A Report from the:

Risk Management Agency, 

U.S. Department of Agriculture, 

regarding:

“The Department of Agriculture’s Strategic Plan and Timetable 

to Implement Organic Price Elections for all Organic Crops 

Produced in Compliance with the National Organic Program 

Regulations under the Organic Foods Production Act of 1990”

March 2014
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Contents

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

Data requirements to develop actuarially sound organic price elections......................................................1

RMA Data Quality Requirements:............................................................................................................1

Appropriate Pricing Level: .......................................................................................................................2

Actuarially Sound Insurance Programs: ...................................................................................................2

Existing organic price elections....................................................................................................................2

Available Organic Price Elections:...........................................................................................................2

Available Organic Coverage through Policy Contract Requirement:.......................................................3

Previous efforts to acquire data.....................................................................................................................4

Contracted Study:......................................................................................................................................4

National Agricultural Statistics Service (NASS) Organic Survey:...........................................................4

Development of alternative tools to provide organic coverage ....................................................................5

Contract Price Addendum:........................................................................................................................5

Actual Revenue History:...........................................................................................................................5

Adjusted Gross Revenue & AGR-Lite: ....................................................................................................6

Whole Farm Revenue Protection:.............................................................................................................6

Current data collection efforts ......................................................................................................................7

Contract for Research into Organic Crop Marketing:...............................................................................7

NASS Organic Survey for 2014: ..............................................................................................................8

Data Preference - Optimal Scenario: ........................................................................................................8

Proposal and timeframe to develop organic price elections for all RMA-insured crops..............................9

Potential for Further Development of Organic Coverage:......................................................................10

Method Implications:..............................................................................................................................10

Implementation Time Frame:..................................................................................................................11

Conclusion ..................................................................................................................................................11
1

Introduction

The Risk Management Agency (RMA) provides this report, pursuant to the following 

instructions contained in the Explanatory Statement of the Consolidated Appropriations Act of 

2014:

“There is concern about the pace of progress in implementing an organic price election 

for all organic crops as required in the Food, Conservation, and Energy Act of 20081. 

USDA is urged to make every effort to implement this requirement as quickly as 

possible. The Department is requested to provide a report to the Committees with its 

strategic plan and timetable to implement organic price elections for all organic crops 

produced in compliance with the National Organic Program regulations under the 

Organic Foods Production Act of 1990 (7 U.S.C. 6501 et seq.).”

In this report, RMA details: 1) the progress we have made to establish and implement cropspecific organic price elections for our existing crop insurance programs; 2) alternative options 

we have developed that can broadly be utilized to provide organic coverage; and 3) our efforts to 

establish organic coverage for additional RMA-insured crops in the future that are produced in 

compliance with the National Organic Program regulations under the Organic Food Production 

Act of 1990 (7 U.S.C. 6501 et seq.).

Data requirements to develop actuarially sound organic price elections

RMA Data Quality Requirements: RMA develops organic price elections for select crops 

based on data quality and availability. To meet RMA data requirements, the price data must 

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

unbiased, and available to RMA on a recurring basis. Due to the varying size and locations of 

different organic markets, data requirements may vary by crop and location; however, generally 

RMA requires a minimum of five consecutive years of data to assure accurate organic prices. To 

derive exact price elections (as opposed to factors to be applied to conventional prices), the data 

must either be production-weighted or coupled with data indicating quantity of units sold at each 

 

1

In the Food, Conservation, and Energy Act of 2008, Congress states RMA “... shall enter into 1 or more contracts 

for the development of improvements in Federal crop insurance policies covering crops produced in compliance 

with standards issued by the Department of Agriculture under the national organic program established under the 

Organic Foods Production Act of 1990 (7 U.S.C.6501 et seq.).” This contract “... shall include the development of 

a procedure, including any associated changes in policy terms or materials required for implementation of the 

procedure, to offer producers of organic crops an additional price election that reflects actual prices received by

organic producers...” Additionally, “the procedure shall be expanded as quickly as practicable as additional data on 

prices of organic crops collected by the Secretary and other sources of information becomes available, with a goal of 

applying this procedure to all organic crops not later than the fifth full crop year that begins after the date of 

enactment of Food, Conservation, and Energy Act of 2008.”
2

price level. The most credible data source is a disinterested party, with no personal financial 

stake in the outcome of the Federal crop insurance program or other conflict of interest. 

