Crop Insurance Performance
Dr. Laurence M. Crane
2019 Atlanta Farm Bill ConferenceImplications for Socially Disadvantaged Farmers and Ranchers
National Crop Insurance ServicesEmbassy Suites by Hilton Atlanta, Georgia
June 11, 2019
Organization of Presentation
• NCIS Backgrounder
• Industry Overview
• Year in Review
• 2018 Recap
– State Regulated (Crop-Hail)
– Federally Regulated (MPCI)
• Other Considerations
– Specialty Crops
– Some Farm Bill Stuff
– Dairy Revenue Protection
– Whole Farm Revenue
• Application Process
© 2019 NCIS 2
2019 Atlanta Farm Bill Conference -- Implications for Socially Disadvantaged Farmers and Ranchers
BACKGROUNDER
© 2019 NCIS 3
2019 Atlanta Farm Bill Conference -- Implications for Socially Disadvantaged Farmers and Ranchers
NCIS Functions
• Crop Insurance Program Development and Analysis – Policy Analysis, Loss Adjustment Procedures, Legal Analysis, Agronomic Research
• Economic and Actuarial Analysis
• Education and Training– Loss Adjuster Schools – 17 (1,180 attendees)
– National Conferences – 5 (1,154 attendees)
– Annual Regional/State Meetings – 19 (504 attendees)
• Crop-Hail Advisory Organization and Statistical Agent– Licensed by Individual State Insurance Departments
• Public Relations and Industry Outreach
© 2019 NCIS 4
2019 Atlanta Farm Bill Conference -- Implications for Socially Disadvantaged Farmers and Ranchers
Number of Insurance Providers by Year
© 2019 NCIS 5
2019 Atlanta Farm Bill Conference -- Implications for Socially Disadvantaged Farmers and Ranchers
FCIC’s role is to establish provisions, rules, regulations, and rates.
RMA oversees the crop insurance program, administers premium and subsidies, and provides support and outreach. •Agent• Insured
•AIP•RMA/FCIC
Working Together
To Provide
Effective Crop
Coverage
For the Ag
Producer
Working Together
2019 Atlanta Farm Bill Conference -- Implications for Socially Disadvantaged Farmers and Ranchers
•Agent• Insured
•AIP•RMA/FCIC
Working Together
To Provide
Effective Crop
Coverage
For the Ag
Producer
Approved Insurance Providers
(AIPs) contract with licensed
agents to market crop insurance
and the agent receives
commission.
Working Together
2019 Atlanta Farm Bill Conference -- Implications for Socially Disadvantaged Farmers and Ranchers
•Agent• Insured
•AIP•RMA/FCIC
Working Together
To Provide
Effective Crop
Coverage
For the Ag
Producer
The agent
Provides product and premium
information to the insured.
Collects required information
including:
Application
Production
Acreage
Builds relationships with customers
Must stay current with crop insurance
programs.
Working Together
2019 Atlanta Farm Bill Conference -- Implications for Socially Disadvantaged Farmers and Ranchers
•Agent• Insured
•AIP•RMA/FCIC
Working Together
To Provide
Effective Crop
Coverage
For the Ag
Producer
The Insured
Has ownership in a crop and enters into contract to insure it
Must report required information
Pays applicable premiums and fees
Must follow appropriate farming practices
Must notify the AIP in the event of a loss
Will receive an indemnity payment when an insurable loss occurs if guarantee not met
Working Together
2019 Atlanta Farm Bill Conference -- Implications for Socially Disadvantaged Farmers and Ranchers
2018 YEAR IN REVIEW
© 2019 NCIS 10
2019 Atlanta Farm Bill Conference -- Implications for Socially Disadvantaged Farmers and Ranchers
Source: USDA, NASS, Quick Stats https://quickstats.nass.usda.gov
Figure 9. U.S. Farm Prices Paid and Received for Crops & Animals (2000 to 2018)
0
20
40
60
80
100
120
140
160
180
20
11
= 1
00
Livestock Paid Livestock Prices Received
0
20
40
60
80
100
120
Crops Prices Paid Crops Prices Received
© 2019 NCIS 11
2019 Atlanta Farm Bill Conference -- Implications for Socially Disadvantaged Farmers and Ranchers
Figure 12. Weekly Corn Futures Prices December Contract, 2012-2018
3.00
4.00
5.00
6.00
7.00
8.00
9.00
1 5 9 13 17 21 25 29 33 37 41 45 49
2012
2013
2014
2015
2016
2017
2018
Week
$/Bu.
