Insurance can help
when isle crops fail

But many farmers seem
unaware of the financial
relief available to them

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By Helen Altonn
haltonn@starbulletin.com

Tropical fruit farmers suffering losses because of drought conditions or pests may qualify for insurance relief many never knew existed.

Statewide hearings this week are designed to get information from the farmers and determine the need and feasibility of offering them crop insurance, said University of Hawaii sustainable-agriculture coordinator Dick Bowen.

The U.S. Department of Agriculture organizes and administers the crop insurance program, which is only available now to Hawaii's macadamia nut farmers and nurserymen.

One company that did seek protection because of adverse weather conditions and crop losses during the past decade was MacFarms of Hawaii, based in South Kona.

The macadamia nut grower was paid about $1 million for losses caused by drought conditions during the past year.

The insurance covers both trees and crops affected by drought, disease or other problems, said Kent Fleming, risk management education coordinator at the University of Hawaii-Manoa College of Tropical Agriculture and Human Resources.

It also covers a low yield and low prices because of trees killed by drought, he said.

"It's amazing," Fleming added. "It's (insurance) probably the single most important risk management tool available to farmers, yet so few in Hawaii have it. The rest of the country is way ahead of us on this."

Why don't more farmers have insurance?

"It's kind of up to industries to ask for these insurance policies," said Bowen.

Hilary Brown, MacFarms orchard manager, said, "For us, it was a succession of very dry years, and last year, while not necessarily worse than the previous years, the combined effect of X number of years finally caught up."

The company has 3,850 acres in mac nuts, and without insurance, Brown said: "We would have had some very difficult decisions to make.

"It's a wonderful program. I would have thought that more people, certainly the macadamia nut industry, would have taken advantage of it."

Bowen said the banana industry for two years has been pushing for crop insurance, and got the USDA's Risk Management Agency to do studies.

They were going to set up insurance for bananas, then Congress said it wanted to expand the number of crops insured and have private firms do the work instead of government, he said.

The Risk Management Agency then contracted with AgriLogic Inc. to conduct a study.

"They said, 'Let's look at all related crops while we're at it,'" Bowen said.

The hearings that start Wednesday cover coffee, guava, bananas, pineapple, papaya, mango, rambutan, atemoya and lychee.

Some of the specialty fruits possibly could be combined under the same policy, Bowen said.

He said the federal government picks up all administrative costs of the insurance. "In that sense it's a good deal. There is a guarantee that you have enough money to replant if you have a disaster and are wiped out."

He said the production value of the crops involved in 1999 was $101.5 million for pineapple, $15 million for papayas, $8.5 million for bananas and $8.1 million for coffee. Guava, rambutan, lychee and atemoya totaled about $1.7 million.

The first phase of hearings, Bowen said, is to determine whether to go ahead and develop any policies.

Crop insurance meetings Tropical fruit farmers are invited to free meetings from 2:30 to 5 p.m. on the following dates to explore opportunities for crop insurance: Oahu: Wednesday, Pearl City County Extension Office. Kauai: Thursday, Department of Agriculture, 4398-A Pua Loke St., Lihue. Hilo: Monday, Aug. 6, Komohana Agricultural Complex. Kona: Tuesday, Aug. 7, Kona Extension Office, Kainaliu. Maui: Wednesday, Aug. 8, Maui Extension Office, Kahului. For more information about meetings or crop insurance, contact Dick Bowen, 722-5720 or rbowen@hawaii.edu, or Kent Fleming, 989-3416 or fleming@hawaii.edu.

Fleming said MacFarms worked to get insurance here for the state's 500 macadamia farmers, and other tropical fruit farmers are being encouraged to get coverage. A USDA team will be here to talk to them at the meetings.

"I would think for sure that bananas and coffee would get crop insurance," Fleming said. "Guava may also get insurance programs written for them.

"Avocados are insured in California, whereas they're not insured in Hawaii, which is quite amazing," he added.

Since farmers are paid directly for losses, the insurance reduces risks, and bankers or lenders are more inclined to lend to farmers because their risk is minimized, he said.

On the mainland, he said, banks will not lend to a farmer who does not have crop insurance.

The only other way to recover from crop losses is "to go to Congress to come up with a special bailout program, but we're trying to get away from that," Fleming said. "We would rather have a farmer take responsibility for his own risk, rather than go to Congress and beg for relief."

Kauai's guava farmers, seriously hurt by Hurricane Iniki in 1992, would have received a lot of compensation, Fleming said. "They are recovering, but it was quite a big hit. They have replanted a lot of trees."

Right now, coffee farmers are suffering because nematodes, a type of worm, have moved into the orchards and are devastating crops, he said.

One Kona farm lost about 100 acres of coffee that must be replaced, he said. "It is very costly.

If they had crop insurance in place, they would be compensated for the lost trees, plus they would also receive compensation for the lost crop they couldn't harvest. So it's really good.

"The same with bananas. They want crop insurance because they are very susceptible to wind damage, and maybe a future pest problem would wipe out banana trees."

One of the reasons few Hawaii farmers have insurance, he said, is because "it's hard for farmers to get together and make this request until they realize how important it is and what a good program it is."

Because it is a government program, they think it involves a lot of paperwork, he said. "Government programs get a bad rap," Fleming said, "but this is one that's really effective. They make a big effort to make it efficient."

He said the premiums are "very, very fair," and there is no charge for overhead or administrative costs.

"The second good thing is, you don't pay your premium until after the crop is harvested. Then you can turn around and make a claim for trees that died or a crop that was too low, and they pay quickly with a minimum of paperwork.

"If they don't pay in 30 days, they have to pay interest."

He said a letter was sent to all tropical fruit farmers about the coming meetings.

It caught some macadamia nut farmers who did not know they could get insurance, he said.

Brown said: "Someone farming in an area where Mother Nature provides more reliable rainfall may feel as if they don't need it.

"But you never know when a hurricane or even a lava flow may come. For us, that was a consideration."

The first meetings are to get information from the farmers and see if there is enough interest to develop policies for their crops, Fleming said.

A second series of meetings will be held in September with more detailed information on how to buy the insurance, the costs and how losses are covered.