Appropriate Pricing Level: Commodity prices tend to reflect the value of inputs (materials, 

labor, interest on operating capital, etc.) employed in the production and marketing of a crop at a 

given stage in the production-marketing processes. For example, a pre-harvest price will 

generally reflect the value of inputs required to produce the crop, but not the value of inputs 

required to harvest and market the crop. RMA price elections generally are established at either 

a pre-harvest or a farm-gate level (i.e., at a production stage prior to hauling, packing, storing, 

marketing, etc.) since value added from subsequent activity is not incurred on a failed crop and is 

incurred after the insurance period has ended. Insuring crops at a retail or wholesale price would 

over-insure the crop and violate requirements to be actuarially sound, creating potential marketdistorting situations. 

Accordingly, organic price data reported at a pre-harvest/farm-gate level or accompanied with 

information (i.e., credible, reliable and annually reported post-harvest cost estimates) that allows 

the price data to be adjusted to a pre-harvest/farm-gate level is the most useful to RMA in 

establishing organic price elections. 

Actuarially Sound Insurance Programs: RMA emphasizes compliance with these data 

requirements since the price election is a key component used to establish liability and premium

rates for our insured customers, as well as to determine indemnity payments. RMA’s ability to 

offer actuarially sound crop insurance products is dependent on the establishment of price 

elections that reflect the true value of the insured crop. Quality data has been the primary 

constraint to offering organic price elections. 

 

Existing organic price elections

Available Organic Price Elections: Prior to the 2014 crop year, RMA released premium 

organic price elections for the following crops: avocados (California), corn, cotton (non-ELS), 

fresh stonefruit (freestone peaches, nectarines, and plums in California), processing tomatoes 

(California) and soybeans. For the 2014 crop year, RMA began offering organic price elections 

for almonds (California), fresh apples (Idaho, Oregon, and Washington), blueberries (all types in 

California; Early to Late Highbush type in Oregon, and Washington), Concord variety grapes

(Oregon and Washington), mint (peppermint), oats, pears (Oregon and Washington) and 

additional stonefruit (fresh apricots in California; all fresh stonefruit in Idaho, Oregon, and 

Washington). We intend to offer organic price elections for additional crops in future years, but

the limiting factor is the availability of quality data. 
3

The organic price elections are derived using disparate data sources. Currently, all organic price 

elections are created using factors developed from Agricultural Marketing Service (AMS) data, 

or directly from private data sources. 

For some crops like corn and soybeans, organic and conventional price quotes from AMS are 

used to derive an organic/conventional price factor, which is then applied to the conventional 

price election to derive an organic price election. Factors are used because AMS daily/weekly 

price quotes typically do not include sales volumes, restricting RMA’s ability to develop 

volume-weighted price estimates on an annual basis directly from AMS data. The AMS price 

quotes are also obtained at shipping point or terminal locations, sometimes far removed from the 

pre-harvest/farm-gate price level RMA needs to develop price elections. There is no clear 

method for adjusting these price quotes to a pre-harvest/farm gate level. For some crops, only a 

few years of AMS organic data is available, falling short of the preferred minimum of five years. 

AMS reporting for some crops is variable from one year to the next. RMA continually monitors 

the availability and nature of AMS data to evaluate whether or not organic price factors for 

additional crops can be developed.