Data as of April 16, 2019
Source: Barchart.com© 2019 NCIS 12
2019 Atlanta Farm Bill Conference -- Implications for Socially Disadvantaged Farmers and Ranchers
2018 STATE REGULATED BUSINESS “CROP-HAIL”
© 2019 NCIS 13
2019 Atlanta Farm Bill Conference -- Implications for Socially Disadvantaged Farmers and Ranchers
Crop-Hail Premium TotalsState Regulated Business
Prepared 04/25/2019NCIS Insured Crop Summary as of 04/25/2019
Cropyear Premium Indemnity Loss Ratio
2017 952,960,169 876,653,802 0.92
2018 979,933,352 920,953,568 0.94
2017-2018 Crop-Hail Industrywide Totals (U.S. only)
RANK STATE PREMIUM LOSS LOSS RATIO
1 Nebraska 205,869,248 269,649,341 1.31
2 Iowa 107,233,782 97,472,145 0.91
3 North Dakota 106,110,240 77,609,412 0.73
4 Minnesota 101,267,419 74,879,269 0.74
5 Illinois 83,298,336 59,720,723 0.72
Top 5 States by Written Premium Volume for 2018
© 2019 NCIS 14
2019 Atlanta Farm Bill Conference -- Implications for Socially Disadvantaged Farmers and Ranchers
Figure 18. 2018 Crop-Hail Premium and
Loss RatiosAll Crop, Perils,
Plans Combined
Data as of April 24, 2019
Source: National Crop Insurance Services Insured Crop Summary and NCIS6b
© 2019 NCIS 15
2019 Atlanta Farm Bill Conference -- Implications for Socially Disadvantaged Farmers and Ranchers
2018 FEDERALLY REGULATED CROP INSURANCE “MPCI”
© 2019 NCIS 16
2019 Atlanta Farm Bill Conference -- Implications for Socially Disadvantaged Farmers and Ranchers
U.S. Acres in Crop Insurance, 1981-2017
0
50
100
150
200
250
300
350
Insured acres
Total US cropacres
1994 Act
310 mil
Mil. acres
Premium support,then 2000 Act
318 mil1981-2017: 327.65 mil
Sources: U.S. crop
acres are from the
NASS databases.
Insured acres are
from the RMA’s
Summary of
Business. © 2019 NCIS 17
2019 Atlanta Farm Bill Conference -- Implications for Socially Disadvantaged Farmers and Ranchers
Distribution by CropLiability By Major Crop, 2018
Total: $110 bil.
NCIS Summary of Business as of 04/25/2019 Prepared 04/25/2019© 2019 NCIS 18
Forthcoming in Crop Insurance Today Magazine Paggi and South.
Table 2. Major Revenue Policy Base Prices 1/
2012 2013 2014 2015 2016 2017 2018 2019
% Change
2017-
18
2018-
19
Wheat, Winter ($/bu) (KS) 8.62 8.78 7.02 6.30 5.20 4.59 4.87 5.74 6.1 17.9
Wheat, Spring ($/bu) (ND) 7.84 8.44 6.51 5.85 5.13 5.65 6.31 5.77 11.7 -8.6
Corn ($/bu) (IL) 5.68 5.65 4.62 4.15 3.86 3.96 3.96 4.00 0.0 1.0
Soybeans ($/bu) (IL) 12.55 12.87 11.36 9.73 8.85 10.19 10.16 9.54 -0.3 -6.1
Upland Cotton ($/lb) (MS) 0.94 0.81 0.78 0.63 0.62 0.73 0.75 0.74 2.7 -1.3
Rice ($/cwt) 14.70 15.70 13.90 2/ 11.90 10.40 11.90 10.80 14.4 -9.2
1/ Revenue Protection for 2012-19 as of April 16, 2019
2/ Due to insufficient futures price data, revenue insurance was not available in 2015
Source: RMA Actuarial Information Browser
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2019 Atlanta Farm Bill Conference -- Implications for Socially Disadvantaged Farmers and Ranchers
Table 3. Volatility Factors
Historical
Price
Volatility
1/
Volatility Factor 2/
1968-2018 2012 2013 2014 2015 2016 2017 2018 2019% Change
2017-18 2018-19
Wheat, Winter
($/bu)0.19 0.26 0.24 0.19 0.17 0.22 0.18 0.16 0.19 -11.10% 18.80%
Wheat, Spring
($/bu)0.22 0.19 0.15 0.14 0.15 0.15 0.13 0.13 0.14 0.00% 7.70%
Corn ($/bu) 0.2 0.22 0.2 0.19 0.21 0.17 0.19 0.15 0.15 -21.10% 0.00%
Soybeans ($/bu) 0.18 0.18 0.17 0.13 0.16 0.12 0.16 0.14 0.12 -12.50% -14.30%
Upland Cotton
($/lb)0.23 0.19 0.17 0.15 0.16 0.14 0.15 0.14 0.14 -6.70% 0.00%
Rice ($/cwt) 0.23 0.14 0.11 0.1 3/ 0.15 0.17 0.12 0.11 -29.40% -8.30%
1/ Historical volatility values are obtained by fitting log-normal distribution to the time series of the ratio of the harvest price to the base price from 1968 to
2018. For each year in that time period, the harvest and base prices are calculated by using relevant futures prices in that year. Source: Barchart.com
2/ Revenue Protection as of April 16, 2019
3/ Due to insufficient futures price data, revenue insurance is not available in 2015.
