inventory Valuation

Inventory is valued weekly. The inventory and value could be summarized to months and 

quarters.

8. Record Keeping 

Yes. They keep records of price and volume. They buy cuttings, seeds and tissue culture to 

sell. Some they keep and grow to the young plant stage and sell to greenhouses that grow for 

retail.

9. Views about Nursery/NVS and WFRP Insurance Plans

Not familiar with either program.

10. Willingness and Ability to Pay Premiums

Yes, they understand there would be premiums charged for coverage. They have building 

insurance, which requires a premium.