 

For certain crops, RMA has been able to secure proprietary data sets from trade groups and 

industry sources. We secure these data sets internally and maintain source confidentiality, and 

will not disclose these data or data sources to interested external parties. Private data sources can 

be crucial since they might be the only source of information available, but there are some 

concerns with these data sources as well. In some cases, RMA might not be able to verify the 

sample sizes and representativeness of private data sets. In other cases, the price data may not be 

reported at a pre-harvest/farm-gate level. Also, RMA cannot guarantee the future availability of 

such data sets because a private party offers data to RMA at their discretion. Thus, not all 

private data can be used to develop organic price elections. 

Available Organic Coverage through Policy Contract Requirement: In addition to those 

crops for which we provide organic price elections, certain RMA crop policies require the 

insured crop be produced under contract. The contract must stipulate a base price, which serves 

as the crop insurance price election. This contract requirement is in place for buckwheat, 

camelina, sesame, green peas, machine-harvested cucumbers, mustard, processing sweet corn,

and pumpkins. The contract requirement provides the potential for organic price coverage since 

the terms of the contract can be customized for organic production and thus reflect an organic 

price.
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Previous efforts to acquire data

Contracted Study: In 2009, RMA funded a study to determine whether sufficient data exists to 

derive distinct price elections for organic crops. The report for this study, titled “Organic Crops: 

Report on Research of Additional Price Elections,” was published in 2010 and is available at 

http://www.rma.usda.gov/pubs/2010/price-research.pdf. This was a broad-based study that 

intended to evaluate all organic commodities produced in compliance with the National Organic 

Program. The contractor researched a wide array of pricing arrangements to determine where

organic price data was available, consistent with RMA’s data requirements. 

The study concluded that adequate data was only available to develop organic price elections for 

cotton. However, the study suggested: 1) RMA investigate the feasibility of insuring organic 

crops through contract pricing arrangements; and 2) RMA develop conventional/organic price 

factors using price data reported at a value-added level higher than a pre-harvest/farm-gate level 

(e.g., AMS data is often shipping point or terminal level price data). The price factors could then 

be applied to conventional price elections to derive organic price elections without the need to 

adjust the AMS price data to a pre-harvest/farm-gate level. 

RMA implemented the contractor’s recommendations: organic price elections are now offered 

for corn, cotton and soybeans; for certain crops (including corn and soybeans), RMA uses 

conventional/organic price factors derived from AMS shipping point data to establish organic 

price elections; and, RMA developed the Contract Price Addendum (see separate section below) 

as a means to provide coverage for organic producers with contract price arrangements. 

National Agricultural Statistics Service (NASS) Organic Survey: RMA contracted with 

NASS through a partnership agreement to collect organic acreage, production, and sales data

from certified organic growers. Under this agreement, NASS constructed a survey, compiled 

aggregated values from the responses, and published a report entitled 2011 Certified Organic 

Production Survey. All certified organic farming operations within USDA’s organic registry 

were surveyed, although participation was not mandatory. This report complimented a previous 

NASS report, 2008 Organic Production Survey, a supplement to the 2007 Census of Agriculture. 

Additionally, individual survey responses were analyzed to evaluate the responses and data more 

completely.

RMA analyzed published data from the 2008 and 2011 NASS surveys, as well as unpublished 

data from the individual responses from the 2011 NASS survey. Response rates were often

good. For many crops, more than 80 percent of certified growers responded to the survey. 

However, reliability of the data was variable. The sample size was often small due to the limited 

number of entities involved with organic production: some estimates were derived from a single

response. The survey obtained no responses for several crops. For some crops, the variance in 
5

values reported in the individual responses was very high, with the coefficient of variation 

(standard deviation/mean) often exceeding 1.00, thereby undermining our confidence in the 

computed overall average price. For some crops, reported prices were at a level beyond a preharvest/farm gate level. RMA would still need separate post-harvest cost information in order to 

adjust these price data to pre-harvest/farm gate values. Finally due to their intermittent nature 

(i.e., two surveys in a four-year span), the NASS reports fail to meet the RMA data preference

that specifies data must be available on an annual basis.