Source: Various RMA Manager’s Bulletins© 2019 NCIS 20
2019 Atlanta Farm Bill Conference -- Implications for Socially Disadvantaged Farmers and Ranchers
Nationwide Recent Crop Losses
13% Hail
37% Drought & Heat
33% Excess Moisture
Summary: Historically 75% of losses are due to extremes in moisture and temperature
2019 Atlanta Farm Bill Conference -- Implications for Socially Disadvantaged Farmers and Ranchers
Nationwide SummaryFederal Regulated Business
Note: liability and premium include all business written, both on acre and non-acre
bases.
Prepared 04/25/2019NCIS Summary of Business as of 04/03/2019
CROPYEAR ACRES LIABILITY PREMIUM
2018 309,050,881 110,077,088,960 9,890,623,353
2017 293,404,152 106,083,824,527 10,071,920,375
2017-18 MPCI Industrywide Totals
Top 10 Premium States for 2018STATE ACRES PREMIUM LOSS RATIO
Texas 35,819,283 1,152,979,494 1.31
North Dakota 23,548,536 878,673,599 0.37
Illinois 19,359,940 646,369,301 0.15
Iowa 21,796,976 625,878,448 0.50
Kansas 19,229,164 605,520,961 0.55
South Dakota 18,244,192 598,564,741 0.45
Minnesota 17,524,830 577,161,668 0.62
Nebraska 17,823,745 518,991,516 0.32
California 6,245,624 413,735,308 0.66
Missouri 9,676,950 383,757,527 0.64
© 2019 NCIS 22
2019 Atlanta Farm Bill Conference -- Implications for Socially Disadvantaged Farmers and Ranchers
Figure 15. 2018 MPCI Premium and Loss RatiosAll Plans Combined
Data as of April 16, 2019
Source: RMA Summary of Business
© 2019 NCIS 23
2019 Atlanta Farm Bill Conference -- Implications for Socially Disadvantaged Farmers and Ranchers
CORN , 11%
COTTON , 9%
OTHER, 6%
RICE , 37%
SOYBEANS , 37%
Multiple Peril Crop InsuranceArkansas Liability Percentage
2018
2019 Atlanta Farm Bill Conference -- Implications for Socially Disadvantaged Farmers and Ranchers
2019 Atlanta Farm Bill Conference -- Implications for Socially Disadvantaged Farmers and Ranchers
ALL OTHER , 6%
CORN , 17%
COTTON , 9%
OTHER, 1%
RICE , 18%
SOYBEANS , 33%
SUGARCANE , 16%
Multiple Peril Crop InsuranceLouisiana Liability Percentage
2018
2019 Atlanta Farm Bill Conference -- Implications for Socially Disadvantaged Farmers and Ranchers
2019 Atlanta Farm Bill Conference -- Implications for Socially Disadvantaged Farmers and Ranchers
ALL OTHER , 6%
CORN , 16%
COTTON , 22%
OTHER, 6%RICE , 5%
SOYBEANS , 45%
Multiple Peril Crop InsuranceMississippi Liability Percentage
2018
2019 Atlanta Farm Bill Conference -- Implications for Socially Disadvantaged Farmers and Ranchers
2019 Atlanta Farm Bill Conference -- Implications for Socially Disadvantaged Farmers and Ranchers
BURTOBACCO, 7%
CORN , 37%
OTHER, 11%
SOYBEANS , 39%
WHEAT , 6%
Multiple Peril Crop InsuranceKentucky Liability Percentage
2018
2019 Atlanta Farm Bill Conference -- Implications for Socially Disadvantaged Farmers and Ranchers
2019 Atlanta Farm Bill Conference -- Implications for Socially Disadvantaged Farmers and Ranchers
ALL OTHER , 5%
CORN , 24%
COTTON , 13%
OTHER, 12%
SOYBEANS , 40%
WHEAT , 5%
Multiple Peril Crop InsuranceTennessee Liability Percentage
2018
2019 Atlanta Farm Bill Conference -- Implications for Socially Disadvantaged Farmers and Ranchers
2019 Atlanta Farm Bill Conference -- Implications for Socially Disadvantaged Farmers and Ranchers
ALL OTHER , 16%
CORN , 11%
COTTON , 39%
OTHER, 10%
PEANUTS , 11%
SOYBEANS , 13%
Multiple Peril Crop InsuranceAlabama Liability Percentage
2018
2019 Atlanta Farm Bill Conference -- Implications for Socially Disadvantaged Farmers and Ranchers
2019 Atlanta Farm Bill Conference -- Implications for Socially Disadvantaged Farmers and Ranchers
ALL OTHER , 11%
NUR FG&C , 14%
ORANGES , 9%
ORANGETREE, 36%
OTHER, 30%
