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1 1 (September 9, 2021)

handle is hein.crs/goveeme0001 and id is 1 raw text is: Federal Crop Insurance for Hemp Crops September 9, 2021 The 2018 farm bill (Agriculture Improvement Act of2018; P.L. 115-334) provided a frameworkto legalize hemp under federal law and facilitate the commercial cultiv ation, processing, marketing, and sale ofhemp and hemp-derived products in the United States. In addition to establishing a regulatory programfor production at the U.S. Department of Agriculture (USDA), the 2018 farm bill provided that hemp producers may be eligible to participate in the Federal Crop Insurance Program(FCIP). Hemp is a nonpsychoactivevariety orcultivar of the Cannabis sativa plant-the same species as psychoactive marijuana. Hemp is grown for a range of food ingredients, body products, fibers, textiles, and industrial uses. It is also grown for the extraction ofcannabinoids, such as cannabidiol(CBD), used in consumer products. Hemp is defined in statute as the plant and any part of the plant Cannabis sativa, including seeds, derivatives, extracts, cannabinoids, isomers, acids, salts, and salts of isomers, whether growing or not with a delta-9 tetrahydrocannabinol (THC) concentration of not more than 0.3% on a dry weight basis (7 U.S.C. § 1639o). USDA reports that licensed growers planted nearly 70,000 acres ofhemp in the United States in 2020 (Table 1), comprising a minis cule share of all U.S. planted crop acres. (USDA data are not available on the size of farm-level s ales for hemp grown in the United States.) Table 1. Hemp Licenses and Planted/Harvested Acres 2016 2017 2018 2019 2020 Licenses Issued 817 1,456 3,543 17,724 13,475 Acres Planted 9,649 25,723 77,844 201,126 69,820 Acres Harvested NA NA NA 134,059 33,844 Source: CRS from data reported by USDAand Vote Hemp. Notes: The difference between planted and harvested acres reflects unharvested crops and crop failures, includingcropsfound to exceed legal THC limits that arethus noncompliant hemp. Selected Provisions in the 2018 Farm Bill The 2018 farm bill enacted a number of provisions regarding crop ins uranceproducts and programs available to hemp producers. Theseprovis ions allow hemp to be included as an insurable crop under the FCIP and provide additionalflexibilities for developing newhemp coverage (e.g., §§11101, 11119, parts of11113). Otherprovisions specifically address the treatment ofhemp production within the program. For example, Section 11106 exempts hemp (along with tobacco, potatoes, and sweet potatoes) from general requirements that the insurance period not extend beyond the period during which the insured commodity is in the field. This allows hemp to be insured by the FCIP during the time when it is not growing in the field (such as when dried, cured, or stored). Section 11113 permits the Federal Crop Insurance Corporation (FCIC) to waive the viability and marketability requirements for developing a hemp policy orprogram. Typically, the FCIC must evaluatethe feasibility of an insuranceproduct prior to approving it for use in the FCIP, including an assessment of the demand fromagricultural producers for the insurance product at the expected cost. 2018 Farm Bill (P.L. I 15-334) Selected Provisions Crop Insurance Definitions The Federal Crop Insurance Act (FCIA) defines certain terms related to the statute (7 U.S.C. §§1 502(b), 1518). P.L. 1 15-334 added hemp to the definition of agricultural commodity (§ II 119). P.L. 1 15-334 also defined hemp to mean the term given in §297A of the Agricultural Marketing Act of 1946 (§I1101). Insurance Period The FCIA prohibits coverage of post-harvest losses except fortobacco, potatoes, and sweet potatoes (7 U.S.C. §508(a)(2)). P.L. 1 15-334 added hempto the crops forwhich post-harvest losses may be covered (§1 1106). Submission of Policies and Materials to the FCIC Board The Federal Crop Insurance Corporation (FCIC) Board is responsible for reviewing and evaluating private submissions for new crop insurance policies or premium rates. Approved submissions are eligible for cost reimbursement, premium subsidies, administrative and operating subsidies, and FCIC reinsurance. Submitters are required to showthat proposed submissions are viable and marketable (7 U.S.C. §1508(h)). P.L 1 15-334 authorized the FCIC to waive viability and marketability requirements in the case of a policy or pilot program relating to the production of hemp, if submitted to the FCIC Board (§I 113). Reimbursement for Research and Development Costs The FCIC is authorized to contract with private submitters to research and develop new crop insurance policies. The FCIC may approve up to 75% of the projected total research and development costs to be paid in advance to an applicant-provides for reimbursement of reasonable research and development costs (7 U.S.C. §1522(b)). P.L. 11 5-334 authorized the FCIC Board to waive the viability and marketability requirements for reimbursement of research and development costs related to a hemp insurance policy (§11121). Risk Management Options for Hemp The FCIP provides subsidized insurancepolicies to farmeis. Farmers can purchase policies that pay indemnities when their yields or revenues fallbelow guaranteed levels. The FCIC, a government corporation within USDA, pays part of the premium-about 63% on average-and policyholders (farmers) pay the balance. USDA's Risk Management Agency (RMA) administers the program. For hemp, USDA offers ins urance policies through the FCIP, among other riskmanagement options. To be eligible, hemp must be grown by licensed producers in accordance with federal, state, and triballaws and regulations. Hemp found to have a delta-9 THC level above https ://crs reps

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