Due to the nature of data, these two NASS surveys are inadequate for the purpose of deriving 

actuarially sound organic price elections. Nonetheless, the NASS surveys are still the most 

comprehensive form of organic data collection available since all certified organic growers were

given the opportunity to participate. RMA plans to fund another NASS organic survey for 2014. 

(See section on additional NASS survey below.) 

Development of alternative tools to provide organic coverage

Contract Price Addendum: RMA developed and implemented the Contract Price Addendum 

(CPA) for the 2014 crop year. Although not exclusively developed for organic producers, the 

CPA is a tool that can provide organic coverage to producers of a wide array of crops for which 

we do not currently offer organic price elections. Under the CPA, organic producers who grow 

crops under guaranteed contracts can opt to use prices established in those contracts as their price 

elections in place of RMA’s announced values. Because of the prevalence of contract use in 

organic production, the CPA is anticipated to be an excellent tool for a large number of organic 

producers to insure their crops at the exact price they receive for their crops. 

Beginning in the 2014 crop year, RMA made the CPA available for 62 different crops (CPA fact 

sheet is available at: http://www.rma.usda.gov/pubs/rme/addendum.pdf). The CPA can be used 

by organic producers to establish individualized projected and harvest prices under RMA’s 

revenue programs. The CPA can also be used instead of announced organic price elections when 

doing so is advantageous to the producer. This allows producers who receive a contract price 

that is greater than the conventional RMA price election to obtain a guarantee that is more 

reflective of the actual value of their crop. In most cases, RMA will cap an individual’s contract 

price allowed under the CPA to an amount equal to twice the announced conventional price 

election or 1.5 times the announced organic price election. These caps are in place to help 

prevent program abuse. 

Actual Revenue History: In recent years, RMA began offering coverage under the Actual 

Revenue History (ARH) plan of insurance for a limited number of crops (cherries, navel oranges,

and strawberries). These crop programs are currently in pilot status. ARH programs allow 
6

producers to insure against revenue losses from low yield, low price, low quality, or any 

combination of these events. The coverage is customized to the individual producer, utilizing 

personal historical revenue documentation to establish coverage. This program is similar to 

RMA’s Actual Production History (APH) yield-based programs, except it incorporates the 

producer’s price experience. Organic producers can obtain coverage by providing acceptable 

records that substantiate their historical revenue, including organic prices received. The price

used under ARH is determined at a packinghouse door level (i.e., production delivered from the 

farm to a packinghouse), and is only slightly different from the pre-harvest/farm-gate price level 

commonly used in most APH programs. Since organic producers are able to customize 

coverage to reflect the historical value of their crops, those crops insured under the ARH plan 

may be provided with organic price coverage.

Adjusted Gross Revenue & AGR-Lite: RMA offers coverage under the Adjusted Gross 

Revenue (AGR) and AGR-Lite plans of insurance in certain states and counties. These programs 

are currently in pilot status. AGR/AGR-Lite programs establish individualized coverage based 

on income information reported on a producer’s historical IRS tax form (Schedule “F” or 

equivalent forms). The producer may include income amounts from all agricultural production –

including organic production – to determine the AGR/AGR-Lite guarantee. Most commodities, 

including animals and animal products, are eligible for inclusion under AGR/AGR-Lite

coverage. Organic prices received by the producer are reflected in the income reported to the 

IRS and, by extension, are also reflected in the AGR/AGR-Lite guarantee.

AGR insurance is available in: California (selected counties), Connecticut, Delaware, Florida 

(selected counties), Idaho (selected counties), Maine, Maryland (selected counties), 

Massachusetts, Michigan (selected counties), New Hampshire, New Jersey, New York (selected 

counties), Oregon (selected counties), Pennsylvania (selected counties), Rhode Island, Vermont, 

Virginia (selected counties) and Washington (selected counties).

