today, september 2015, vol. 48, no. 3 · mapping system to better help you meet the rma’s 2016...

SEPTEMBER 2015 • VOL. 48, NO. 3

P U B L I C A T I O N O F N A T I O N A L C R O P I N S U R A N C E S E R V I C E S ®

The Development of Crop Insurance& the U.S. Farm Safety Net

Rural Community Insurance Agency, Inc., D/B/A RCIS. RCIS is an equal opportunity provider.© 2015 Rural Community Insurance Agency, Inc. All rights reserved. WCS-1268585

Strong.Resourceful.Committed.

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Grow your crop insurance business with a proven leaderAs a leader in crop insurance for decades, RCIS offers a comprehensive and evolving line of insurance products to meet the requirements of producers in all 50 states. From in-person fi eld service to multi-channel agent training, we invest our time and resources to help our agents — and their policyholders — succeed.

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“I’m going to Kansas City. Kansas City here I come.”

“Well, I might take a plane, I might take a train. But if I have to walk I’m going just the same. I’m going to Kansas City. Kansas City, here I come...”

The International Association of Agricultural Insurers (AIAG) is coming to Kansas City.

Every two years, the International Agricultural Insurers sponsors an industry Congress where ag-ricultural insurers from around the world gather to discuss insurance on specific crops, crop insurance systems in different countries, loss prevention, re-

insurance, training, as well as specific topics selected by the AIAG leadership.AIAG was founded in 1951 and was one of the first international associations dedicated to

the agricultural insurance sector. Founders of the organization included insurance experts from France, Germany, Italy, the Netherlands, Sweden and Switzerland, and has since grown to more than 100 members from 30 countries on five continents. The organization’s goals are to improve and expand crop insurance coverage and services by exchanging information, experiences and industry statistics.

As co-host for the 2015 event, NCIS has worked diligently with AIAG to identify and se-cure distinguished speakers for the event. We have also taken a lead role in securing lodging and meeting accommodations, providing registration assistance to U.S. guests, meeting with local farmers to put together a great agricultural tour for the attendees, as well as various other administrative and event coordination activities. U.S. crop insurers are excited about this Con-gress, and as a board member of AIAG, I am confident that the educational and networking sessions of this event will be well worth your time to attend.

Why Kansas City?With its countless landmarks, parks and artistic offerings, Kansas City has been

affectionately called “Paris on the Plains.” Fittingly, our fair city was chosen to host the first AIAG Congress to ever be held outside of Europe. We are honored to put on this prestigious affair, and we welcome our international guests as well as our friends and colleagues from across the United States.

It seems appropriate that Kansas City, rich with agricultural history, should be the host city for this international event. In the late 1800s, the railroads helped make possible one of Kansas City’s biggest early-day industries: cattle. From beginnings not long after the Civil War, the city became

Laurie Langstraat, EditorAshley Craft, Assistant Editor

TODAY® IS PROVIDED AS A SERVICE OF

NATIONAL CROP INSURANCE SERVICES® TO EDUCATE READERS ABOUT THE RISK MANAGEMENT TOOLS PRODUCERS USE

TO PROTECT THEMSELVES FROM THE RISKS ASSOCIATED WITH

PRODUCTION AGRICULTURE.

TODAY is published quarterly–February, May, August, and November by

National Crop Insurance Services

8900 Indian Creek Parkway, Suite 600Overland Park, Kansas 66210

www.ag-risk.org

If you move, or if your address is incorrect, please send old address label clipped from recent issue

along with your new or corrected address to Donna Bryan, at the above address.

NCIS® EXECUTIVE COMMITTEETim Weber, Chairman

Mike Day, Vice ChairmanJim Korin, Second Vice Chairman

NCIS® MANAGEMENTThomas P. Zacharias, President

Charles Lee, General CounselJames M. Crist, CFO/COO

Sherri Scharff, Executive Vice President and Chief of Staff

Troy Brady, Senior Vice PresidentFrank Schnapp, Senior Vice President

Mike Sieben, Senior Vice President

Creative Layout and Design by Graphic Arts of Topeka, Inc., Kansas

TODAY PRESIDENT’SMESSAGE

Printed on recycled paper. Printed with Environmentallyfriendly vegetable oil based inks.

Continued on page 32

Tom Zacharias, NCIS President

Kansas City WelcomesInternational Crop Insurance Congress

CROPINSURANCE TODAY® 1

Table of Contents

4

VOL. 48, NO. 3

SEPTEMBER 2015

Copyright NoticeAll material distributed by National Crop Insurance Services is protected by copyright and other laws. All rights reserved. Possession of this material does not confer the right to print, reprint, publish, copy, input, transform, distribute or use same in any manner without the prior written permission of NCIS. Permission is hereby granted to Members in good standing of NCIS whose Membership Class (and service area, if membership is limited by service area) entitles them to receive copies of the enclosed or attached material to reprint, copy or distribute such NCIS copyrighted material in its present form solely for their own business use and solely to employees, adjusters or agents who are under contract with them, and as a condition to receiving such copies, such employees, adjusters and agents agree that they will not reprint, copy or distribute, or permit use of any such NCIS copyrighted material to or by any other person and/or company, or transform into another work such NCIS copyrighted material, without prior written permission of NCIS.© 2015 National Crop Insurance Services, Inc.

www.cropinsuranceinamerica.org••••••••••••••• Visit •••••••••••••••

30

12

1 Kansas City Welcomes International Crop Insurance Congress

4 The Development of Crop Insurance & the U.S. Farm Safety Net

12 AIAG—International Association of Agricultural Insurers

16 2014 U.S. Crop-Hail Loss Ratio By State

18 2014 NCIS Agronomic Research Results

30 Crop Insurance In Action John Michael Pillow, Yazoo City, Mississippi

38 Crop Insurance Plan Comparison

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CropInsurance TODAY

The Development of Crop Insurance

& the U.S. Farm Safety Net

Every American farmer today feeds, on average, 155 people. That is roughly a six-fold increase from just five decades ago, when farm-ers fed just 26 people. Developments in technology, farming practic-es, education and public policy made it possible, improving farmer efficiency by nearly six-fold and providing the American public with the world’s most affordable, abundant and safe food supply.

America’s commitment to agriculture is not surprising. The coun-try’s Founding Fathers were themselves farmers and recognized the importance of a country’s ability to feed and clothe itself. Thomas Jefferson called farmers our “most valuable citizens,” and George Washington noted, “I know of no pursuit in which more real and im-portant services can be rendered to any country than by improving its agriculture.”

Through the years, public support for agriculture has taken many forms, from investments in research and education to disaster aid and individual commodity programs. That journey has led us to to-day’s safety net, with crop insurance as its centerpiece. What tomor-row holds is anyone’s guess, but when charting a course for the future it is important to understand the policy decisions of our past.

Beginning with a Focus on EducationThe early years of farm policy were dedicated to education, research

and training —a dedication that still lives on with public universities, publicly administered extension programs, and partnerships between the public and private sectors, such as NCIS’ risk management education programs for socially disadvantaged and limited-resource farmers.

Early public investment began in 1862, when Congress passed the Morrill Act, which distributed public land to several states and territories and established colleges of agriculture and mechanic arts. That same year also brought another monumental event for the agricultural industry when President Abraham Lincoln instituted the Bureau of Agriculture.

The Hatch Act, passed in 1887, continued policymakers’ push for im-proved training and research. It established experiment stations, provid-ed centers for scientific research, transformed the Bureau of Agriculture into the United States Department of Agriculture (USDA), and added the Secretary of Agriculture to the president’s cabinet, thus cementing agriculture’s place as a public policy priority.

