New strains of crop diseases plague insurers and growersPosted On: Mar. 2, 2014 12:00 AM CST
Domestic and foreign fruit growers are dealing with several newer strains of crop diseases that threaten harvests, but the development of new insurance products can help to mitigate some risks for U.S. food producers.
However, there's still no insurance coverage available for citrus greening, the most costly and harmful disease affecting Florida's vast orange groves.
“There's always a new strain of something that's coming out there that will impact a crop,” said Rick Shanks, Kansas City, Mo.-based national managing director of Aon Risk Solutions' food system, agri-business and beverage practice.
A variety of insects and diseases have affected farmers in recent years. For instance, the glassy-winged sharpshooter bug has been responsible for spreading disease among California grapevines, while banana crops in Mexico, Central America and Hawaii have been hurt by Panama disease, a fungus that affects the plants' roots.
Then there's citrus greening, a bacterial infection spread by the Asian citrus psyllid, said Andrew Meadows, communications director for Florida Citrus Mutual, a Lakeland, Fla.-based trade group that represents more than 8,000 orange growers. It has caused $4 billion in economic damage to orange growers in the last seven years, Mr. Meadows said. Additionally, Florida orange production, measured in 90-pound boxes, is expected to reach only 115 million boxes this year, down drastically from 240 million boxes 10 years ago.
While some of the reduced production can be attributed to major hurricanes in 2004 and 2005, other orange diseases and farmers leaving the industry, Mr. Meadows said citrus greening is the “overriding issue” affecting growers.
“As you drive around the Citrus Belt, you see... groves that just a couple years ago were healthy are now in deep decline,” he said. “I can't really overstate how much citrus greening has affected our industry,” and citrus industry groups have been discussing the issue with the U.S. Department of Agriculture's Risk Management Agency, he added.
Meanwhile, California growers have been hit particularly hard by a recent drought, which has been the “worst in history for the predominant specialty crop state,” said Mike Day, head of Anoka, Minn.-based Rural Community Insurance Services, a crop insurance managing general agency owned by Wells Fargo & Co.
“With the California drought, there's an immediate negative impact on annual crop planted acres, notable risk to perennial crop yields and longer-term damage to actual trees and vines with an extended drought,” Mr. Day said in a statement to Business Insurance.
Recent crop afflictions are part of an evolving threat of pests, diseases and severe weather conditions that growers constantly face, said Tom Zacharias, president of National Crop Insurance Services, an Overland Park, Kan.-based trade group that consists of more than two dozen crop insurers.
“Farming is a risky business, and every year growers are at the mercy of challenges outside of their control, ranging from weather disasters to extreme market fluctuations,” Mr. Zacharias said in a statement to Business Insurance.
Growers' ability to weather adverse crop conditions often depends on federal crop insurance, as well as best practices put in place by farmers and industry funding to help develop solutions to common agricultural problems.
The USDA's Risk Management Agency underwrites crop insurance policies that are sold and serviced by private insurers, and sets rates that can be charged for such coverage. The agency also subsidizes grower insurance premiums, as well as crop insurer operating and administrative costs that otherwise would be paid by farmers.
While the Risk Management Agency underwrites more than 100 types of crops in the United States, it also develops pilot programs to determine the feasibility of issuing insurance coverage for other fruits and vegetables, according to the agency's website. One is an insurance pilot involving tropical fruit insurance is being conducted in Hawaii for Cavendish and Brazilian bananas, according to information provided to Business Insurance by the agency.
“Crop insurance has grown in popularity because it's not a one-size-fits-all tool, but is rather customizable to farmers' unique businesses,” Mr. Zacharias said in a statement. “Growers work hand-in-hand with agents to design the coverage mix that works best for them. And where policies do not exist or need to be strengthened, the USDA has a process in place to help bring new products to market.”
Most insurance policies cover adverse weather conditions that reduce crop yields, Mr. Shanks said. Growers that experience problems with crop disease or pests also can be covered by USDA insurance policies, he said. “As long as they follow the right procedures” for application of pesticides or treatments that fight diseases, “then the loss of yield can be covered by federal crop insurance,” he said.
While there are no USDA policies that cover orange crop losses from orange citrus greening, Mr. Meadows said, federal assistance is on the way. The Agricultural Act of 2014, signed early last month by President Barack Obama, includes $125 million in funding during the next five years for a specialty crop research initiative that includes a subcommittee for citrus diseases — something Mr. Meadows said the orange industry is hopeful will help mitigate future losses.
Meanwhile, Florida citrus growers have committed $70 million of their own money in the last seven years to fund research that could curb the spread of citrus greening.
“It's an all out war right now,” Mr. Meadows said. “Although we're optimistic, it certainly is a huge challenge.”