AGR-Lite is available in: Alabama, Alaska (selected counties), Arizona, Colorado, Connecticut, 

Delaware, Florida, Georgia, Hawaii, Idaho, Illinois, Kansas, Maine, Maryland, Massachusetts, 

Minnesota, Montana, Nevada, New Hampshire, New Jersey, New Mexico, New York (selected 

counties), North Carolina, Oregon, Pennsylvania (except Philadelphia County), Rhode Island, 

South Carolina, Tennessee, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin and 

Wyoming.

Whole Farm Revenue Protection: RMA has developed a new insurance program, the Whole 

Farm Revenue Protection (WFRP) plan of insurance, which was approved by the FCIC Board of 

Directors (Board) in May 2014. WFRP will provide whole-farm insurance protection covering 

all commodities on the farm (including organic commodities). The program will improve upon 

many features of AGR and AGR-lite policies, with a goal of providing producers with an 
7

improved whole-farm risk management product. WFRP will replace coverage currently 

provided by the AGR and AGR-Lite plans of insurance.

RMA sought input from parties interested in whole-farm insurance in order to help define the 

target markets for the WFRP product. The feedback centered on the risk management needs of 

producers and focused on sustainable agriculture and specialty commodities, including organic 

commodities. This lead to the identification of two key markets, both of which are composed 

primarily of specialty crop growers: (1) highly diversified farms where shallow and/or isolated 

commodity losses might be sufficiently absorbed by the operation, but that may benefit from a 

risk management safety net that provides insurance for larger losses; and (2) farms growing two 

to five commodities and selling to wholesale markets. These farms tend to need higher coverage 

levels in order to insure their risk for commodity losses. It was noted that current AGR and 

AGR-lite products do not provide high enough coverage levels for these producers’ needs. 

Current data collection efforts

Contract for Research into Organic Crop Marketing: On November 18, 2013, RMA posted 

a solicitation for a contract titled, “Indefinite Delivery, Indefinite Quantity (IDIQ) for Pricing 

Reviews and Information and Task Order 1.” The contract involves multiple phases that will be 

accomplished via task orders issued under the IDIQ. The work required under the contract will 

involve examining organic markets and submitting reports on the research. Further, the work 

will involve: 1) identifying, contacting, and working with producers and point-of-first-sale 

purchasers to gather information; and 2) compiling and analyzing results of the research. 

Approximately $980,000 has been approved for this contract. To the extent this funding lasts,

task orders are expected to be issued for the following services/deliverables: 1) organic 

production budgets; 2) specialty crop production budgets; and 3) livestock and livestock 

products. RMA seeks to obtain information and data to develop representative cost of 

production budgets for both conventional and organic specialty crops. 

The cost of production budgets are needed to determine the value of crops at different stages of 

production/marketing. RMA hopes to utilize harvest/post-harvest cost information in order to 

adjust published price data (e.g., from AMS that is reported at a high value-added level (e.g., 

shipping point or terminal level price data). Where paired conventional and organic crop

production budgets are constructed, RMA hopes to assess relative costs between the two 

practices in order to derive organic price elections from existing conventional price elections. 

For example, if the paired budgets indicate pre-harvest costs for organic production are 50 

percent greater than for conventional production, RMA might be able to establish an organic 
8

practice price election equal to 150 percent of the already-established conventional practice price 

election. 

NASS Organic Survey for 2014: RMA will again contract with NASS to collect organic 

acreage, production and sales data from certified organic growers. For the 2014 survey, NASS 

will survey all producers who identified themselves as producing some amount of organic 

production in the 2012 Census of Agriculture, making the survey the most complete form of data 

collection RMA is able to obtain. Due to the nature of these surveys (farm-gate level season 

average production-weighted prices, and comprehensive survey coverage), they provide great 

insight into the organic markets, as well as a valuable tool to evaluate other sources of organic 

price data. 

