Protecting Beer: How Updated Crop Insurance Safeguards the Barley Supply

Stand in a barley field during harvest, late summer, and the landscape will hypnotize you. Glaring rays wash the grain in warm light as a combine kicks debris into the air, making your eyes water as it passes by in orderly rows. On the horizon, black clouds advance quickly, casting shadows on the glowing fields. To the observer, the scenic storm is a passing moment in the life of beer’s agricultural foundation—malting barley. To the grower, the storm is a foreboding sign that fields of brewing gold may become fields of sunken investment.

Like all agricultural operators, barley growers must have insurance in place to manage their property. Until recently, many barley growers could only insure high-quality malting barley as livestock feed barley—which fetches half the price. Government programs and legislation are just catching up to needs of the brewing industry, bringing growers into the 21st century. Insurance policies are brokered by agents but regulated by the United States Department of Agriculture’s Risk Management Agency (RMA).

The RMA acknowledges the increased demand for malting barley coverage. According to a representative for the RMA, “If insured under the Small Grains Crop Provisions, malt barley is provided protection against all naturally occurring perils,” securing aid for growers if unseasonal weather becomes the norm. The representative adds, “Malt barley is also provided protection against a loss of revenue caused by price changes or low yields, or a combination of both, depending on the crop insurance plan the producer elects.” Regardless of natural disaster or poor harvest, the grower has access to financial relief.

In the past only large growers had secure access to policies. Now, the size of the growing operation does not matter. Scott Heisel, the vice president and technical director of the American Malting Barley Association (AMBA), insists on protecting crops on every scale. “I don’t see crop insurance as a big or little farm thing,” Heisel says. “Both need it to stay in business. You can have all the government programs you want, but the one that is most likely to save an individual farm is crop insurance.”

Barley is subject to different environmental stresses throughout its growing cycle. Young plants are susceptible to fungal diseases, and mature plants can germinate in the field before harvest in an unseasonably rainy and humid summer. Whatever the cause, a variety of factors can reduce quality of a barley crop or destroy it entirely.

Even when growers have a contract in place, maltsters are allowed to refuse barley that doesn’t meet their quality standards. If refused, the grower might try to sell substandard malting barley in the open market or as feed barley. When there is too much fungal disease early on and plants succumb to fusarium head blight, which produces mycotoxin deoxynivalenol (DON), or “vomitoxin,” the crop cannot even be sold for feed, and the grower takes a massive financial hit. Without insurance, this spells financial disaster. The grower may incur debt or give up on barley altogether in favor of a lower-risk, more competitive commodity crop like wheat. 

Losing growers to wheat is a problem that can be quelled by mitigating risk. Here is where the Malting Barley Endorsement comes in, providing insurance (set by the county and state), to major barley-growing regions. Once they have secured a feed barley policy, growers can add an endorsement that insures them for malting barley. Scott Heisel outlines the changes made for the 2016 growing year: “There are improvements made in calculating farm yields. The projected price is based on a contracted price, and the harvest price is relative to spring wheat instead of corn.” Changing the comparison crop from corn to wheat makes barley more competitive. Heisel explains improvements for those just getting into the barley industry: “It is easier for a new grower to get insurance because they have done away with requirements that the grower show delivery of malting barley one in every four years. The bottom line is that this insurance is much more like the insurance wheat growers get and will make barley more competitive with wheat on this basis.”

 

For smaller growers throughout the U.S., or those who have a variety of crops and livestock, there are also new improvements in insurance. The 2014 Farm Bill begot a policy called Whole-Farm Revenue Protection (WFRP). This plan protects farms with insured revenue up to $8.5 million, that could be biodynamic or organic and might have a variety of crops and livestock. It reflects the kind of small farming outfits that provision farm-to-table restaurants and local farmers markets. Unlike the Malting Barley Endorsement, the WFRP is available in all 50 states.

Erin Roche works with the University of Maine Extension’s Risk Management and Crop Insurance Education Program, helping growers navigate crop insurance. Roche notes the changes that the 2014 Farm Bill brought to crop insurance policies: “WFRP is unique because it protects against loss of the whole-farm revenue generated from multiple crops and livestock unlike other crop insurance policies, which are on a per-crop basis. Malting barley could therefore be covered under a WFRP policy.” The new program is more inclusive because it reduces the number of years growers must declare farming on their taxes from five to three — better for beginning farmers. She also notes the record-keeping requirements have lessened, easing the application process for farmers.

Crop insurance is as dry a topic as the harvested grain that it protects, but mitigating risk in the supply chain is one of the most important elements in keeping all-grain beer affordable, American-made and delicious. Scott Heisel is pleased to see improvements for growers. “The bottom line is that this new policy [within the Malting Barley Endorsement] makes growing barley for large and small producers more attractive,” he says. “If this means more barley growers, then processors have more to select from, getting the best quality for the brewer and beer drinker.”

Erika Bolden is a freelance writer based in Southern California. Read more at erikabolden.com. Some information contained in this article was obtained during a trip to Idaho sponsored and funded by Anheuser-Busch. The brewery had no control or oversight on any content contained within.