PP 91 | Hemp Crop Insurance


Hemp farming, like all agricultural businesses, comes with a degree of risk. After all, it is Mother Nature you’re dealing with. Good thing crop insurance is an available option for all farmers. In this episode, our host, Tony Frischknecht is joined by risk advisor, Bret Gum. Bret discusses risk management and crop insurance, and shares details on the federal program that insures hemp crops. Bret also shares what he’s learned about mitigating risk with your crop.

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Managing Risk On Your Hemp Farming Business: Talking Crop Insurance With Bret Gum

I’ve got a great guest. I met him at the Hemp Expo here in Denver, Colorado. Everybody was a first time back out in 2020 because of what happened with COVID. He had some interesting things. We got into a great conversation and discussing some new ideas. The reason why I brought him on is it could help some of you guys. In cannabis and hemp, we could use all the help we can get. What it comes down to is there are new things that are opening up, that I’m seeing, financing, different ways of lending. That’s one of our biggest challenges not only as a business but in cannabis. There’s no easy way to attract people. Everybody’s growing and got a dispensary. What sets you apart? What can make you stand out to your potential investors? Before we get into that, I want to introduce Bret Gum from AgRisk Advisors. Bret, thank you so much for being on, a Risk Advisor, right?

Thanks, Tony, for having me. Yes, I am a risk advisor. I grew up on a family farm in a little town in Kansas called Johnson, Kansas, grew up raising crops and cattle. I have that background. I grew up looking at the numbers side of things, understanding how you got to grow something that it’s got to work financially, too. I grew up on the farm. I went to Kansas State University, graduated with an Agriculture Economics degree. My background, I got into crop insurance after college. That was the start of being a risk advisor. I got the ins and outs of it, understanding where the risk comes from and how we can better manage that risk for our producers. I joined AgRisk Advisors a couple of years ago. Now, we are able to offer hemp coverage. We’re able to take our knowledge in the agriculture side and apply it to hemp, to the emerging market. We’re now able to offer some of those services to hemp producers.

What’s the product that you guys created is not unique to crops themselves but coming into the hemp and cannabis world, there’s some very uniqueness to it. I remember and I know this is for hemp specifically. There were some companies out there that were offering crop insurance. For those out there that don’t understand that, what is crop insurance do for you?

It’s giving you a bottom line to give you a floor to set yourself. What’s my floor? How low can I go to make it to the next year? That’s been the goal. It’s making it to the next year and keep that business going.

The hemp farmers out there, you guys know, if you’ve made it to the next year, it’s a win already right there.

What we can do is take your average production for at least four years. If you don’t have four years, then you get the county to yield, which has to do with the growing conditions in the county and what you should be able to expect for yield-wise. We take that average of your average yield and then we can ensure up to 75% of that yield. That gives us a floor there.

With the unique things that are coming out as the industry is evolving, especially with hemp seeds and finding true production numbers, all this stuff, it’s got to make it easy for you and your job, including the farmer. As people are finding these things, you’re like, “This is an insurance guy.” It’s yes and no. If you are in the midst and you’ve been in the beginning stages 14, 15 going on, how many people you know when you talk to them, their product is available?

PP 91 | Hemp Crop Insurance

Hemp Crop Insurance: Crop insurance gives you a bottom line to give you a floor to set yourself. What’s my floor? How low can I go to make it to the next year? That’s been the goal.


Not a lot and that’s because this has only been the second year that we’ve been able to offer this. Hemp hasn’t been legal for that long. Even being able to insure it and giving yourself some coverage has only been in the last two years. They’re not familiar with the idea yet. It’s starting to get more common and guys are starting to realize, “I want to be able to cover some of these risks.” I said, “Make it to the next year.” This is the second year. We have a few different products. The main one is a Federal Hemp Policy. It’s backed by the USDA. It’s a government-subsidized program, which makes the cost of it a lot more affordable, more attractive and reasonable for guys to use. You’re covering a lot of dollars out there.

Going back ten years ago, we were talking $40,000 and $50,000 to do these small indoor crops. It’s what they were trying to sell it. We were barely trying to survive. When it comes down to it as an indoor grower, it’s like you said, you just got to get to the next crop. Hopefully, in between those crops, you have some solid wins. You’re not always going to have a great year. Sometimes turns into a 50/50 shot, “I think we got it. I think we don’t.” Growing outdoors is a different ballgame. Speaking of that, do you guys do crop insurance for greenhouses or is it strictly outdoor ag?

