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Slack crop insurance basics
- 1. Crop Insurance Basics BethSlack and Melody McCurry
- 2. HOW IT COMESTOGETHER • FCIC Federal Crop Insurance Corporation • RMA Risk Management Agency • AIPS Approved Insurance Providers • Agencies and Agents
- 3. WHAT ARE THEMAJOR RISKS FACING YOUR OPERATION? • • • • • • • • • Drought Excessive Moisture Excessive Heat Hail, lightning, wind Insects and Wildlife Cold, frost, freeze Disease Price variations Others?
- 4. ELIGIBLE PERSONS • BeCompetent • Be of legal majority, 18 years or older, or conferred by court • Have an insurable interest in the crop at the time coverage begins • Provide applicable identification number and person type • NOT be ineligible
- 5. APPLICATION • • • • • • • Applicant Information SBI Information CropInformation Cancellation/Transfer Information Conditions of Acceptance Privacy Act and Nondiscrimination Stmt Signature Blocks
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- 8. APH ACTUAL PRODUCTION HISTORY •Reporting production is done, by unit • Acreage must be reported separately, by unit • Coverage is provided separately, by unit • Harvested production must be maintained, by unit • Indemnities determined, by unit
- 9. UNIT STRUCTURE Four typesof units: • • • • Basic Optional Enterprise Whole Farm 3 most common types
- 10. BASIC UNIT • Thebuilding blocks of a policy. A policy’s coverage broadens or becomes more localized if the insured elects unit structures other than basic units. • Determined first by crop then by share arrangement 1. 100% share ownership or 2. Which is owned by one person and operated by another person on a share basis
- 11. OPTIONAL UNIT • Theunits must be located in separate sections, section equivalents, or separate farm serial number (FSN) • Irrigated and Non-Irrigated Practices • Organic and Conventional Farming • Written Agreement • The insured must have the prior year’s production by section reported to the company no later than the Production Reporting Date of the current crop year
- 12. ENTERPRISE UNIT • Allinsurable acreage of the same insured crop in the county in which the insured has a share on the date coverage begins for the crop year • Must be elected by sales closing date • Available for: • - Revenue Protection • -Yield Protection • -Non-revenue crops if allowed by special provisions • Election is continuous, unless insured notifies agent by sales closing • Enterprise unit must contain same crop on 2 or more sections.
- 13. WHOLE FARM UNIT • Allinsurable acreage of all the insured crops planted in the county in which the insured has a share on the date coverage begins for each crop for the crop year. • With Revenue Protection elected • Without Revenue Protection only if in the special provisions.
- 14. The Basics of CropInsurance vs Chocolate
- 15. PLANS OF COVERAGE vs TYPESOF CHOCOLATE • CAT • ARPI (formally GRP) • YP – Buy Up 85% • RP • Dollar Store • Hershey Minatures • Dove Chocolate • Ghirardelli
- 16. CATASTROPHIC RISK PROTECTION • • Individual policy/APH data base Guarantees bushels per acre against a catastrophic loss • Coverage level- 50% of APH @ 55% of established market price • $300 Admin fee per crop per county • Basic units only
- 17. ARPI formally GRP •Area Risk Protection Insurance • Coverage based on an area, not an individual, yield or revenue amount. 3 plans • ARP – Area Revenue Protection • ARPHPE Area Revenue Protection w/ Harvest Price Exclusion • AYP – Area Yield Protection
- 18. MULTI-PERIL (YP) PLAN •Individual Policy/ APH Data Base • Guarantees bushels per acre • Coverage Levels Available – 50% to 85% of Approved Yield • Premium rate is determined by APH, Level, Price, and County • Basic, Optional, and Enterprise Units Available • Gov’t. Subsidy % varies by level
- 19. REVENUE PROTECTION RP •Individual Policy/ APH Data Base • Guarantees bushels per acre • Coverage Levels Available – 50% to 85% of Approved Yield • Premium rate is determined by APH, Level, Price, and County • Basic, Optional, and Enterprise Units Available • Gov’t. Subsidy % varies by level
- 20. Assume: Wheat NI CoverageLevel: Base Price: Harvest Price: Actual Harvest RP Example 45 Bu average yield 70% $7.02/ Bu* $6.25/ BU* (Example Price only) 20 bu/ac Minimum Guarantee Calculation Approved Yield 45 Bu/Ac X Base Price X $7.02* X X Indemnity Payment Calculation Calculated Revenue Actual Yield X Harvest Price = 20 Bu/Ac X $6.25/ Bu* = Indemnity Payment Minimum Guarantee $ 221.13 - Coverage Level 70% = = Base Guarantee $221.13 Calculated Revenue $125.00/ Ac Calculated Revenue $125.00 Ac = Indemnity Payment = $96.13/ Ac * Note: All prices used in this illustration are for illustration purposes only and do not portray actual prices used for loss calculation!
- 21. Calculating The Valueof the Crop Not Covered Under the MPCI Policy $ Coverage By Level Under MPCI Coverage APH Plan CROPS ACRE AV Yield WHEAT 1 CORN $ Not Covered by Level Under MPCI Coverage MP PRICE Crop Value 45 $ 7.02 $ 316 $ 205 $ 221 $ 237 $111 $95 $79 1 90 $ 4.39 $ 395 $ 257 $ 277 $ 296 $138 $118 $95 GSORG 1 70 $ 4.30 $ 301 $ 196 $ 211 $ 226 $105 $90 $75 SBEAN 1 30 $ 12.87 $ 386 $ 270 $ 290 $135 $116 $96 65% $ 251 70% 75% 65% 70% 75%
- 22. Things to Remember •Sales Closing dates • • Spring planted crops March 15, 2014 Fall planted crops September 30, 2014 Check to make sure tax id #’s are correct Martial status Any entity changes Changes to FSA #’s, shareholders, shares Are you adding any land to your farming operation? Have you acquired any acreage in another county? Do you want to make changes to levels or types of coverage? Production History and Unit Structure • This is not an all inclusive list, however these are some important things to remember.
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- 25. Thanks for yourtime and have a great day!! We are an equal opportunity provider and employer