Multiple Peril Crop InsuranceFlorida Liability Percentage
2018
2019 Atlanta Farm Bill Conference -- Implications for Socially Disadvantaged Farmers and Ranchers
ALL OTHER , 8%
CORN , 5%
COTTON , 46%OTHER, 12%
PEANUTS , 20%
PECANS , 9%
Multiple Peril Crop InsuranceGeorgia Liability Percentage
2018
2019 Atlanta Farm Bill Conference -- Implications for Socially Disadvantaged Farmers and Ranchers
2019 Atlanta Farm Bill Conference -- Implications for Socially Disadvantaged Farmers and Ranchers
ALL OTHER , 7%
CORN , 15%
COTTON , 14%
FLUECURETB, 28%
OTHER, 10%
SOYBEANS , 19%
WFRP , 6%
Multiple Peril Crop InsuranceNorth Carolina Liability Percentage
2018
2019 Atlanta Farm Bill Conference -- Implications for Socially Disadvantaged Farmers and Ranchers
2019 Atlanta Farm Bill Conference -- Implications for Socially Disadvantaged Farmers and Ranchers
ALL OTHER , 19%
CORN , 17%
COTTON , 31%
FLUECURETB, 6%
OTHER, 6%
PEANUTS , 7%
SOYBEANS , 14%
Multiple Peril Crop InsuranceSouth Carolina Liability Percentage
2018
2019 Atlanta Farm Bill Conference -- Implications for Socially Disadvantaged Farmers and Ranchers
2019 Atlanta Farm Bill Conference -- Implications for Socially Disadvantaged Farmers and Ranchers
ALL OTHER , 20%
CORN , 20%
COTTON , 12%FLUECURETB, 13%
OTHER, 15%
SOYBEANS , 22%
Multiple Peril Crop InsuranceVirginia Liability Percentage
2018
2019 Atlanta Farm Bill Conference -- Implications for Socially Disadvantaged Farmers and Ranchers
2019 Atlanta Farm Bill Conference -- Implications for Socially Disadvantaged Farmers and Ranchers
CORN , 41%
OTHER, 12%
SOYBEANS , 47%
Multiple Peril Crop InsuranceMissouri Liability Percentage
2018
2019 Atlanta Farm Bill Conference -- Implications for Socially Disadvantaged Farmers and Ranchers
2019 Atlanta Farm Bill Conference -- Implications for Socially Disadvantaged Farmers and Ranchers
ALL OTHER , 18%
CORN , 11%
COTTON , 9%
OTHER, 10%
PECANS , 28%
PRF , 24%
Multiple Peril Crop InsuranceNew Mexico Liability Percentage
2018
2019 Atlanta Farm Bill Conference -- Implications for Socially Disadvantaged Farmers and Ranchers
2019 Atlanta Farm Bill Conference -- Implications for Socially Disadvantaged Farmers and Ranchers
CORN , 14%
COTTON , 53%
OTHER, 24%
PRF , 9%
Multiple Peril Crop InsuranceTexas Liability Percentage
2018
2019 Atlanta Farm Bill Conference -- Implications for Socially Disadvantaged Farmers and Ranchers
2019 Atlanta Farm Bill Conference -- Implications for Socially Disadvantaged Farmers and Ranchers
SPECIALTY CROPS
© 2019 NCIS 52
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Liability Specialty Crop Coverage Growing
From RMA Summary of Business
02/25/2019 © 2019 NCIS 53
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Percentage of Policies That are CAT for Select Crops
56%
53%
38%
37%
29%
27%
22%
20%
17%
16%
13%
10%
0% 10% 20% 30% 40% 50% 60%
Pears
Grapes
Almonds
Mandarins/Tangerines
Pistachios
Onions
Lemons
Blueberries
Sugarcane
Walnuts
Orange Trees
Nursery (FG&C)
Source: USDA Office of the ChiefEconomist
© 2019 NCIS 54
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Crop Insurance Introductions by CY
• 2000 – 2016 CY premium for added crops/plans
• Stacked bars = count of added programs
– Includes livestock crops/plans
– Does not include added options or expanded/specialty types and practices
– Start with CY 2000; stack each CY’s additions on top of 2000
– No programs are removed from the added program count
© 2019 NCIS 55
2019 Atlanta Farm Bill Conference -- Implications for Socially Disadvantaged Farmers and Ranchers
0
20
40
60
80
100
120
140
160
180
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
# P
rod
uct
s
2013 – e.g., dry pea & bean revenue
