The federal crop insurance program provides producers with risk management tools to address crop yield and/or revenue losses on their farms. Farmers can purchase subsidized policies that pay an indemnity when their production or revenue falls below a guaranteed level. The crop insurance program has expanded in recent decades, and policies are available now for a wide range of commodities, including crops covered by federal farm programs (e.g., wheat and corn) as well as specialty crops such as fruits and vegetables. While additional policies have been introduced in the last 10 years, producers and some Members of Congress would like to enhance crop insurance for specialty crop producers. Several legislative proposals have been introduced in the 112 th Congress, including provisions in the Senate-passed farm bill ( S. 3240 ) and the House Agriculture Committee-reported farm bill ( H.R. 6083 ). This report describes the federal crop insurance program for specialty and organic crops. In 2009, specialty crop policies covered more than 7 million acres, which was roughly one-half to three-quarters of specialty crop area, depending on how total area is calculated. In total, crop insurance is available for over 80 specialty crops. The federal crop insurance program is permanently authorized by the Federal Crop Insurance Act, as amended (7 U.S.C. 1501 et seq.). It is periodically modified, most recently in the 2008 farm bill ( P.L. 110-246 ). Congress chose to revise the legislation in the 2008 farm bill to achieve budget savings and to supplement crop insurance with a permanent disaster payment program. The U.S. Department of Agriculture's (USDA's) Risk Management Agency (RMA) operates the Federal Crop Insurance Corporation (FCIC), which is the funding mechanism for the program. Management is vested in a board of directors, subject to the general supervision of the Secretary of Agriculture. Insurance policies are sold and completely serviced through approved private insurance companies. Independent insurance agents are paid sales commissions by the companies. The insurance companies' losses are reinsured by USDA, and their administrative and operating costs are reimbursed by the federal government. In purchasing a policy, a producer growing an insurable crop selects a level of coverage and pays a portion of the premium, which increases as the level of coverage rises. The remainder of the premium is covered by the federal government (about 60% of total premium, on average, is paid by the government). In the case of catastrophic coverage, the government pays the full premium. (For more information, see the section below on " Crop Insurance Premiums and Subsidies .") In the absence of subsidies, farmer participation in the crop insurance program would be substantially lower. A major benefit for producers is the timely payment for crop losses (about 30 days after the farmer signs the claim form). The availability of crop insurance for a particular crop in a particular region is an administrative decision made by USDA. The decision is made on a crop-by-crop and county-by-county basis, based on farmer demand for coverage and the level of risk associated with the crop in the region, among other factors. In areas where a policy is not available, farmers may request that RMA expand the program to their county. The process usually starts with a pilot program in order for RMA to gain experience and test the program components before it becomes more widely available. Alternatively, a policy can be reviewed and later discontinued if it fails to perform at an acceptable level (e.g., low participation or high losses). RMA also regularly responds to requests from commodity organizations or industry representatives for enhancements to existing coverage, such as adding revenue coverage. Congress first authorized federal crop insurance as an experiment to address the effects of the Great Depression and crop losses seen in the Dust Bowl. In 1938, the FCIC was created to carry out the program, which focused on major crops like wheat in major producing regions. During the same era, farm programs were established to support crop prices and boost farm income for producers of so-called program crops, including wheat, corn, and cotton. The availability of federal crop insurance remained limited until passage of the Federal Crop Insurance Act of 1980 ( P.L. 96-365 ), which expanded crop insurance to many more crops and regions of the country. Congress again enhanced the crop insurance program, including greater subsidy levels, in 1994 and in 2000 in order to encourage greater participation. The changes also expanded the role of the private sector in developing new products that would help farmers manage their risks. Today, many banks, when making operating loans, require that farmers purchase crop insurance. By 1999, insurance policies covered 52 specialty crops with planned testing on another 9, according to a government report. These 61 crops reportedly accounted for a majority of value for specialty crops, but coverage on about 300 additional crops remained unavailable. The report concluded that progress on expansion was slow because USDA follows a deliberate and involved process (taking up to five years) to assess risk and set premiums