Of course, new technologies and best management practices designed to enhance productivity and efficiency are meaningless unless farmers

By Ashley Craft, Tom Zacharias and Mechel Paggi, NCIS

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tcan readily access and afford these tools—something Congress addressed in the early 1900s with three key pieces of legislation. In 1914, the Smith-Lever Act set up the Coop-erative Extension system to communicate new technologies from the USDA directly to farmers. Next, the Federal Farm Loan Act of 1916 helped create 12 Cooperative Federal Land Banks, thus starting the Farm Credit System. And lastly, the Smith-Hughes Act of 1917 provided Federal support for teaching vocational agriculture in high schools.

A Farm Safety Net Evolves in Turbulent Times

When the U.S. economy collapsed during the Great Depression and rural America struggled with one of the worst droughts in history, it became readily apparent that in-vestments in education and training alone were not a sufficient farm policy. Net farm income plummeted 70 percent between 1929 and 1933 and crop prices dropped by 56 per-cent. The number of Americans employed in agriculture also started to dwindle, falling 50 percent since the turn of the century.

To counteract the effects, President Frank-lin D. Roosevelt signed the Agricultural Ad-justment Act (AAA) of 1933, the country’s very first farm bill. This legislation was de-signed to bring stability to the agricultural sector by granting the Secretary of Agricul-ture new power. Specifically, the secretary was authorized to: 1) reduce acreage by voluntary agreements, 2) enter into agreements with processors to control prices paid to farmers and 3) allow the USDA to spend money, ex-pand markets or remove surpluses.

Three years later, the AAA was replaced by the Soil Conservation and Domestic Al-lotment Act, which encouraged conservation by paying farmers for planting soil-building crops. This Act was amended just two years later when Congress approved permanent legislation that included price and income policy for agriculture.

Designed to stabilize prices, the Agri-cultural Adjustment Act of 1938 introduced commodity stock holding by the government; buying commodities in periods of surplus and selling in periods when production was short. But perhaps, in retrospect, most importantly, the Act provided for the Federal Crop Insur-ance Program and planted the seed of what

1862The Morrill ActDistributed public land to several states and territories, establishing colleges of agriculture and mechanic arts. That same year, President Abraham Lincoln instituted the Bureau of Agriculture to advance international botanical examination and national crop improvement.

1887The Hatch ActEstablished experimental stations, providing research centers for scientific investigations benefiting farmers, ranchers and other individuals involved in food production and/or agriculture. The Act also helped transform the Bureau of Agriculture into the United States Department of Agriculture and added a secretary of agriculture to the president’s cabinet.

1914The Smith-Lever ActSet up the Cooperative Extension system to communicate new technologies from the USDA directly to farmers. This connected the education provided at land-grant universities, established under the Morrill Act, to their communities providing economic and agricultural development.

1916Federal Farm Loan ActCreated 12 Cooperative Federal Land Banks, thus starting the Farm Credit System. The goal of this Act was to increase credit to rural family farmers.

1917The Smith-Hughes ActProvided federal support for teaching vocational agriculture in high schools, starting the agricultural education program before students entered the workforce or postsecondary education programs.

1933Agricultural Adjustment ActEstablished first farm bill to:1) Reduce acreage by voluntary agreements.2) Enter into agreements with processors to control prices paid to farmers.3) Allow the USDA to spend money, expanding markets or removing surpluses.


evolved with the passage of four new acts. The first being the Agricultural Act of 1954, which introduced flexible price supports to commodity programs. The second, the Ag-ricultural Act of 1956, introduced the use of conservation reserve, in addition to acreage control, for supply management. Next came the Food and Agricultural Act of 1965, es-tablishing new income support payments in combination with reduced price supports and continued supply controls. Finally, the first in-clusion of a title for rural development came in the 1970 Agricultural Act.

Preparing for Bad Times During the Good

Positive changes were beginning to take place within agriculture during the 1970s, thanks in part to past public investments. Between 1970 and 1973, farmers saw a 73 percent increase in their real net income. Land values also increased 376 percent in the 1970s. However, most decision makers recog-nized that good times do not always last, so enhancements were made to provide a better cushion when tides inevitably turned.

Specifically, the Agricultural Act of 1973 created disaster payments for farmers who were prevented from harvesting two-thirds of normal production, price targets for select-ed commodities and deficiency payments to farmers of those commodities when prices fell below target levels. The Agricultural Act of 1977 further increased target prices and loan rates, revised payment limits upwards and substituted current planted acreage for al-lotments. Then came the Federal Crop Insur-ance Act of 1980, which phased out the free Federal farm disaster payment program and enabled private crop insurers and agents to market “All-Risk” crop insurance—the birth of today’s public-private partnership.

Initially the 35 companies that held a rein-surance agreement with FCIC for the 1981/82 crop year had a slow start due to a shortened sales season, but still sold $12-13 million in premium with a loss ratio of around 60 per-cent. In 1982 and 1983, the Federal crop in-surance program paid out 63 percent more in losses than premiums paid in. All told, more than $1 billion in crop insurance losses were paid out in 1982 and 1983, equaling half as much as had ever been paid out during the entire 45-year history of the program.

grew to become our modern-day farm policy. Even though crop insurance was original-

ly introduced on a pilot basis and only cov-ered wheat, it would go on to pave the way for farmers to financially recover from natural disasters and volatile market fluctuations; pay their bankers, fertilizer suppliers, equipment providers and landlords; purchase their pro-duction inputs for the next season; and give them the confidence to make longer term in-vestments that increased their productivity.

By 1939, approximately 165,000 wheat policies were in place in 31 states. According to Crop Insurance, Disaster Assistance, and the Role of the Federal Government in Providing Catastrophic Risk Protection, the government “absorbed all delivery and operating costs” ensuring each of the policies was covered. As the government continued to expand the Federal Crop Insurance Program, eventu-ally covering much more than just wheat, it remained a pilot program for the first 40 years.

The Agricultural Act of 1949, another permanent piece of agricultural legislation, was enacted to broaden commodity cover-

age, maintain acreage allotments and extend price supports based on a parity concept, which was meant to raise commodity prices and help them keep pace with inflation. Ad-ditionally, the bill created the Farmers Home Administrations (FMHA) emergency loan program, which established emergency loans at subsidized interest rates for farmers who suffered losses caused by a natural disaster.

It is important to note that if, or when, Congress faces the dilemma of not passing a new farm bill and the current rule expires, the rules and regulations governing most of U.S. farm policy would automatically revert to the permanent 1938 and 1949 agricultural acts.

From 1954 to 1970, farm policy slowly

“Agriculture…is our wisest

pursuit, because it will in

the end contribute most to

real wealth, good morals,

and happiness.”

President Thomas Jefferson

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tSteve Harms, Rain and Hail L.L.C., called 1984 the “year of contrasts.” The nation’s pri-vate crop-hail insurance program had a tre-mendous 1984, experiencing a loss ratio of 40.8 percent, the lowest since 1946. Howev-er, the Federal Multiple Peril Crop Insurance (MCPI) program was again disastrous. More than $638 million was paid in losses resulting in an industry loss ratio of 147 percent.

Events in 1988 then took a turn for the worst. While the clear skies and high tem-peratures produced abnormally low crop-hail losses, the effects on crop yields and Federal crop insurance were near disastrous levels. By the end of 1988, very few geographic ar-eas had been spared by the drought. Illinois, North Dakota and Montana had statewide loss ratios that exceeded 500 percent. Indi-ana’s loss ratio was 400 percent; Iowa, 375 per-cent; South Dakota, 338 percent; Minnesota, 309 percent; Ohio, 298 percent; and Missouri, 200 percent.

The 1988 drought dominated the news media, and all eyes were on Washington, D.C., for answers. Eventually disaster leg-islation was enacted that provided for re-lief on nearly all crops in all states. It also formalized the link between crop insurance and eligibility for disaster assistance, requir-ing farmers to purchase or maintain a Fed-eral policy for 1989 if the 1988 loss was 65 percent or greater and a disaster payment was received.