2012 – e.g., olives, pistachios, camelina
2015 – e.g., SCO/STAX, peanut revenue
2014 – e.g., cucumbers, tangors, other citrus
2016 – e.g., significant SCO expansion, margin protection
Source: RMA Summary of Business Feb 13, 2017
Over 160 Product Introductions Since 2000
© 2019 NCIS 56
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SOME FARM BILL STUFF
© 2019 NCIS 57
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Agriculture Improvement Act of 2018
• Signed on December 20, 2018.
• General overview of key provisions within several Titles.– Not an all encompassing review
• Implementation priorities and timeline established by USDA and RMA.– Regulatory and procedural development or research is needed for several
provisions before they can be implemented.
© 2019 NCIS 58
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Crop Insurance Provisions in the 2018 Act
• Title XI – Crop Insurance
• Title XII – Miscellaneous
• Hemp
– Title VII – Research, Extension, and Related Matters
– Title X – Horticulture
– Title XI – Crop Insurance
– Title XII – Miscellaneous
• Title I - Commodities
© 2019 NCIS 59
2019 Atlanta Farm Bill Conference -- Implications for Socially Disadvantaged Farmers and Ranchers
Enterprise Units
• Allows producers to establish a single enterprise unit by combining an enterprise unit with:– One or more enterprise units in one or more counties; or,
– All basic units and all option units in one or more other counties
• From the Managers’ Report: Does not mandate that an MCEU would cross state boundaries.
© 2019 NCIS 60
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Cover Crops
• Identifies the voluntary practice of using cover crops as a good farming practice when terminated appropriately, and says cover crops will not “affect the insurability of a subsequently planted insurable crop.”
• Planting of a cover crop into summer fallow land will also not affect insurability of a subsequently planted insurable crop when terminated appropriately.
© 2019 NCIS 61
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Cover Crops, cont.
• “COVER CROP TERMINATION – The term ‘cover crop termination’ means a practice that historically and under reasonable circumstances results in the termination of the growth of a cover crop.
• FCIC shall utilize NRCS “in the consideration of acceptable conservation practices, including good farming practices with respect to conservation (such as cover crop termination).”
© 2019 NCIS 62
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Cover Crops, cont.
• Requires continuing education for loss adjusters and agents regarding conservation activities and agronomic practices that are common and appropriate to the area where the crop is produced, including organic and sustainable practices.
• Includes “Conservation Activities” as a topic for Education and Risk Management Assistance.
© 2019 NCIS 63
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Cover Crops, cont.
• From the Managers’ Report: The intention of these provisions is that producers considering voluntary conservation practices like cover crops should have confidence when following program guidance, procedures, or advice that they will not impact insurability of their subsequently planted crop.
© 2019 NCIS 64
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Crop Production on Native Sod
• Continues 2014 Farm Bill provisions, but expands the reduction in benefits for native sod acreage that has been tilled to any insurable crop.
• Begins on the date of enactment of the Agriculture Improvement Act of 2018 (application to 2019 crop year to be determined by RMA).