It’s outdoor grows. There’s stuff on the indoor side but that’s not what we focus on. It’s more of the outside and protecting against Mother Nature because we know it can be a force sometimes.

For the farmers out there reading, what are the top things they need to know when they’re thinking about a product like this or managing risk?

On the first side, there are a few different policies on what we can do. The main one is the Federal Hemp Program. There are some hurdles that guys need to understand that they got to go through to be able to be eligible for this policy.

What are some of those hurdles?

For 2021, first of all, we had to have signed up by March 15. For this year, if you don’t have coverage, this isn’t going to be the policy for you this year. Going forward, even for 2022, you have to have at least one year of production history, which is a little counterintuitive because if you’re getting into it, you wouldn’t have some production when you’re first getting into this. We got to be able to get that first year covered. There’re some other options here but on Federal, one year of history. You cannot grow hemp on back-to-back years on the same dirt. They’re saying something with the microbial is basically affecting the next hemp crop. We can ensure it. If you have one field that you want to go back-to-back on, it won’t work for that. You also have to have a processor contract. Like a lot of these guys know, we’ve hit a glut in the market. Some of those contracts are hard to get now but we have to have them to be able to insure them.

If you're pitching your grow to investors, you want some people to back you. They want to know that their investment is secure. Click To Tweet

Those are huge things because you can’t just sign over and all of a sudden be ready for this. I want to go back to the first one and talk to you about that. Qualification for a year, they’ve had to have a year crop. What data or information do they have to back that up? Give an idea of what do they need to collect so they make sure they fall into those guidelines.

It’s mainly they don’t want everybody getting into hemp and say, “I’m going to go for it.” If it doesn’t work, it doesn’t work. They’re trying to exclude that because it is a pilot program. Usual crop insurance, that’s not a thing. If you want to go out and grow field corn, we can insure the first year you do it. Part of it is you are covering a high amount of dollars. It’s still a pilot crop to us. There’s not a lot of history in the US for it.

If somebody was to go out and grow 5 acres, if they came to you, we’ve grown on this land, we’ve got another plot over here next to this land because that falls in your guidelines, am I able to grow 10 acres this year and still get crop insurance for that even though it’s twice as big as the one I did last year?

Yes, you would be able to. You just have that history.

Some of these guys out here, the ones I know that take this stuff seriously, and not just throw seeds out into the soil, they’re strategically planning how they’re going to expand their business at the same time with all the other variables that happened with outdoor growing. That’s solid information to know. Let’s go to the second one. You said they don’t want you to grow on the same crop, like you said the microbial, also give the soil a year to regenerate itself. If you look at what a lot of farmers have done, they let those stocks and everything sit in that soil. With hemp, it’s crazy how it can regenerate the soil with the leftovers. Let’s get into the real piece that I wanted to talk about with. How can you set yourself aside and entice investors? What are some things that your risk management and this insurance can do for you as an owner and an entrepreneur?

These policies are a great way to entice investors. If you’re pitching your grow to investors, you want some people to back you. They want to know that their investment is secure. This is a great way to be able to insure their investment and be able to give them peace of mind, knowing that things go south, I’m not going to lose everything. That’s been enticing to these investors. We insured some guys last year that. They had to have X amount of coverage because that’s what their investors required of them. If they didn’t have this coverage, I don’t know if they would have had those investors, quite frankly.

PP 91 | Hemp Crop Insurance

Hemp Crop Insurance: Whatever they say the crop is worth based on the number of bushels or amount of pounds they produced, whatever your guarantee is, it pays up to that guarantee.


Most people that I’ve talked to the last couple of years, nobody’s brought up this. Had they been able to it, would have for sure changed who they could have gone after. It could have gone after what I see is the more conservative type of investor. It’s, “Let’s give it a shot.” You got two great things here. One, you’ve had to have done a crop for one season. That leaves you at, if you’re going out and talking to an investor, you got this crop insurance let’s say, this year you’ve started, next year, you can plan for that, you can do a small grow now and get an understanding of your plot of land and how it can go. Come around next year, you’re talking to that investor and say, “I’m getting crop insurance next year. I’m lining this all out.” It does take some time to move money.

