Shellfish Coverage Arrives in Federal Crop Insurance

The launch of the USDA’s Shellfish Pilot Crop Insurance Program marks a significant milestone for the federal crop insurance system. For the first time, aquaculture producers — specifically oyster farmers — have access to a targeted, yield-based insurance policy designed to mitigate the risks they face from extreme weather and environmental conditions.

This development opens a new door for crop insurance agents. It allows for the expansion of services into a growing and historically underserved agricultural sector — marine shellfish farming — and provides agents with the opportunity to support producers with tailored risk management tools.

Program Overview: What the Shellfish Policy Covers

The Shellfish Crop Insurance Program is currently available to producers of containerized oysters raised for the half-shell market. It provides yield-based coverage for mature oysters (≥4mm) against the following named perils:

• Named storms (e.g. hurricanes, nor’easters)

• Excessive heat during a low tide event

• Freeze during a low tide event

• Low salinity caused by excessive rainfall

Producers can elect coverage levels ranging from 50% to 75% of their historical yield and select a price election up to 100% of the RMA-established price. Additionally, producers may use verifiable sales records to increase their price election — up to 125% of the base price — through the Producer Price Option. Coverage is currently limited to oysters grown in containers (such as bags, cages, or racks) in open water. Land-based hatchery production and immature seed oysters are not covered. Growers must have at least four years of production records to establish an Actual Production History (APH).

The Shellfish policy is offered in select counties across 15 coastal states, including:

• Atlantic Coast: ME, NH, MA, RI, CT, NY, NJ, DE, MD, VA, NC, SC

• Gulf Coast: FL, AL, MS, LA

• Pacific Coast: CA

The sales closing date is November 30 for coverage in the upcoming calendar year.

Understanding the Shellfish Market Opportunity

Marine shellfish farming — particularly oysters — is a high-value and growing segment of U.S. agriculture. In 2022, U.S. shellfish farms produced over 39 million pounds of oysters, clams, and mussels with a total value of approximately $318 million.

Major production regions include:

• Chesapeake Bay (VA, MD): Boutique oyster brands for the half-shell market

• Gulf Coast (LA, AL, FL): Large-volume farms with exposure to storm events

• Northeast (ME, MA, NY): High-quality oysters produced in colder waters

• California: Concentrated production in Humboldt Bay and other estuaries

Despite this market size, shellfish producers have traditionally lacked access to federal crop insurance programs. Prior to this pilot, most were limited to the Noninsured Crop Disaster Assistance Program (NAP) or ad-hoc disaster aid — neither of which offers yield-based protection with the same precision or reliability.

Environmental Risks and Coverage Relevance

Oyster production is particularly sensitive to environmental changes. Key risk factors include:

• Salinity: Oysters require brackish water with salinity levels above ~8 parts per thousand. Heavy rainfall and freshwater runoff can reduce salinity to levels that cause mortality.

• Temperature extremes: Exposure to high temperatures during summer low tides or freezing temperatures during winter low tides can result in rapid mortality.

• Storm exposure: Tropical storms and hurricanes can destroy gear, bury oysters in sediment, and disrupt salinity and oxygen levels.

The Shellfish policy was designed to align closely with these real-world risks. It insures producers only when a covered weather event (e.g., named storm, qualifying heat or freeze event) occurs and causes a measurable shortfall in harvested production.

Comparison to Other Federal Insurance Products

From a structural standpoint, the Shellfish policy is most similar to traditional APH-based crop insurance:

Product	Structure	Trigger	Customization	Claim Basis
Shellfish Pilot	Yield-based	Event trigger + yield loss	Price and interval options	Individual production history
PRF	Index-based (NOAA rainfall)	Rainfall below historical avg	Interval and productivity factor	Index deviation (no farm data)
LRP	Price-based (futures market)	Market price < insured price	Coverage price, length	Market index (no farm data)

This makes the Shellfish policy more administratively intensive, but also far more personalized. It protects producers based on their actual operation and actual losses, which is crucial in a high-value, high-variability sector like aquaculture. Here's how a payout is determined:

1. County-Level Trigger Must Be Met: First, the RMA must determine that a qualifying weather event occurred in the insured’s county during the insurance period. For example, if a hurricane makes landfall in the county, or if NOAA weather data confirms that temperatures exceeded or fell below defined thresholds during a low tide, this will “trigger” the peril for that location.

2. Producer’s Yield Falls Below Guarantee: Second, the producer’s actual harvest for the insured oysters must fall below the policy’s approved yield guarantee — which is calculated using the producer’s historical production records and elected coverage level (50%–75%).

3. Cause of Loss Must Be Attributable to the Triggered Peril: The loss must be reasonably attributable to the insured cause. For example, if excessive heat at low tide occurred and the farmer experiences widespread oyster mortality as a result, that loss would be eligible for indemnity — subject to verification by a loss adjuster.

4. Indemnity Is Calculated on the Shortfall: The payout is based on the difference between the producer’s approved yield and their actual harvested production, multiplied by the insured price per oyster. If the Producer Price Option is used, this price may reflect the grower’s actual average market price (subject to RMA approval and documentation), rather than the default price election.

   Indemnity = (Approved Yield × Coverage %) – Actual Yield × Insured Price

What's Next for Agents

This policy opens a promising growth area for crop insurance agents, especially those operating in coastal regions. With more than 1,500 oyster farms in the U.S., and limited current penetration by crop insurance providers, the market remains largely untapped.

For agents, this represents:

• A new client base of producers previously ineligible for federal crop insurance

• Higher per-acre values than many traditional crops

• A chance to lead in an emerging USDA coverage area

At Till, we're striving to help our agents succeed in this space. We offer:

• Identification and pre-qualification of potential customers

• Guidance on eligibility, yield records, and price elections

• Support with quoting and coverage modeling

• Expertise in processing specialty and pilot program policies

• Ongoing training on aquaculture-specific risk factors and claims handling

Conclusion

The USDA Shellfish Pilot Crop Insurance Program is a significant step forward in expanding the federal crop insurance framework to include aquaculture. It reflects both the growing economic importance of shellfish farming and the federal government’s commitment to support producers across all sectors.

For agents, this is an opportunity to offer meaningful protection to underserved producers, diversify your client base, and develop expertise in a fast-growing segment of agriculture.

If you are interested in writing Shellfish policies or learning more about aquaculture risk management, we are here to help. Contact us to learn how we can support you and your clients at info@tillinsurance.com.

Posted June 29, 2025