Policymakers Turn to Crop Insurance

Despite the investments made in agricul-ture throughout the ‘70s, U.S. agriculture was again reeling, both with adverse weather and an unparalleled farm debt crisis. Producers needed assistance, but aid was expensive, not sufficiently targeted and slow to arrive, caus-ing hardship, not just in the countryside, but for taxpayers as well. Even as late as the ear-ly 1990s, crop insurance participation rates hovered in the 30 percent range and Congress was spending considerably more each year on ad hoc disaster relief measures than risk management.

That is when Congress passed the Federal Crop Insurance Reform Act of 1994, which came on the heels of a disastrous 1993 that saw more than 21 million acres of flooded

1936Soil Conservation andDomestic Allotment ActEncouraged conservation by paying benefits to farmers for planting soil-building crops instead of primary crops that were being pushed prior to 1936. This act lasted two years before being amended.

1938Agricultural Adjustment ActCreated the Federal Crop Insurance Program and firmly planted the seed that has allowed crop insurance to grow to the number one most popular and preferred farming safety net program to this day. Even though crop insurance was originally introduced on a pilot basis, initially only covering wheat, this addition would go on to pave the way for farmers to financially recover from various natural and economic disasters.

1949Agricultural Adjustment ActEnacted to broaden commodity coverage, maintain acreage allotments and extend high price supports based on a parity concept. It may be worth noting, that if or when Congress faces the dilemma of not passing a new farm bill, the rules and regulations governing most of U.S. farm policy would automatically revert to the permanent 1938 and 1949 agricultural acts.

1949Farmers Home Administration’s Emergency Loan ProgramEstablished emergency loans at subsidized interest rates for farmers who suffered losses caused by a natural disaster.

1956Agricultural ActIntroduced the use of a conservation reserve in addition to acreage control for supply management. This Act established the Soil Bank and provided up to 29 million acres of Conservation Reserve.

1965Food and Agriculture ActEstablished new income support payments in combination with reduced price supports and continued supply controls. Extended wheat and food programs to 1969 as well.


paved the way for one of the most effective and popular forms of crop insurance used by farmers today.

The year 1996 also brought with it a seis-mic shift in farm policy. Crop prices had re-bounded, new international markets were emerging, and growers wanted to be un-shackled from the government when making business decisions. Producers and lawmakers alike supported farm policies that were more free-market oriented and benefited from pri-vate-sector efficiency.

Thus was born the Federal Agricultur-al Improvement and Reform (FAIR) Act of

1996. FAIR eliminated target prices for in-come supports, introduced nearly complete planting flexibility, and continued marketing and non-recourse loans for existing crops. It established marketing loans for all program crops with the exception of extra-long staple cotton and capped loan rates at 1995 levels. This Act also streamlined crop insurance by paving the way for a single-delivery system, transferring existing Farm Service Agency (FSA) delivered policies to the private insur-ance companies.

These changes helped strengthen the crop insurance industry and by 1998, more than 180 million acres of farmland were insured under the program, representing a three-fold increase from just 10 years earlier. Un-der Secretary of Agriculture at the time, Gus Schumacher, said, “RMA and the private crop insurance companies have developed innova-tive new crop insurance policies and provided protection to more farmers and more acres than ever before.”

The 1990s saw great expansion in the num-ber of crops and counties protected by crop insurance including canola, blueberries and Florida fruit trees. New programs, such as the Group Risk Plan, Revenue Assurance and Ad-justed Gross Revenue, were also introduced.

farmland and $4 billion in damage. Accord-ing to Ken Ackerman, Manager of the Federal Crop Insurance Corporation at the time, the legislation was “designed to combine the crop insurance program and the various ad hoc Federal disaster relief bills into a single, uni-fied program so that farmers will have more certainty in knowing how the government will protect them in the event of a natural di-saster and taxpayers will have more certainty knowing what their financial risk exposure is.”

The reform bill also restructured crop insurance to increase farmer participation, increased the private sector’s role, enhanced provisions of the crop insurance program for the farmer and created the USDA’s Risk Man-agement Agency (RMA). It made participa-tion in crop insurance mandatory for farmers to be eligible for deficiency payments under price support programs, certain loans and other benefits. Catastrophic coverage (CAT) was created, compensating farmers for losses exceeding 50 percent of an average yield paid at 60 percent of the price established for the crop that year.

Crop insurance revenue products—Crop Revenue Coverage (CRC) and Income Pro-tection (IP)—were also introduced to farmers beginning with the 1996 spring crop year and

“In no other country do

so few people produce

so much food, to feed

so many, at such

reasonable prices.”

President Dwight D. Eisenhower

Crop Insurance

Farm Policy

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tBy May 2000, Congress approved anoth-er important piece of legislation to further its goals of making crop insurance more afford-able and widely available. The Agricultural Risk Protection Act (ARPA) made it easier for farmers to access different types of crop insur-ance products including revenue insurance and protection based on historic yields. ARPA also increased premium discounts to farmers to encourage greater crop insurance partici-pation and included provisions designed to reduce fraud, waste and abuse.

Another Farm Bill in 2002 made addition-al changes to commodity policies and contin-ued the trend of prioritizing crop insurance in America’s farm policy portfolio. By that time crop insurance had emerged, for the first time ever, as the largest single source of aid to farmers following disaster.

Just two decades after the historic pub-lic-private partnership structure that signifies today’s crop insurance system was established, the program had grown substantially and was successfully protecting the economic viabil-ity of rural communities across the country. From $377 million in premium and $3 billion in liability in 1981, crop insurance boasted more than $4.1 billion in premium and $46 billion in liability by 2005.

In 2008 Congress passed the Food, Con-servation and Energy Act (2008 Farm Bill) helping build on 2002’s farm security plan and again taking steps meant to improve crop insurance. However, new budget pressures emerged as the U.S. economy began experi-encing ramifications from the recent reces-sion. This led to budget reductions for crop insurance in the 2008 bill and set the stage for future farm policy deliberations.

Crowning Crop Insurance as Farm Policy’s Centerpiece

By 2012 when new Farm Bill discussions were under way, it became obvious that addi-tional budget cuts to farm policy were inevi-table. Farmers from coast to coast repeatedly stated their support for crop insurance and urged lawmakers to expand the system, even if it meant other parts of the farm safety net would need to be reduced or eliminated.

Such support is understandable consider-ing that, at the same time, farmers across the Midwest and Deep South were facing a his-

1970Agricultural ActCreated minimum loan rates and additional price supports based on percent of parity. It also required farmers to plant their crop before a set date or have their allotments reduced in future years.

1973Agriculture and Consumer Protection ActCreated disaster payments for farmers who were prevented from harvesting two-thirds of normal production, deficiency payments when prices fell below target levels and target prices to determine such deficiency payments.

1977Food and Agricultural ActIncreased target prices and loan rates, revised payment limits upwards and substituted current planted acreage for allotments. In addition to these alterations, this Act also introduced Farmer Owned Reserves for grains.

1980Crop Insurance ActIncreased participation in the Federal Crop Insurance Program, making it more affordable and accessible. The Act also established multi-peril crop insurance (MPCI) for crops throughout various regions and this form of insurance was viewed as a “replacement for disaster programs.”

1981Agricultural and Food ActContinued and modified commodity programs through 1985. Marketing quotas and rice allotments were eliminated under this Act and dairy support prices were lowered.

1985Food Security ActAllowed lower commodity price and income supports, trying to maintain total production and loan rates. Introduced marketing loans for cotton and rice.

1994Federal Crop Insurance Reform ActMade participation in crop insurance mandatory for “farmers to be eligible for deficiency payments under price support programs, certain loans and other benefits.” This in turn also created catastrophic (CAT) coverage.


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torical drought, far worse than the drought of 1988. But unlike the ‘80s, farmers now embraced insurance. More than 282 million acres and $117 billion in liability were pro-tected by 2012, and many farmers who had purchased crop insurance for years, were sub-mitting loss notices to their insurance agent for the first time.