© 2019 NCIS 65
2019 Atlanta Farm Bill Conference -- Implications for Socially Disadvantaged Farmers and Ranchers
Whole Farm Revenue Protection
• Directs RMA to take steps necessary to streamline and add flexibility or tailor program rules to make the WFRP policy provide more meaningful risk protection, especially for small and beginning farmer operations or operations with less than $1 million in gross revenue.
• Expands the definition of a Beginning Farmer or Rancher under a WFRP policy from 5 to 10 years.
© 2019 NCIS 66
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Research and Development
• Directs research and development to improve existing policies or develop policies for:
Note: Some initiatives may be developed as a 508(h) program
Tropical storm or hurricane insurance Quality Losses
Citrus Hops
Subsurface irrigation practices Grain sorghum
Limited irrigation practices Irrigation practices for rice
Greenhouses Local foods
Batture land
© 2019 NCIS 67
2019 Atlanta Farm Bill Conference -- Implications for Socially Disadvantaged Farmers and Ranchers
Underserved Producers
• Definitions expanded to:– Refine “participation rate” to include “by crop”;– Include a member of an Indian tribe, veteran farmer or rancher, or a
socially disadvantaged farmer or rancher.
• Calls for an initial report on how to increase participation in States and amongst underserved producers that are not adequately served by available policies and plans of insurance, with a follow up report every 3 years.
• As part of the report FCIC is encouraged to examine the types of production common among underserved producers, including diversified production for local markets.
© 2019 NCIS 68
2019 Atlanta Farm Bill Conference -- Implications for Socially Disadvantaged Farmers and Ranchers
Specialty Crops
• Updates the role of the Specialty Crop Coordinator.
• Requires a Specialty Crop Liaison in each regional office.
• Requires the FCIC Board to annually review research and development of insurance for new crops, expansion of existing insurance to additional counties or States, and crops with existing insurance.
• Requires data collected through the Noninsured Crop Disaster Assistance Program be provided for improving crop insurance coverage.
© 2019 NCIS 69
2019 Atlanta Farm Bill Conference -- Implications for Socially Disadvantaged Farmers and Ranchers
Livestock
• Allows for participation in both the FSA Dairy Margin Coverage (formerly the Margin Protection Program) and crop insurance coverage under LGM Dairy program.
• Allows 2018 LGM Dairy participants to retroactively participate in the Dairy Margin Coverage.
© 2019 NCIS 70
2019 Atlanta Farm Bill Conference -- Implications for Socially Disadvantaged Farmers and Ranchers
Underwriting Rules
• AIPs will be required to limit the decrease in actual production history of a producer, at the producer’s election, to not more than 10 percent of the actual production history of the previous crop year if the decline was due to drought, flood, natural disaster, or other insurable loss.
• An actuarially sound premium rate must be charged to cover the additional risk.
• Note: Codifies existing procedures
© 2019 NCIS 71
2019 Atlanta Farm Bill Conference -- Implications for Socially Disadvantaged Farmers and Ranchers
Use of NASS Data
• Aggregate published and unpublished NASS data is to be provided to RMA for use in providing insurance.
– The data is to be kept confidential.
• RMA may use published aggregate data from NASS or any other data source to:
– (i) detect yield disparities or other data anomalies that indicate potential fraud; and
– (ii) target the relevant counties, crops, regions, companies, or agents associated with that potential fraud for audits and other enforcement actions.
© 2019 NCIS 72
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Other Miscellaneous Title XI Provisions
• 508(h) Changes:– RMA may share program data, including NAP data from FSA, with concept
proposal applicants
– 508(h) developers shall be eligible for the reimbursement of reasonable research and development costs if the policy is approved by the Board
• Reduces permanent funding for certain program administration and operational activities, and in maintaining actuarial soundness and financial integrity.
© 2019 NCIS 73
2019 Atlanta Farm Bill Conference -- Implications for Socially Disadvantaged Farmers and Ranchers
Other Miscellaneous Title XI Provisions, cont.
• Modifies topics and funding for Education and Risk Management Assistance.
• Repeals Crop Land Reports annual update and makes a technical correction for pilot programs to the Federal Crop Insurance Act.
• Increases Catastrophic Fees from $300 to $655.
© 2019 NCIS 74
2019 Atlanta Farm Bill Conference -- Implications for Socially Disadvantaged Farmers and Ranchers
Veteran Farmer or Rancher
• The term ‘veteran farmer or rancher’ means a farmer or rancher who:
(A) has served in the Armed Forces (as defined in section 101 of title 38, United States Code); and
(B)(i) has not operated a farm or ranch;
(ii) has operated a farm or ranch for not more than 5 years; or
(iii) is a veteran (as defined in section 101 of that title) who has first obtained status as a veteran (as so defined) during the most recent 5-year period.
