How Much Will WFRP Cost?
Is farm diversification an important factor in WFRP?Yes! Farm level diversification is important in WFRP. In general, diversification is measured by the number of commodities on the farm. Farm diversification reduces revenue risk on the farm. The following are key items in WFRP that are affected by diversification on the farm (Note: The number of commodities is determined as described in the answer to the next question.):
- Diversification with at least three commodities qualifies the farm for the highest coverage levels (80 and 85 percent);
- Farms with two or more commodities will receive a premium rate discount based on the amount of diversification (a reflection of the lower risk of revenue loss because of the farms diversification);
- Whole-farm premium subsidy is applicable for farms with two or more commodities, resulting in less premium cost to the producer;
- Farms growing potatoes must show diversification of at least two commodities to qualify for WFRP insurance; and
- Farms with a commodity insurable under any of the other Federal crop insurance programs that provide revenue coverage must meet diversification requirements of at least two commodities on the farm in order to qualify for WFRP insurance.
How is diversification (commodity count) measured?The WFRP commodity count is a calculation rather than simply a count of commodities produced. It is important to understand that the commodity count used by WFRP is not just what you are growing or producing on the farm, but is a measure of farm diversification that shows the farm has reduced its risk by producing significant amounts of revenue from multiple commodities. For example: A dairy farm may have 95 percent of its revenue coming from milk and five percent from calves. For WFRP purposes, this farm would be considered to have only one commodity. However, if the farm had 80 percent of its revenue coming from milk and 20 percent from feedlot steers, the farm would be considered to have two commodities. The commodity count calculation must be used to determine the number of commodities that count under the policy.
The calculation determines the minimum proportion of revenue a commodity must contribute to the farm to be considered a countable commodity for WFRP. A farm’s revenue would be evenly distributed if an equal percentage of revenue came from each commodity produced; for example, 25 percent from milk, 25 percent from hay, 25 percent from steers and 25 percent from replacement heifers. The minimum proportion to be considered a countable commodity is 1/3 of that evenly distributed amount. Therefore, in this example, each commodity would have to make up at least 8.3 percent of the total revenue of the farm to count as a commodity under WFRP. Commodities with revenue below the minimum will be grouped together in order to recognize the diversification of the multiple commodities, thereby making the commodity count higher.
For a dairy, would milk, calf sales, replacement heifers, and hay sold all count towards diversification?Every county has a list of commodities under WFRP. Each commodity listed that is sold on the farm counts towards diversification. For commodities not listed, there are categories called ‘other’, such as ‘other animals’ or ‘other animal products’. (Note: If a commodity you sell isn’t on the list, please contact your regional RMA office and request it be added for the next year.)
What type of premium subsidy is available for WFRP?Whole-farm subsidy is available for WFRP if you qualify through diversification on your farm. The availability of whole-farm subsidy for WRFP for farms meeting the diversification requirements for two (2) commodities means that WFRP insurance provides the same higher whole-farm subsidy levels available on the Revenue Protection products. Your WFRP subsidy amount will be based on the commodity count calculation indicating the amount of farm level diversification of revenue that you have. If you have two (2) or more commodities that significantly contribute to your operation, you will receive a whole-farm subsidy. If not, you will receive the basic subsidy. The following subsidy amounts will apply for WFRP.