All told, crop insurance paid more than $17 billion in indemnities that year, but that was only part of the story. Farmers received aid quickly after claims were adjusted, and that aid helped them break even, not profit. Because of the system’s unique cost-sharing structure, farmers had paid more than $4 billion in premiums and shouldered approx-imately $13 billion in deductibles before re-ceiving a dime from crop insurance. Private insurers also suffered $1.3 billion in losses, which otherwise would have fallen on the backs of taxpayers.

Michael Scuse, Under Secretary for USDA, said of the situation after he toured devastated farms that summer: “I have yet to have a sin-gle producer call me with a complaint about

crop insurance. That is a testament to just how well agents, adjusters, the companies, and Risk Management Agency (RMA) worked together in one of the worst droughts in the history of this nation.”

The Agricultural Reform, Food and Jobs Act was signed into law on February 7, 2014. The new Act accelerated the evolution from traditional farm price and income support to risk management and solidified crop insur-ance as the primary tool for farmers in deal-ing with production and price risk.

The 2008 Farm Bill’s direct and countercy-clical payment programs and the state-based revenue program known as ACRE (Average Crop Revenue Enhancement Program) were eliminated. In their place, a farmer could choose one of two new farm programs that began with the 2014 crop year: 1) Price Loss Coverage (PLC), a program that makes a pay-ment to a producer when the market price for a covered crop is below a fixed reference price; or 2) Agriculture Risk Protection (ARC), a program that makes a payment when ei-ther the farm’s revenue from all crops or the

“Providing farmers the

option to insure their

whole farm at once gives

farmers more flexibility,

promotes crop diversity,

and helps support the

production of healthy

fruits and vegetables.

More flexibility also

empowers farmers

and ranchers to make

a broader range of de-

cisions with their land,

helping them succeed

and strengthening our

agriculture economy.”

Agriculture Secretary Tom Vilsack

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t1996Federal Agriculture Improvement and Reform ActRepealed mandatory crop insurance participation and also replaced price support and supply control programs with programs of direct payments based on historical production. Congress also established the Risk Management Agency to oversee Federal Crop Insurance Corporation programs, risk management programs and educational programs, supporting U.S. agriculture.

2000Agricultural Risk Protection ActMade it easier for farmers to access different types of crop insurance products including revenue insurance and protection based on historic yields. This Act also increased premium subsidy levels to farmers and included provisions designed to reduce fraud, waste and abuse.

2002Farm Security and Rural Investment ActEstablished a counter-cyclical payments program. Also amended the Federal Crop Insurance Act.

2008Food, Conservation and Energy ActHelped expand regulatory options of the crop insurance industry conducted by RMA, as well as expanded assistance for organic farmers, research and development.

2014Agricultural Reform, Food and Jobs ActAccelerated the evolution of farm policy from traditional farm price and income support to risk management tools, signifying the importance of farm security.

county’s revenue for a crop (the farmer may choose which alternative) is below 86 percent of a predetermined or benchmark level of revenue.

In addition to these two new farm pro-grams, the 2014 Farm Bill substantially strengthened crop insurance by adding two supplemental policies that will help producers expand their protection against losses due to natural disasters or price declines.

The first program, the Stacked Income Protection Plan, or STAX, is an area revenue plan that a cotton producer may use alone or in combination with an underlying policy or plan of insurance. The second program, the Supplemental Coverage Option, or SCO, provides crop producers with the option to purchase area coverage in combination with an underlying individual policy or plan of insurance that would allow indemnities to be equal to a part of the deductible on the under-lying the policy or plan of insurance.

The Farm Bill also put priority on intro-ducing new policies that increase participa-tion by producers of under served agricultural commodities and initiated several feasibility studies to determine where new products and policies might be the most effective. It also provided new and beginning farmers with an additional premium support and the benefits of higher yields until their own actual produc-tion history can be provided.

Today, like never before, our farmers have the ability to more quickly recover from eco-nomic or natural disasters thanks to crop in-surance and its many strengths, including a public-private partnership structure, speed of delivery, the ability to be uniquely tailored for farmers’ individual needs, and cost-sharing.

Getting to this stage in our history has re-quired the foresight of leaders dating back to the founding of this great nation who shared a common goal of securing America’s food and fiber supply. It will be important that future leaders share this same overarching goal, and as a crop insurance industry, we must remain ready to do our part in meeting whatever challenges tomorrow may bring.

Editor’s Note: This piece was compiled us-ing a large number of resources. To find a list of those resources, please visit www.cropinsur-anceinamerica.org/resources-materials and search for this article in PDF form.

to agricultureAmerica’s commitment


CropInsurance TODAY

Agriculture was, agriculture is and will be the most important sector in the world. Only farmers are feeding the world’s population as weather extremes due to the climate change increase. Therefore a strong security net for the farmers is neces-sary and the agricultural insurers make an important contribution to support a healthy agricultural system.

AIAG is the international association of agricultural insurers and was found-ed in Paris, France, in 1951. Its permanent secretariat is based in Zurich, Switzerland. Currently, the association has 102 members from all over the world. “We connect agri-cultural insurers worldwide” is the vision of the association.

Kurt Weinberger, AIAG’s president, is convinced: “because of the challenges in ag-riculture caused by increasing damage and income fluctuations involved, it will be even more important in the future to exchange ex-pert knowledge with all specialist agricultur-al insurers from all over the world (crop and livestock insurers).The agricultural insurers

must learn from the world’s best. AIAG has been allocated this task by the agricultural insurers.” Therefore, there is a close collaboration between AIAG, National Crop Insurance

Services (NCIS) and the Latin American Association for the Development of Agricultural Insurance (ALASA).

The Agricultural Insurance Market WorldwideThe global premiums of agricultural insurance are $28.4 billion US. (Figure 1)

AIAG—International Association of Agricultural Insurers

“We connect agricultural insurers worldwide!”

Figure 1. Global Premiums of Agricultural Insurance

By Kurt Weinberger, President, AIAG

12 SEPTEMBER2015

At the General Assembly, which is held biennially, the board members and the president are elected. Pictured above are current members of the AIAG board

The AIAG’s most important key objectives

Biennial international AIAG Congress: 33rd Congress 2015 in Kansas City

Every two years, a congress is organized for the members of AIAG. Highly qualified speakers share their experience and knowl-edge with the attendees. The 33rd AIAG Congress will take place in Kansas City, September 27–30, 2015. This is the first time in AIAG’s history that the congress will take place outside of Europe.

AIAG Board Meeting Zurich, May 2015President Dr. Kurt Weinberger AustriaVice-Presidents Dott. Pier Ugo Andreini Italy Bernard Koeckhoven Netherlands Arnaud de Beaucaron France Members Dr. Rainer Langner Germany Ignacio Machetti Spain Ewa Nordenstedt Sweden Tom Zacharias USA Secretary-Treasurer Pascal Forrer Switzerland Delegate of the Board Patricia Angehrn Switzerland

Left to right: Koeckhoven, Andreini, Zacharias, Langner, Weinberger, Grayeb (guest from ALASA), Machetti, Nordenstedt, de Beaucaron.

AIAG Congress Vienna, 2013: more than 350 attendees from 34 countries worldwide.


Since 1951, AIAG put

through 16 study tours for

the board members through

all continents to get useful

information about the

different crop insurance

and private public

partnership systems.

Annual International AIAG Adjusters’ Seminar: 37 seminars since foundation

AIAG organizes adjusters’ seminars for its members annually. The location and the examined crop vary each year. AIAG mem-bers throughout Europe, Asia and even South Africa graciously hosted the past 37 seminars, giving the loss adjusters the opportunity to widen their experience on damages concern-ing various fruit, vegetables and vine.

AIAG Board’s Study Tours: 16th tour was in China 2014

Since 1951, AIAG put through 16 study tours for the board members through all con-tinents to get useful information about the different crop insurance and private public partnership systems.

Other objectives are regular exchange of experience in the area of livestock insurance with its own working group, the collection of statistical information from our members, the creation of cooperative relationships and connections between our members and close contact with other crop insurance associ-ations like NCIS and ALASA to inform our members about other insurance systems.