© 2019 NCIS 75
2019 Atlanta Farm Bill Conference -- Implications for Socially Disadvantaged Farmers and Ranchers
Veteran Farmer or Rancher, cont.
• Extends Beginning Farmer or Rancher crop insurance benefits and CAT Fee waiver to Veteran Farmers.
• Adds veteran farmers or ranchers to the targeted audience of Education and Risk Management Assistance.
© 2019 NCIS 76
2019 Atlanta Farm Bill Conference -- Implications for Socially Disadvantaged Farmers and Ranchers
Industrial Hemp
• Defines hemp as an agricultural commodity, and allows hemp insurance coverage to extend beyond the period of time it is in the field (as allowed for tobacco, potatoes, and sweet potatoes).
• Amends the Agricultural Marketing Act of 1946 to allow states and Indian tribes to regulate, or follow a plan established by the Secretary to regulate hemp production that includes:– Locations of hemp production
– Sample testing for THC concentration
– Random inspections of producers
– Disposal of plants that are out of compliance
© 2019 NCIS 77
2019 Atlanta Farm Bill Conference -- Implications for Socially Disadvantaged Farmers and Ranchers
Other Potential Program Impacts
• Expansion of the Acreage Crop Reporting Streamlining Initiative (ACRSI).
• Use of RMA data in establishing county yields for the Agriculture Risk Coverage (ARC) program.
• Potential use of data in identifying conservation practices and their effects on farm and ranch profitability relative to crop yields, soil health, and other risk related factors.
• Sharing of program data between RMA, FSA, NRCS and NASS.
© 2019 NCIS 78
2019 Atlanta Farm Bill Conference -- Implications for Socially Disadvantaged Farmers and Ranchers
NCIS Role
• Liaison Between USDA/RMA and Approved Insurance Providers (AIPs)
• Communications
• Facilitation
• Training
© 2019 NCIS 79
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DAIRY REVENUE PROTECTION
© 2019 NCIS 80
2019 Atlanta Farm Bill Conference -- Implications for Socially Disadvantaged Farmers and Ranchers
Product Overview
• AFBF and American Farm Bureau Insurance Services developed Dairy Revenue Protection:
– Provides protection against declines in milk sales quarterly revenue
– Quarterly coverage (3-month periods) – can purchase up to 5 quarters out with the exception of the last sales period (only 4 quarters available)
© 2019 NCIS 81
2019 Atlanta Farm Bill Conference -- Implications for Socially Disadvantaged Farmers and Ranchers
Five Decisions
• Dairy farmer decides:
– Value of milk protected
– Amount of milk production covered
– Level of coverage (from 70 to 95 percent of the revenue guarantee)
– Which quarterly contracts to purchase
– Protection Factor
© 2019 NCIS 82
2019 Atlanta Farm Bill Conference -- Implications for Socially Disadvantaged Farmers and Ranchers
2019 Dairy Revenue Protection Statistics
AIPs with Policies Sold 10
Total Policies Sold 3,814
AIPs with Endorsements Earning Premium 10
Total Endorsements Earning Premium 8,644
Declared Covered Milk Production 28,196,293,594 lbs.
Liability Amount $5,506,965,459
Total (Gross) Premium Amount $90,152,185
Producer Premium Support $50,587,419
Source: RMA 6/03/19 1pm CT
© 2019 NCIS 83
2019 Atlanta Farm Bill Conference -- Implications for Socially Disadvantaged Farmers and Ranchers
WHOLE FARM REVENUE PROTECTION
© 2019 NCIS 84
2019 Atlanta Farm Bill Conference -- Implications for Socially Disadvantaged Farmers and Ranchers
Source: RMA Summary of Business 02/25/2019
2018 Whole-Farm
Revenue Protection Premium
© 2019 NCIS 85
2019 Atlanta Farm Bill Conference -- Implications for Socially Disadvantaged Farmers and Ranchers
2016-2018 Whole-Farm Revenue Protection Comparison
Source: RMA Summary
of Business history files
as of 04/25/2019
2016 2017 2018 Change 2017/18
Policies 2,268 2,835 2,539 -10.4%
Liability $2,332,694,472 $2,837,865,597 $2,681,236,422 -5.5%
Premium $118,705,438 $142,721,972 $138,702,392 -2.8%
Producer Premium $35,080,159 $41,207,021 $39,462,177 -4.2%
Subsidy $83,625,279 $101,514,951 $99,240,213 -2.2%
Indemnity $174,229,613 $153,492,703 $17,680,177 (preliminary)
N/A
Loss Ratio 146.8% 107.6% 12.7% N/A
States 43 45 45 0.0%
Counties 507 679 612 -9.9%
LOSS RATIO DEVELOPMENT OVER TIME
CROP YEAR AGE 52 WEEKS AGE 78 WEEKS AGE 104 WEEKS AGE 130 WEEKS CURRENT
2015 0% 62% 116% 128% 132%
2016 0% 67% 138% 145% 147%
2017 1% 48% 96% N/A 108%
2018 1% N/A N/A N/A 13%
© 2019 NCIS 86
2019 Atlanta Farm Bill Conference -- Implications for Socially Disadvantaged Farmers and Ranchers
• Ask yourself:–What plans are available for the crops I grow?