I’ve dealt with a lot of money. They say, “The money’s there.” Six months in a year goes by like that. As a startup, this is fantastic. The last couple years, especially in 2018 and 2019, they got beat down on pricing. This is another thing too. If I’m able to have my crop insurance, I’m able to make sure that I’m producing a decent product. One or the other happened, maybe the best thing is I don’t have to use my insurance. That’s a great thing. If guys are going out there, I know this is all on circumstance. What should they expect with the subsidized plan that you have? It’s all relative expense. Is there a percentage, formula or something that you can take and say, “This is about what it’s going to cost per acre? This is going to cost you.” How does that work?

First of all, what you’re growing is for CBD, for fiber, for seed are going to have different values. Typically, what we’re seeing is give or take about 10% of whatever coverage you’re going to get, that’s what you’re going to pay in premiums. $0.10 on the dollar is going to give you that coverage that you’re looking for. If you think about it in a dollar sense, you’re giving up your $0.10 to cover a full dollar.

The government is putting a lot of money into this then, if that’s the case. What are some stories of gentlemen that you’ve had coverage where they’ve said, “I’ve lost this crop?” What stories have you seen and that happened to you and around your company that’s going on?

In 2020, we had some losses. Some guys around the Denver area, had some losses. Part of it was snow. We had a severe drought in 2020 in this area. It didn’t produce and they lost a good portion of their crop. In that case, like a car claims adjuster, come out there about you eating the crop, see how much it’s worth. Whatever they say the crop is worth based on the number of bushels or amount of pounds they produce, whatever your guarantee is, it pays up to that guarantee.

I remember visiting a farm in October 2020. There was a freak snowstorm that happened. We usually get a snowstorm in Denver around Halloween. It was the end of the first week or the second week in October. I remember vividly visiting a guy and his investors who wanted to keep going because they wanted to get produce more CBD. They were concerned that they weren’t going to get the best out of it. That night, I was out in the dirt talking to him about this and they’re like, “We don’t know.” I was, “I don’t know either.” We could see the clouds coming over. We’re watching as these clouds come over. They’re asking me my opinion and what I think about it. I was like, “At this point, I don’t know what you can do. If it’s common, it’s common.”

A lot of these first-year guys aren’t prepared for what it takes to not only judge the weather but also harvest the crop in a fair, reasonable amount of time. They don’t understand that. I get it on a small scale. When you magnify it to 1, 2, 5, 10 acres, it can take you weeks to harvest depending on what kind of ways you’re doing it. They froze their crop out that night. They ended up saving a lot of it, which was a surprise. They pulled their crops, got them dried and ready to go. I don’t know that they gain that much by getting that extra week or two because of where they were at. Had they had something like this, is the policyholder penalized for not making the right decision on harvesting a crop earlier when they could have or is there anything like that in the policy that would negate coverage?

The language in most crop insurance and hemp as well as good farming practices. They want you to follow good farming practices. The thing is, for Mother Nature, when you’re an outside grow, there’s not a whole lot you can do. You can just hope that it works out. You got to have that coverage beforehand, especially in that cold situation, there’s not a whole lot you can do. If you can harvest it, they’re going to want you to harvest it. What the insurance companies want to see is the language in the policy is good farming practices. They want you to follow guidelines that in good conditions will lead to a good crop. If you got weeds or whatever, they want you to control them the best they can. It’s just good farming practices. In your case, what you’re saying, when it gets cold like that, honestly, I think that might even be September or something. It was like the second earliest snow.

For Mother Nature, when you're an outside grower, there's not a whole lot you can do. You can just hope that it works out. Click To Tweet

I knew it was early. You could be right. It could have been September.

We had some guys that were calling, “What do we do?” I hope it works out. I think some of the hemp came back. Like I said a little bit but just follow good farming practices. You’re going to get to a point where you say, “Is this worth harvesting,” because he got harvest expenses and all that with it.

The amount of cash that it takes to harvest this, it’s almost as much as it takes to grow it several months. When you guys out there are doing this for the first time, you’re going to see because if you don’t have the equipment to harvest it, you’re going to be harvesting it by hand. You’re paying hourly people.

When it comes to that point, what we can do is we can get a claim opened. We’ll send an appraiser, an adjuster out there. He will appraise the hemp. He’ll give you an appraisal and he’ll say, “This is how much it is.” That’s their job. They’re out there saying how many pounds this hemp can produce. They’ve had to get trained in that since this is a newer policy. They’re going to tell you, “This is about how much we think it’s going to make.” You can talk to the adjuster and they’ll try to be fair with you. If they give you a low enough appraisal, then you can say, “This isn’t going to be worth harvesting.” Usually, they don’t want you to take the money, go ahead and still harvest it and trying to get more. Typically, they’ll pay you whatever it’s worth to get up to that guarantee. They’ll then say, “You can’t do anything with this hemp. Usually, you got to destroy it or leave it to die.”