Contact information:AIAG Seilergraben 61CH-8021 ZürichTel. +41 44 257 22 [email protected] • www.aiag-iahi.org

AIAG Adjusters’ Seminar Murcia, Spain, 2015: Hail damage on lettuce

AIAG’s Board Study Tour China, 2014

14 SEPTEMBER2015

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2014 U.S. CROP-HAIL LOSS RATIO BY STATEAll Crops • All Losses • All Policies

TOP 20 STATES

FOR NCIS MEMBERS

AL10

AZ82

AR205

CO118

CT 0

DE 19

GA58

KS96

OK61

TX102

NM97

UT6

WY28

M076

NH 0

VT 0

RI 0

NJ 0

NY109

PA44

VA36

NC17

SC3

WV0

OH18

WI42

NV0

NE248

MT110

MS5

ND57

MN119

SD49 MI

86

MA 0

MD 281

ME0

LA84

TN79

KY148

IA137

IN41

IL74

ID140

OR32

WA192

FL12

CA81

0 to 35

66 to 100

101 and up

36 to 65

Data Source: NCIS 6-B Adjusted Verified Totals as of 08/17/2015.

© National Crop Insurance Services 08/2015.

STATE PREMIUMS LOSSES LOSS RATIO %

Nebraska 180,910,650.00 448,900,535.00 248.13Iowa 128,131,738.00 176,163,580.00 137.49North Dakota 98,102,726.00 55,978,762.00 57.06Minnesota 96,478,130.00 114,663,028.00 118.85Illinois 86,309,768.00 63,745,827.00 73.86South Dakota 60,966,020.00 30,099,513.00 49.37Kansas 52,197,819.00 50,107,362.00 96.00Texas 49,565,196.00 50,525,561.00 101.94Montana 43,993,583.00 48,546,945.00 110.35Indiana 25,815,266.00 10,596,962.00 41.05Missouri 23,049,736.00 17,541,085.00 76.10Washington 16,493,801.00 31,678,211.00 192.06Idaho 15,413,744.00 21,649,479.00 140.46Wisconsin 15,395,397.00 6,504,562.00 42.25Colorado 14,985,384.00 17,696,234.00 118.09Arkansas 14,360,635.00 29,415,796.00 204.84Ohio 11,713,895.00 2,077,436.00 17.73North Carolina 9,372,960.00 1,552,286.00 16.56Kentucky 7,744,502.00 11,466,021.00 148.05Michigan 7,146,171.00 6,135,145.00 85.85All State Totals 987,795,627.00 1,211,568,358.00 122.65Data Source: NCIS 6-B Adjusted Verified Totals as of 08/17/2015.© National Crop Insurance Services 08/2015.

16 SEPTEMBER2015

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2014 U.S. MPCI LOSS RATIO BY STATEAll Crops • All Losses • All Policies

Data Source: RMA Summary of Business as of 06/17/2013.Prepared by National Crop Insurance Services 06/2013.

AL55

AZ110

AR81

CO87

CT 56

DE 11

GA94

KS92

OK190

TX110

NM112

UT72

WY71

M027

NH 41

VT 57

RI 63

NJ 36

NY90

PA40

VA42

NC59

SC64

WV52

OH50

WI111

NV231

NE88

MT49

MS55

ND63

MN212

SD25 MI

66

MA 83

MD 21

ME28

LA37

TN48

KY94

IA191

IN38

IL40

ID93

OR115

WA104

FL30

CA112

0 to 35

66 to 100

101 and up

36 to 65

Data Source: RMA Summary of Business as of 08/17/2015.

Prepared by National Crop Insurance Services 08/2015.

Alaska 37Hawaii 92

TOP 20 STATES FOR MPCI

STATE PREMIUMS LOSSES LOSS RATIO %

Texas 980,260,888 1,079,978,817 110.17

North Dakota 914,043,879 578,825,445 63.33Iowa 738,188,743 1,409,662,588 190.96South Dakota 717,385,146 178,773,085 24.92Illinois 679,246,763 268,414,514 39.52Kansas 668,927,455 614,572,068 91.87Minnesota 656,870,418 1,395,287,310 212.41Nebraska 576,875,142 508,162,857 88.09California 389,153,255 434,101,375 111.55Missouri 380,237,624 103,830,661 27.31Indiana 376,946,530 144,990,719 38.46Ohio 269,213,202 135,116,622 50.19Wisconsin 253,652,605 282,123,589 111.22Oklahoma 200,342,462 379,835,575 189.59Colorado 190,825,121 166,125,109 87.06North Carolina 182,497,267 106,818,431 58.53Michigan 179,204,684 117,521,436 65.58Montana 161,718,711 79,276,543 49.02Georgia 152,462,981 142,776,389 93.65Kentucky 149,507,945 140,404,125 93.91All State Totals 10,064,838,945 9,075,412,843 90.17Data Source: RMA Summary of Business as of 08/17/2015.Prepared by National Crop Insurance Services 08/2015.


Since the formation of National Crop In-surance Services (NCIS), updates to loss ad-justment procedures have originated from the Agriculture Research program at NCIS. Agronomic research projects needed for such updates are conducted at university experi-ment stations and agricultural colleges across the United States, as well as some locations in Canada. All research projects are examined over the course of at least three years. How-ever, if for some reason the results are not obtained for one or more years, the research project may be extended.

In order to know which crops need to be addressed, NCIS researchers turn to company field adjusters, claims supervisors and univer-sity researchers for advice. The NCIS research program then focuses on designing experi-ments that will result in data used to create up-to-date, consistent and timely loss adjust-ment procedures. When combined with ex-isting projects, NCIS has 17 research projects ongoing across 13 states from Washington to South Carolina, and from Saskatchewan, Canada to New Mexico.

In 2014, NCIS performed research on al-falfa, canola, chickpeas, chile peppers, corn,

cotton, lentils, soybeans and potatoes. The results are summarized below. It is import-ant that these results are not used exclusively, but combined with the results from previous years’ research and any subsequent research in order to provide the best loss adjustment procedures for NCIS members.

Alfalfa—MissouriIn 2014, research was conducted to find a

better method for giving an accurate apprais-al of alfalfa yields. Researchers compared the use of the number of plants and the number of stems of alfalfa to determine the best method.

Alfalfa was seeded in the spring of 2014 with different seeding rates, percentages of Roundup Ready (RR) and conventional al-falfa to give a wide range of plants and stems within the treatments. The results showed a very good correlation between the number of stems and the forage yield (R2 = 0.88).

Researchers took photos of each treatment two weeks after harvest to determine wheth-er it was possible to use computer software to differentiate the amount of stems/groundcov-er color and use this as an estimate of forage yield as well. The preliminary results suggest that this may be possible. Forage yields will continue to be determined over the next cou-ple of years to follow this procedure through the various harvests.

Alfalfa—North DakotaResearch was conducted in North Dakota

to study the potential use of stems as com-

2014 NCIS Agronomic Research Results

pared with number of plants for appraisals on forage yields. Three different trials were done in 2014: the first trial established a new stand of alfalfa in 2014 by using six different seed-ing rates from one to 25 pounds of seed per acre; the second trial utilized the second year (known as the production year) of the trials that were established in 2013 using the six different seeding rates; the third trial used a 5- and 7-year-old stand of alfalfa with different plant and stem densities.

Forage was harvested twice for the new-ly established alfalfa in trial one. The use of either plants or stems gave the same level of accuracy in predicting yield for the estab-lishment year. The yields for the older alfal-fa stands were better predicted by the use of the number of stems compared with the plant density. This research will continue in 2015.

Canola—Oklahoma Since the early 1980s, research conduct-

ed on canola has focused on the spring types located in Canada and the upper tier states in the U.S. Current research and loss procedures were developed based on these specific types of canola. Recent breeding has improved the survival of winter types of canola.