to ensure that programs are actuarially sound, meaning that total premiums including subsidies cover indemnities. (USDA is required by law to achieve actuarial soundness.) Expansion continued over the subsequent decade. By 2011, insurance was available for more than 80 specialty crops in counties considered to be major growing areas. Crops include avocados, blueberries, grapes, citrus, onions, pumpkins, and tomatoes, among others. Another measure of program growth is the total liability, which is the estimated value of the insured portion of the crop ( Figure 1 ). Insured liability of the specialty crops rose from less than $8 billion in 2000 to nearly $13 billion in 2009, reflecting increased production and participation. Liability declined some in recent years, primarily because of reduced nursery insurance following the severe recession that adversely affected the housing market and demand for nursery products. When crop insurance is not available, USDA's noninsured crop disaster assistance program (NAP) provides catastrophic coverage (i.e., indemnifying for yield losses greater than 50%) if purchased by the producer. NAP applicants pay an administrative fee (currently $250 per crop); no premiums are required. NAP is administered by the Farm Service Agency, separately from crop insurance. Producer interest in policy availability often starts at the local level and is channeled through RMA's regional offices. In general, for a viable policy, a crop must have established cultivars, defined farming practices, developed markets, and known perils. Significant producer interest (demand for the policy) also is critical for success. The Federal Crop Insurance Act provides two methods for developing new crop insurance programs: (1) internal products developed under contract, and (2) external products submitted through procedures in Section 508(h) of the Federal Crop Insurance Act. Once developed, products undergo a rigorous approval process, which can take up to a year to complete. An independent external panel of experts reviews potential policy and actuarial weakness and suggests improvements. The revised product is submitted to the FCIC board of directors for approval. Once approved, the product is typically implemented as a pilot program in a limited area to test for effectiveness while limiting financial exposure. Pilot programs typically operate for four years but may be extended for additional testing if needed. Eventually the board either converts the pilot to a regular program or terminates it. Sometimes product development is suspended. For example, in recent years, RMA began investigating a product called "Named Peril Weather Insurance," which would allow producers to insure against specific weather events. However, the agency suspended its work until it can be shown that private industry, which offers weather-based products, is not meeting the needs of specialty crop producers. Under law, RMA is not allowed to conduct pilot programs if insurance against the risk is generally available from private companies without public involvement. Several types of federal crop insurance policies are available for specialty crops. For most yield-based policies, a producer can receive an indemnity if there is a yield loss relative to the farmer's "normal" (historical) yield. Insurable causes of loss include drought, excess precipitation, hail, frost, freeze, fire (if due to natural causes), and insects and disease. Revenue-based policies protect against crop revenue loss resulting from declines in yield, price, or both. Whole-farm insurance protects against losses in whole farm revenue rather than just for an individual crop. An endorsement is available in some areas for protecting against loss due to quarantine established to control a specific pest that requires destruction of insured crops. Actual production history (APH) and dollar plans are the two major types of yield-based policies for specialty crops. When purchasing an APH policy, a producer is assigned (1) a "normal" crop yield based on the producer's actual production history, and (2) a price for the commodity based on estimated market conditions. The producer can then select a percentage of his normal yield to be insured and a percentage of the price he wishes to receive when crop losses exceed the selected loss threshold. The most basic level of insurance is called catastrophic (CAT) coverage. The premium is completely subsidized by the federal government. The farmer pays an administrative fee ($300 per crop per county), and in return can receive a payment on losses in excess of 50% of normal yield, equal to 55% of the estimated market price of the crop (called 50/55 coverage). Coverage levels that are higher than CAT are called "buy-up" or "additional" coverage. For an additional premium paid by the producer, and partially subsidized by the government, a producer can "buy up" the 50/55 catastrophic coverage to any equivalent level of coverage between 50/100 and 75/100 (i.e., up to 75% of "normal" crop yield and receive 100% of the estimated market price). In limited areas, production can be insured up to the 85/100 level of coverage. APH policies are popular for a wide variety of specialty crops, including apples, stone fruits, and some citrus fruits.