The cost of the survey will be $1.4 million. The survey will be conducted for the 2014 crop year 

and the results released in fall 2015. RMA has worked with NASS to improve the survey 

methods. For example, NASS will now collect data for specific crop types and varieties not 

listed in previous surveys. Since price elections are established a year in advance of the year of 

insurance coverage, RMA will utilize the data from the 2014 survey beginning in the fall of 

2016. The NASS data from this survey, combined with data from the earlier surveys, will

provide three non-sequential years of organic price data during a seven year span. For a limited 

number of crops, the three data points might provide minimal information that is sufficient to 

derive organic price elections, but as noted previously in this report, price elections from no less 

than five consecutive years of data is preferred to maintain actuarially sound insurance products. 

Data Preference - Optimal Scenario: Going forward, the most beneficial scenario is one in 

which an organic NASS survey is conducted on an annual basis. RMA will continue work with 

NASS to improve future surveys as needed, provided funding is made available for additional 

surveys. However, even with annual NASS organic surveys, there is still no guarantee that data 

gathered by these surveys will meet RMA data requirements.

In addition to NASS surveys, increased AMS organic price reporting could also be beneficial. 

AMS price quotes typically do not include sales volumes and are obtained at shipping point or 

terminal locations, rather than at the pre-harvest/farm-gate price level utilized by RMA. 

Nonetheless, RMA currently utilizes organic and conventional price quotes from AMS to derive 

approximate organic/conventional price factors, which are applied to conventional price 

elections to derive organic price elections. Expanded AMS organic reporting for additional 

crops on a sustained basis could assist RMA in developing organic price elections. Ideally, AMS 

price quotes would reflect pre-harvest/farm gate values, and be accompanied by sales volumes.
9

Proposal and timeframe to develop organic price elections for all RMAinsured crops

In the Agricultural Act of 2014, Congress states, “As soon as possible, but not later than the 2015 

reinsurance year, the Corporation shall offer producers of organic crops price elections for all 

organic crops produced in compliance with standards issued by the Department of Agriculture 

under the National Organic Program (NOP) established under the Organic Foods Production Act 

of 1990 (7 U.S.C. 6501 et seq.) that reflect the actual retail or wholesale prices, as appropriate, 

received by producers for organic crops, as determined by the Secretary using all relevant 

sources of information.”

This language is similar to that from the Food, Conservation, and Energy Act of 2008. RMA has 

made great strides to comply with this language and will continue to pursue compliance with this

language subject to the following constraints: 

 Section 508(a) of the Federal Crop Insurance Act states, “If sufficient actuarial data are 

available (as determined by the Corporation), the Corporation may insure, or provide 

reinsurance for insurers of, producers of agricultural commodities grown in the United 

States under 1 or more plans of insurance determined by the Corporation to be adapted to 

the agricultural commodity concerned,” (underline added for emphasis). Therefore, if 

sufficient data are available to determine organic price elections, RMA will provide such 

price elections for insurance. Otherwise, RMA is restricted by Section 508(a) from 

providing organic price elections when insufficient data are available to meet the actuarial 

soundness requirement.

 Price elections will be derived at a pre-harvest/farm gate level, as discussed previously 

(see section on Appropriate Pricing Level), and not at a retail or wholesale price level. 

The latter do not provide an actuarially sound basis since the price election would not 

reflect just the value of the actual crop, but also post-harvest/marketing activity that is not 

incurred on a failed crop and occurs after the end of the insurance period. Such excessive 

price election amounts could potentially induce moral hazard behavior amongst insured 

producers.

 RMA will strive to offer organic price elections for those crops for which we offer 

conventional coverage. We do not currently provide conventional coverage for all crops

contained under the NOP because of a lack of data or interest. In some instances, growers 

of certain crops are not interested in the development of a crop insurance program. This 

can be attributed to various reasons: the crop is grown in a region with few natural perils; 

the total crop value is too minor for the average producer to make insurance attractive; and 
10

stakeholders fear a crop insurance program might draw additional acreage to the crop and 

disrupt markets. 