Winter canola production in Oklaho-ma and Kansas varies tremendously from the Northern regions due to different cli-mates and growing seasons. The research being done in Oklahoma is focused on new winter canola varieties to determine if the response to damage at the various growth

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18 SEPTEMBER2015

stages differs from the observations made for spring canola types.

In Oklahoma, a winter canola hybrid was used to determine the influence of early defo-liation, 8-to-10 leaf stage, and damage to the developing flower stem (bolt or early flower) on canola production. At the end of October 2013, plots were seeded using a convention-ally tilled seedbed. Harvest occurred in early June 2014.

Defoliation treatments of 50 and 100 per-cent were applied to 8-to-10 leaf canola in early March 2014. The 50 percent defoliation resulted in a 19 percent loss, while the 100 per-cent defoliation resulted in a 26 percent loss. Research on spring types has shown approxi-mately a 30 percent loss with 100 percent de-foliation of 10 leaf spring canola. Treatments of 50 and 100 percent defoliation were applied at early bolting – approximately 6- to 10-inch tall bolt (Mid-March), which resulted in loss-es of 12 and 23 percent, respectively.

Other treatments were done on a weekly basis during flowering, which involved cut-ting off various amounts (50 and 100 percent) of the main flowering stem and crimping the main stem at 33 or 66 percent of the flower stalk/podded area. After the first treatment, the 50 percent treatments showed little loss with the plants being able to produce new limbs/flowers to compensate—5, 5, 11 and 26 percent loss at one, two, three or four weeks into flowering. The 100 percent treatments at one, two, three and four weeks after initiation of flowering had losses of 23, 32, 40 and 45 percent, respectively, still able to compensate, but difficult to reinitiate the flowers.

Canola—SaskatchewanResearch on Saskatchewan canola was

done to reexamine the influence of stem breakage during the flowering stages of hy-brid spring canola growth and development. Original research was done in the early 1980s on open pollinated varieties that have very different growth rates and plant vigor com-pared to the hybrid varieties grown currently.

This trial was done at two locations just outside of Saskatoon, Saskatchewan during the 2014 growing season. Treatments were initiated at the onset of bolting (approx. BBCH 53) and continued weekly until all flowers had fallen off the plants (BBCH>69). (For more information on the BBCH Scale,

please visit http://bit.ly/1JmRWg0.) Note that canola has the ability to recover from substan-tial stem breakage, particularly if this damage occurs during the early phase of flowering.

During the first two weeks of flowering, removing up to 75 percent of the flowering ra-ceme resulted in less than 10 percent yield loss. Yield loss remained under 20 percent even with late stem breakage, if 25 percent of the raceme was removed. However, canola’s ability to recover was severely limited with high levels of stem breakage (50, 75 and 100 percent) near the end of flowering. The yield loss ranged from 60 to 80 percent under such conditions.

Chickpeas—North DakotaChickpea cotyledons stay below the

ground during the early stages of growth, similar to field peas and lentils. This allows the plants to recover from early hail quite well since there really is no stand reduction, but rather a cut-off. Hail that occurs during the later vegetative and flowering to pod-fill stag-es that is of greater concern.

Research was started in 2013 and contin-ued in 2014 to look at simulated hail damage on chickpea growth and development. Simu-lated hail was applied at three growth stages: vegetative, first flower and late flower/pod set. Various levels of damage up to 75 percent was applied at each stage of growth. Loss was greater as the plants matured from vegeta-tive to late flowering. The greatest amount of loss was approximately 50 percent from the 75 percent plant damage treatment. This re-search will continue in 2015.

Chile Peppers— New Mexico

Within the past 15 years, chile pepper production methods have changed consider-

ably. This is due to the high cost of labor in the United States compared to other growing regions. High costs of labor have led to the de-velopment of mechanical harvesters picking chile peppers, especially for red chile/paprika production.

Growers have also gone to direct seed-ing with little or no thinning of the fields so that the plants tend to grow taller. As a result, some of the plant architecture has changed. The purpose of this research is to determine if early season stand losses would affect the pro-duction of the red Chile/paprika under closer plant spacing regimes.

Two red chile pepper varieties were used, with thinning applied eight weeks after estab-lishment. Thinning occurred at 6-, 8-, 12-, 24- and 60-inch spacing. Production per plots did not show major differences in yield, except at the widest difference. The number of basal branches did increase as the distance between plants increased, which also reduced the effi-ciency of mechanical harvesters.

Corn—Illinois and Minnesota

This year marks the third year of corn research focused on the accuracy of the sec-ond or multiple loss procedures. Year two research was conducted in Illinois and Min-nesota, and the first year was held in Ohio. The research looked at defoliation applied at a single, two and three stages of growth. The stages were 10 leaf, 15 leaf and tasseling. The levels of defoliation were 0, 50 and 100 per-cent defoliated.

Differences in yield were measured be-tween the expected loss from the current charts and the actual measured loss. The numbers in Table 1 followed by the * are sig-nificantly different from the expected results.

Table 1. Leaf Stage (L) Expected Measured Measured Measured Loss (%) Loss -MN Loss -IL Loss -OH 100% 15L 51 49 17* 44* 50% Tassel 31 16* 23* 28 50% 10L + 50% 15L 8 15 17 20* 50% 10L + 50% Tassel 33 24* 19* 22* 100% 10L + 50% 15L 15 25* 22 24* 100% 10L + 50% Tassel 48 27* 2* 31* 100% 15L + 50% Tassel 84 63* 47* 53* 50% 10L + 50% 15L + 50% Tassel 50 18* 23* 26**Numbers are significantly different from the expected results.


Corn—Virginia and North Dakota

Research in Virginia and North Dakota is being conducted to determine the accuracy of the maturity line appraisal method for corn. Previous research suggested that the current method may be underestimating the final yields when done at the early milk lines.

Research has been completed in six states

to determine the actual corn fill rates and if the current factors are adequate or if differ-ent factors may be more appropriate. The research indicates that the current appraisal method underestimates yield during the milk line stages. When the appraisal was done in the extended kernel stage, the appraisal meth-od estimated yield within five percent of the actual yield.

Cotton—CaliforniaInitiated to follow up on a previous study,

the California cotton study was conducted to determine the effects of limb removal in cotton, specific to the growing conditions of Arizona and California. This research ex-amined limb removal during the later repro-ductive stages of growth due to the greater number of limbs that are produced consis-tently under these environmental condi-tions, see Table 2. The treatments removed limbs at node 20, 24 and 32. NCIS removed either 0, 25, 50 or 75 percent of the limbs from the top of the plant down.

The growth stage at which the plant cut-offs were removed had a significant effect on cotton yield. The loss percentages were con-sistently lower than what the current charts would suggest.

A second study looked at the defoliation of the cotton plant with and without the removal of the terminal nodes. Defoliation was done at nodes 4, 10, 16 and 24 with either 50 or 100 percent of the leaves being removed. The 50 percent defoliation treatments removed the top 50 percent of the leaves.

The removal of the terminal with no de-foliation resulted in an average of 14 percent loss. The 50 percent defoliation treatment av-eraged 19 percent loss while the 100 percent defoliation treatment averaged 24 percent loss. The removal of the terminal increased the loss for the 50 percent defoliation treat-ment to 30 percent and the 100 defoliation treatment to 43 percent.

Cotton—South CarolinaThis study was initiated to determine the

effects of defoliation to cotton that is specific to the growing conditions of South Carolina. The research was conducted under rain-fed conditions and examines defoliation during vegetative and reproductive stages of growth.

Table 2. Node % Limb Removal Loss

20 0% 0% 20 25% 12% 20 50% 24% 20 75% 35% 24 25% 15% 24 50% 45% 32 25% 32% 32 50% 51%

Cotton research on early bloom with 100% defoliation and terminal.

Corn defoliated at the 10 leaf stage.

20 SEPTEMBER2015

The treatments were 50 and 100 percent de-foliation at V-4, R-1, R8 and R12 stages of growth with/without the terminal being removed.