–For what coverage levels do I qualify?
–How much can I afford to lose?
–What makes the best financial sense?
• Engage with a crop insurance agent to help answer these questions.
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What insurance plan and coverage level is right for me?
2019 Atlanta Farm Bill Conference -- Implications for Socially Disadvantaged Farmers and Ranchers
• Completed by the insured at agent’s office
• Continuous policy unless canceled in writing
• Insured elects:– Which crop(s) to insure
• Must insure all acres of the crop
– By crop/county:• Plan
• Level
• Price
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Apply for all of the crops that you may possibly plant. Note: You will only be charged for the crops you
actually plant
Process—Application
2019 Atlanta Farm Bill Conference -- Implications for Socially Disadvantaged Farmers and Ranchers
• Completed:
– Annually by producer, with agent
– After crops are planted
– Due by a specific date
• Reported information:
– Includes acres, share, and plant date
– Determines coverage and liability
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Process—Acreage Report
2019 Atlanta Farm Bill Conference -- Implications for Socially Disadvantaged Farmers and Ranchers
• Generated after acreage report is submitted
• Details coverage and liability on each unit
• Should be reviewed carefully for accuracy
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If information is not correct, contact your agent immediately.
Process—Schedule of Insurance
2019 Atlanta Farm Bill Conference -- Implications for Socially Disadvantaged Farmers and Ranchers
• If loss expected, insured must file a notice of loss
• Adjuster:– Contacts insured
– Visits farm
– Determines actual production by using standard Federal procedures
– Completes loss paperwork
• Loss payment is made, by company
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Process—Determining a Loss
2019 Atlanta Farm Bill Conference -- Implications for Socially Disadvantaged Farmers and Ranchers
• Report required information accurately.
• Meet policy deadlines.
• Pay premiums when due.
• Report losses immediately.
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Producer Obligations
2019 Atlanta Farm Bill Conference -- Implications for Socially Disadvantaged Farmers and Ranchers
• Visit a crop insurance agent
• Discuss coverage options with and get help from an agent
• Complete and submit an application to an agent
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Main Message: Make an informed decision!!
SummaryHow do I get coverage and who can help me?
2019 Atlanta Farm Bill Conference -- Implications for Socially Disadvantaged Farmers and Ranchers
Crop Insurance
Av
ail
ab
ilit
y
Crop Insurance must be affordable so that it is a useful
risk management tool for farmers and
ranchers.
In order for this successful public/private partnership to continue the program must yield a reasonable economic return for the Approved Insurance Providers (AIPs).
Crop Insurance must be available for use by farmers and ranchers regardless of the size of their operation or the enterprise they are engaged in.
The Strength of Crop Insurance Depends on the Three Legs of the Stool
© 2019 NCIS 94
2019 Atlanta Farm Bill Conference -- Implications for Socially Disadvantaged Farmers and Ranchers
Websites
NCIS
www.ag-risk.org
Crop Insurance in America
www.cropinsuranceinamerica.org
Social Media
@USCropInsurance
Instagram /Pinterest
CropInsuranceInAmerica
YouTube
NCISAmericaSENSITIVE AND CONFIDENTIAL
Do not distribute without author’s permission© 2019 NCIS 95
2019 Atlanta Farm Bill Conference -- Implications for Socially Disadvantaged Farmers and Ranchers
QUESTIONS, COMMENTS, DISCUSSION
© 2019 NCIS 96
2019 Atlanta Farm Bill Conference -- Implications for Socially Disadvantaged Farmers and Ranchers