They can let it die into the soil if they want to do that. That makes sense. You’d have people then that manipulating the system and trying to have their cake and eat it too. That’s more powerful than I thought. Even though the financial, getting your investors in there, it comes down to it. If you’re able to make that determination like, “We just had a bad season, why throw good money after bad?” Some of these things that are coming to the industry now that is maturing in hemp and cannabis are blowing my mind. Had I had these tools. Who knows how big I could have built these businesses that back then? These are something that I want you guys out there to understand, the value in something, whether you talk to a company like Bret’s or not, realize that these are real tools that will allow you to grow and make mistakes.

I think that’s the biggest thing, Bret that is hard to understand. We were the pioneers in cannabis and even the hemp guys. We didn’t have any backing. The thing that saved us was our margins. We had large margins to run our businesses at the time because nobody was doing it. That allowed us to make mistakes. In this day and age, the margins are much thinner. I was talking to a guy about what hemp processed was a few years ago. They’re buying kilos of distillate for $7,000. Now it’s between $400 and $500. If you guys are hemp out there, I’m laughing. I want you to know, I feel your pain. I felt it in the cannabis world, too. We had an excess of overgrowing that was flooding the market. Our prices went down too. I laugh because I care and I’ve been there. That’s the only way I can do, laugh about it because, at the time, it’s super painful.

You guys that are starting in 2021, have this chance to build up to something like getting in and tied in with some of these government subsidies, I encourage you to jump on top of this. At least know what you need in more detail. I appreciate Bret for sharing some of these details. I know there’s a lot more to this. This is the matter of making a year three or not. That’s what it comes down to. Find out that you’re able to quit on a shitty harvest. If the harvest is going to be crap, what’s the point? If you’re able to survive next year and go, “Now, we can lick our wounds, get into this again and try again,” there’s nothing else like that out there right now, not for saving your company. The government’s barely allowing banking for a lot of hemp places. There’s some banking coming on. We still have a lot of challenges, so why not take that out of the equation? I want to thank you, Bret for sharing these little details. I hope you guys got something from this. As I said, I met with Bret at the Hemp Expo show and it was great. Finding out these little details, that’ll make or break your business. I encourage you guys to reach out to Bret at AgRisk Advisors.

PP 91 | Hemp Crop Insurance


There’s one thing, Tony, before we leave here. I want the guys to understand that this Federal program is not available for this year. If you guys are starting, you guys want to get some coverage on now, you can. You can do that through a hail policy, or there’s a new policy. Honestly, we just did some training on it. It’s very similar to the Federal program. Basically, the same thing, except you’re lifting all those requirements. You don’t have to have a year of history. You can grow it in the same year, same dirt. You don’t have to have a pricing contract. Again, that’s not a Federal program. We haven’t seen the prices yet. I’m guessing it’s going to be about double the price you still want to get in the Federal program. This is an amazing tool to get in that first year when you need some coverage.

The inhale destroys your crop in one fell swoop, it’s done. There’s no coming back after that. I appreciate you sharing that too, because I didn’t ask you that. That’s great information for people out there. AgRisk Advisors, I want you guys to reach out to Bret. All his information is going to be on this show visit PlantProblem.com. It’ll be there. You can click on that and find Bret and his info. Bret, last word, people are out there and they want to get into the hemp growing business, what’s the number one thing you would tell them?

The main thing, figure out where you can sell it. It doesn’t matter if you can grow it, you got to be able to sell it. CBD, it’s tough. Honestly, if it were me and if I were getting into hemp, right now I’d look at the fiber. There’s a lot more viability in it. You can get into CBD. You got to look for those contracts. You can grow it but you got to be able to sell it to make money.

That’s solid advice. That’s awesome. Thanks for sharing that. Thanks for joining me on this episode of Plant Problems. I will see you next week. Bret, thanks a lot for being on the show.

Thanks, Tony.

Important Links:

About Bret Gum

PP 91 | Hemp Crop InsuranceRisk Management Advisor for Hemp Producers as well as farmers and ranchers.








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