The growth stage at which the plant cut-offs were removed had a significant effect on cotton yield. The loss percentages were con-sistently lower than what the current charts would suggest. The later stages of develop-ment actually experienced increased yields under irrigation from the removal of the up-per most nodes. See Table 3.

Cotton—TexasSpecific to the growing conditions of the

High Plains of Texas, this study was initiated to determine the effects of stand reduction in cotton. The trial was conducted under dry-land and irrigated conditions. During vege-tative stages of growth, the treatments were stand reductions, based on number of seed planted, of control, 20, 40, 60, 80 and 90 per-cent for three different varieties.

The data presented are the averages over the three varieties (Table 4). Weather con-ditions were difficult for growing cotton, but were better than those in 2012. The re-sponse to the various treatments differed and will be further examined to determine their reliability before any changes are incorporat-ed into the loss procedures.

The second trial, which was conducted at Lubbock, studied the effects of plant cut-offs on cotton production. The treatments were cut-offs at node 2, 4, 8, 12, 16 and 20 with the cut-off occurring at the top node, and then at two nodes and four nodes below the top node. An example would be at node 16, the cut-offs would occur at C16, C14 and C12. This was done under both dryland and irrigated conditions. The resulting losses are shown in Table 5.

Lentils—North DakotaTo develop a better loss adjustment pro-

cedure, a study was initiated to evaluate damage to lentils during the vegetative and reproductive stages. Two different lentil va-rieties, Viceroy and Pennell, were treated at vegetative, first flower and at pod-fill to de-termine the effect of simulated hail. Little loss occurred from damage during the vegetative stage, with a maximum of nine percent. Yet, damage that occurred during the flower and

Table 3. LOSS Defoliation Term. Removed 4 Leaf R-1 R-8 R-12

50% No 0% 3% 15% 0% 50% Yes 11% 6% 14% 16% 100% No 33% 47% 51% 74% 100% Yes 51% 38% 64% 69%

LOSS Level of Strand Reduction Irrigated Dryland Control 0% 0% 20% -4% 38% 40% -5% 14% 60% 10% 47% 80% 15% 43% 90% 20% 80%

Table 4.

Cotton research on early bloom plants plus two weeks with 100% defoliation.

Researcher, Oli Bachie (right) and Tom Vetter, ProAg Insurance (left), at the cotton research plot in California.


pod-fill stage resulted in greater amounts of loss (Table 6).

Potatoes—ColoradoResearch began in 2014 to examine the

losses associated with simulated hail dam-age to white potatoes: both medium and late maturing varieties under the growing con-ditions in Colorado. Two different varieties, Russet Norkotah Sel. 8 (a medium maturing variety) and Russet Nugget (a late maturing variety) were grown and had simulated hail applied at three growth stages: Tuber Ini-tiation (TI), Early Bulking (EB), and Late Bulking (LB).

Damage was applied at 0, 33, 66 and 95 percent. The plants were then taken to har-vest. Losses varied depending on the maturity of the potatoes as shown in Table 7. This was the first year of a planned three year trial so final conclusions will not be made until all re-search data is available.

Potatoes—MichiganResearch was started in 2013 to deter-

mine the losses associated with simulated hail damage to white potatoes: both medium and late maturing varieties under the grow-ing conditions in Michigan. Two different varieties, Pike (a medium maturing variety) and Snowden (a late maturing variety) were grown and had simulated hail applied at three growth stages: Tuber Initiation (TI), Early Bulking (EB) and Late Bulking (LB). Damage

Lentil research in North Dakota shows 66% damage on the left and the check strips with no damage on the right.

Table 5. Node Cut 2 4 8 12 16 20 Dryland

Terminal -12% -20% -20% 8% 12% -12% Cut 2 Nodes 8% 12% 20% 18% -21% Cut 4 Nodes 45% 22% -19% -8% Irrigated

Terminal 14% 20% 22% 17% 18% 0% Cut 2 Nodes 25% 19% 25% 15% 19% Cut 4 Nodes 35% 19% 11% 19%

Table 7. Damage Tuber Initiation Early Bulking Late Bulking Medium-Russet Norkotah Sel.8 33% 2% 11% 9% 66% 14% 18% 10% 95% 35% 38% 13% Late-Russet Nugget 33% 2% 9% -2% 66% 14% 29% 2% 95% 35% 51% 24%

Table 6. LOSS Damage 33% 66% 100% Viceroy Vegetative -3 24 8 Flower 38 72 85 Pod-Fill 55 57 61 Pennell Vegatative -1 15 12 Flower 14 41 67 Pod-Fill 28 43 56

22 SEPTEMBER2015

24 SEPTEMBER2015

rieties, Russet Norkotah (a medium maturing variety) and Ranger Russet (a late maturing variety) were grown and had simulated hail applied at three growth stages: Tuber Initia-tion (TI), Early Bulking (EB) and Late Bulk-ing (LB).

Damage was applied at 0, 33, 66 and 95 percent. They are then taken to harvest. Losses varied depending on the maturity of the potatoes as shown in Table 9. Decisions on how this research will affect current loss procedures will be made after three years of research data is collected.

Potatoes—WashingtonStarted in 2013, research was conducted

to determine the losses associated with sim-ulated hail damage to white potatoes: both medium and late maturing varieties under the growing conditions in Washington. Two different varieties, Russet Norkotah – TX Strain 278 (a medium maturing variety) and Ranger Russet (a late maturing variety) were grown and had simulated hail applied at three growth stages: Tuber Initiation (TI), Early Bulking (EB) and Late Bulking (LB).

Damage was applied at 0, 33, 66 and 99

Table 8. Damage Tuber Initiation Early Bulking Late Bulking Medium-Pike 33% -11% -9% -16% 66% -8% -4% -26% 95% 9% 6% -6% Late-Snowden 33% 1% -2% -1% 66% 10% 12% 3% 95% 29% 40% 36%

Table 9. Damage Tuber Initiation Early Bulking Late Bulking Medium-Russet Norkotah 33% -15% 1% -4% 66% 12% 8% -2% 95% 31% 14% -9% Late-Ranger Russet 33% 3% 11% 7% 66% 10% 16% 13% 95% 32% 21% 12%

Potatoes—North DakotaBeginning in 2014, research was started to

look at the losses associated with simulated hail damage to white potatoes: both medium and late maturing varieties under the growing conditions in North Dakota. Two different va-

was applied at 0, 33, 66 and 95 percent. From there, the plants were taken to harvest. Losses varied depending on the maturity of the po-tatoes as shown in Table 8. Since this is the second year of a planned three year trial, con-clusions will be made at the end of all trials.

Researcher Chris Long, Michigan State University, examines potatoes that were defoliated during research.


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percent and then taken to harvest. Losses varied depending on the maturity of the po-tatoes as shown in Table 10. This is the second year of a planned three year trial, so we will wait until the end of year three to make our conclusions.

Soybeans—ArkansasA study was started in 2013 to investigate

the defoliation charts for both indeterminant and determinant type soybeans in Arkansas. Arkansas has historically grown more deter-

minant soybeans, but more recently there has been a trend to start growing an earlier ma-turing indeterminant variety.

When viewing additional research, NCIS has seen greater amounts of loss associated with defoliation damage occurring during the early to mid-reproductive stages (R1 and R3) of development and wanted to see if this was true. Two different varieties were used—MG 4.7 indeterminant and MG 5.4 determinant variety were planted at Newport Arkansas. Defoliation was applied at 0, 25, 50, 75 and 100 percent at either R1 or R3 stage of growth.

Losses were significantly greater for the indeterminant MG 4.7 variety at the higher levels of damage (75 and 100 percent) at R1 and R3 stages than our current charts would suggest. The determinant MG 5.4 variety also showed higher losses at the higher damage levels (75 and 100 percent); this occurred only during the R3 stage.