Potential for Further Development of Organic Coverage: As previously stated, we have 

been unable to locate quality organic price data for many RMA-insured crops. In the absence of 

such data, the development of actuarially sound crop-specific organic price elections is not 

possible. As already discussed, the best potential source for future comprehensive organic price 

data is from ongoing NASS organic surveys, coupled with enhanced AMS organic price 

reporting. Price election development is already underway for the 2015 crop year, making 

compliance with the Congressional mandate to release organic price elections for all crops by the

2015 reinsurance year unattainable. 

One method would target specific crops, which might allow us to derive organic price elections 

for an unknown number of additional crops. It would entail using the NASS 2011 Certified 

Organic Production Survey and the accompanying unpublished individual survey responses 

(refer to NASS Organic Survey section). RMA would conduct assessments of data from the 

individual survey responses on a crop-by-crop basis. Data threshold requirements would be set 

regarding survey response rate, number of observations, measures of price variance (exclusive of 

outliers), and farm concentration. Based on RMA’s assessment of the data, we would advance 

certain crops for development of organic price elections. The standards for data assessment have 

not yet been determined. 

For this method, RMA would derive an organic price estimate for a crop-state-type-practice 

combination, as appropriate, which would then be used in lieu of the published NASS price 

estimate. In other words, with only one occurrence of observations, the NASS survey results 

would serve as a starting point for certain crops that meet threshold requirements. From this 

starting point, the price could be reduced by some amount, to the point where RMA feels 

comfortable there is little risk of setting the organic price too high. The intent would be to 

establish a process that minimizes the likelihood organic price elections will exceed expected 

pre-harvest/farm gate market prices. Development of organic price elections using this method 

would be contingent on funding for further NASS organic surveys to avoid creating organic price 

elections that are not able to be updated. 

Method Implications:

RMA would purposely set organic price elections conservatively (when referenced against the 

data available) to avoid inducing moral hazard and market distorting behavior. Consequently, 

the organic price elections may fall short of insured producers’ coverage expectations. To do 

anything beyond this scope may introduce moral hazard behavior into the Federal crop insurance 

program. For example, a price election that substantially exceeds the actual market-determined 

pre-harvest/farm gate value creates a serious potential for fraud and market-distortion by 
11

interfering with producers’ decision-making processes. There becomes an incentive to produce

more of that commodity since a key factor in planting decisions is a producer’s assessment of the 

expected financial security that attaches to production of the crop, relative to alternative crops. 

The increased production can in turn affect supply-and-demand interaction, and ultimately, 

market prices. 

Such behavior undermines our ability to offer actuarially sound insurance products since 

indemnities can accrue due to perverse financial incentives rather than to insured-peril loss 

events. This is not to say differences between realized season average pre-harvest/farm gate 

values and RMA price elections do not occur, because RMA is limited in its ability to predict 

future market behavior. However, RMA is able to minimize the frequency and severity of 

disparities between price elections and season average pre-harvest/farm gate values when we are 

equipped with quality price data that provide accurate depictions of what prices have actually 

been and allow us to assess likely market outcomes for the upcoming crop year. 

Implementation Time Frame: The expected method shows the most potential beginning with 

certain crops for the 2016 crop year. The research, analysis, and methodology used to develop

the organic price elections would be detailed in a decision memorandum, which would be 

provided to the Administrator of RMA. 

Conclusion

Through persistent efforts, RMA has made significant progress in the development and 

implementation of organic price elections for our crop insurance programs. These price elections

are developed whenever adequate organic price data is available that allow us to meet program 

mandates to be actuarially sound. We have also developed viable alternatives that increase the 

amount of organic coverage provided. These options include price coverage under the Contract 

Price Addendum, the Actual Revenue History plan of insurance, and the anticipated Whole Farm 

Revenue Protection plan of insurance. To gather organic price data and information, RMA has 

also funded research studies and organic price and production surveys. 

RMA will continue to pursue opportunities for the acquisition of additional organic price data

and information, as we are able given funding constraints. We will also continue to work toward

developing crop-specific organic price elections consistent with our data quality requirements.