Would not help with local apple moth issue, but may be useful for future losses
[caption id="attachment_12119" align="alignright" width="298" caption="Map shows light brown apple moth quarantine areas demarcated by red line"][/caption]
CALIFORNIA – Some California farmers will for the first time receive crop insurance coverage for losses created by a quarantine, according to a new pilot program announced by federal officials this month.
"Depending on how the insurance program works during the pilot, I am sure there will be other states and crops that might be insured," said USDA spokeswoman Shirley Pugh.
Beginning this fall, California citrus and avocado producers will receive coverage for certain claims resulting from a mandated pest or disease control area for the 2011 crop year. Ms. Pugh said the Federal Crop Insurance Corp.'s board has discussed the possibility of the coverage for several years, but has before struggled with finding an allowance in its charter.
The group hired a consultant agency to project the implications of running such a program and ultimately decided it could be economically feasible. By statute, the program only covers losses related to natural causes.
The test will continue for about four years, and depending on success measured by participation and actuarial results, it will likely be expanded to other crops as an endorsement to policies other than basic, catastrophic coverage.
In its current form, the product does not compensate for losses due to the market, but it can cover lost revenues from an inability to move product out of a region.
"The coverage is meant to pay for situations where there is a mandated destruction of crops or if fruit rots either on the tree or in the truck bed because it can't be moved," Ms. Pugh said.
"What it does not pay for is a fall off in market that might occur because people are afraid to purchase products from within a quarantined area."
Currently, several parts of the North Bay are under USDA restrictions due to light brown apple moth infestation, including several areas of Sonoma and Marin. Napa was quarantined, but limits in that area were recently lifted.
The apple moth can become infested in wine grapes, apples and other crops.
Sonoma County Winegrape Commission President Nick Frey said members haven't reported any complaints of significant losses from the event, but he does see the potential advantage of insurance.
"If you do find insects there is an extra cost incurred in mitigating, but nothing really significant. I could see if you don't get the necessary inspections in time for harvest, there could be significant losses there," he said.
Federal Risk Management Agency North Bay Director Jim Otto said crops with shorter harvesting time frames could be more vulnerable to the kind of losses being tested in the new program.
"I can imagine how fresh fruits that have a small window for harvest would be more susceptible to the kind of perils specified in the quarantine program. Avocadoes and citrus can sit on the tree for a while, but others that must be picked right away might incur more significant losses," he said.