Soybeans—IndianaThis trial was initiated in 2012 to study the

impact of simulated hail defoliation on the

Table 10. Damage Tuber Initiation Early Bulking Late Bulking Medium-Russet Norkotah TX Strain 278 33% -4% 11% 8% 66% -1% 13% 11% 95% 19% 44% 31% Late-Ranger Russet 33% 7% 10% 8% 66% 14% 17% 7% 95% 25% 46% 16%

LOSS Defoliation 25% 50% 75% 100% MG 2.7 R1 4% 6% 5% 17% MG 3.7 R1 4% 5% 15% 26% MG 2.7 R3 3% 24% 37% 63% MG 3.7 R3 10% 23% 39% 55%

Table 11.

Soybeans were 75% defoliated (left) and 100% defoliated (right) at the R1 stage of growth.

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The products and services described here are written by ADM Insurance Company (not licensed in AK, CA, CO, FL, HI, ID, MN, NH, NM, NY, RI, VT, WA or WY) Home Offi ces Princeton, NJ and reinsured to Agrinational Insurance Company. The insurance products described here are subject to availability and qualifi cations. Other terms, conditions and

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yield and percent loss of two different matu-rity group varieties of soybeans. A maturity group MG 2.7 and a MG 3.7 soybean variety were grown at the Purdue research farm just west of Lafayette, Indiana.

Defoliation treatments were applied at R1 and R3 growth stages with defoliation levels of 25, 50, 75 and 100 percent. The three year average losses are shown in Table 11. The loss-es for the both varieties in the R3 stage have higher losses than our current charts suggest, especially at the higher levels of defoliation.

In conclusion, the NCIS research program could not happen without the support of NCIS member companies. For more than 90 years, research has provided the science be-hind the industry loss adjustment procedures. This provides company adjusters with the knowledge they need to determine accurate losses, giving farmers a peace of mind know-ing that their loss has been adjusted accurate-ly and fairly. We, at NCIS, strive to continue providing this service to the crop insurance industry. Continue to look for future NCIS agronomic research reports for final conclu-sions on all of our recent studies.

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Soybeans were 25% defoliated (left) and 50% defoliated (right) at the R1 stage of growth.


John Michael PillowYazoo City, Mississippi

John Michael Pillow is a fourth generation Mississippi farmer and spent the first part of his career managing his family’s farm. In 2011, Pillow decided to strike out on his own and become a full-time farmer.

“Most of the 3,500 acres I planted that year were in corn, which is a crop whereby most of the cost is right up front,” he says. By the time the entire field was planted, Pillow estimates he had not only his family’s future invested in the crop, but also $2.5 million that he had borrowed from the bank to put the crop in.

“2011 started out exceptionally dry for us, and by mid-summer, the crop was al-ready starting to show the signs of drought stress,” said Pillow. But then Pillow’s luck changed drastically as the drought was bro-ken by rain. And then more rain, and then some more rain.

And although Pillow’s farm and home-stead are protected by a sophisticated levee system, the levees simply weren’t high enough to accommodate the unending downpours. “Before I knew it, the Yazoo River was knock-ing on my front door.”

At that point, Pillow suddenly realized the value of crop insurance, and why it was worth buying every year. “Crop insurance, for me, not only proved to be essential, it’s the reason I’m in business today,” he said.

Just as luck would have it, Pillow’s crop insurance agent had approached him at the beginning of the crop year prior to discuss various high-loss scenarios with him. “Out of the blue, my crop insurance agent float-

ed the worst-case scenario by me about how well I’d handle a crop loss of 80 to 85 percent,” recalls Pillow. “I told him that a loss that high was simply inconceivable, that it would never happen.”

But Pillow notes that, given the fact that this was his first year of farming on his own, and that he would require a $2.5 million oper-ating loan from the local bank to put his crop in the ground, he decided the prudent thing to do would be to plan for the worst.

“I had to cut a check in excess of $60,000 in February to purchase the level of coverage the agent suggested for a level of loss that I didn’t really believe was possible,” he recalls.

And then it happened. Roughly three months after writing that check, the Yazoo

River had spilled over its banks and most of Pillow’s farm was underwater.

“I lost 80 to 85 percent of my crop that year,” said Pillow. “And to add insult to injury, after the waters receded, although most of the corn was completely washed away, the corn that was left had been severely damaged by drought,” he said.

Pillow said that just like car insurance, crop insurance gives you a degree of stability in times of disaster. “If you wreck your car, the insurance will replace it and you can still go to work the next day,” he says. “Why would you not have insurance on your food source, since it’s the most important thing we have?”

Pillow notes that through the whole pro-cess, his crop insurance agent and company were by his side. “When I found out that we were going to flood, the first call I made was to my crop insurance agent,” said Pillow. “He was very reassuring that it would be ok.”

Pillow said that when the flood was at its height, his agent, the adjuster and the supervi-sor were all on his farm surveying the damage and assuring him that his indemnity check would be on the way so he could bounce back from this.

“Needless to say, I would be doing some-thing else other than what I love besides farm-ing, and I would be repaying the bank for the $2.5 million I borrowed to put the crop in for the rest of my life,” said Pillow. “In fact, me, my wife and my kids would have been pay-ing the bank back for a generation or more,” he added.

CROP INSURANCE IN ACTION

CropInsurance TODAY

Pillow said that just like car insurance, crop insur-ance gives you a degree of stability in times of disaster. “If you wreck your car, the insurance will replace it and you can still go to work the next day,” he says. “Why would you not have insur-ance on your food source, since it’s the most import-ant thing we have?”

30 SEPTEMBER2015


OverviewThe 2014 year was

another successful demonstration of sales and service for the crop insurance indus-try. Yet, the year turned out to be frustrating in several aspects. After two successive years of gross losses (indemnities exceeding premi-ums), the natural expectation was for a return to fewer losses and more normal returns. But that was not to be, as lower crop prices and pockets of production losses pushed the gross loss ratio to 0.89, the fourth highest in the past decade. (Unless indicated otherwise, data in this article are as of April 20, 2015.)

The 2013/14 winter featured extended periods of extreme cold. While many areas had adequate precipitation, cold and variable temperatures, wind, periods of inadequate snow covering and dryness hurt the 2014 winter wheat crop, which declined 11 per-cent from 2013. Spring was slow to come, and planting delays occurred in the Northern tier of states. Later in the spring and during the summer while California suffered, weather generally cooperated elsewhere, and much of the nation had a more favorable growing season.

Corn and soybeans consistently had high ratings of “good” to “excellent” throughout the summer and into the fall, and production of many crops was up in 2014. Corn yield and production set record highs. With soybean planted area up as corn area contracted, soy-

beans, too, featured record highs for yield and pro-duction. Other oilseeds also saw produc-tion gains, such as sunflowers, canola and peanuts. The spring wheat crop was sharply higher with the Dakotas having record yields. Cotton and rice production were also higher, despite much lower rice area in California. Among specialty crops, vegetable and citrus production declined in 2014.

The increase in production of major crops again is leading to increased carryover stocks and lower prices. The index of prices received for crops by farmers was down nine percent from January-December 2014, which followed a 19 percent decline in the prior 12-month period. The weak farm markets resulted in sharp declines in crop insurance base prices for all major crops for 2014. The market price declines continued into 2015, reducing base prices again for all major 2015 crops. The drop in 2014 base prices, com-bined with lower volatility factors (which are used to set premium rates) for all major crops, contributed to a 15 percent drop in to-tal program premiums.

As of this writing, the program provided farmers with protection on $109.8 billion in crop value in 2014, and the crop year loss ra-tio (indemnities divided by premiums) stood at 0.89. While an improvement over the past

two years ,

the final loss ratio is expected to

exceed 0.90 and keep the re-turns to the crop insurance companies ane-

mic under the financial terms of the current Standard Reinsurance Agreement (SRA), which has been in effect since 2011. The cu-mulative underwriting gains of the insurance companies during 2011-14 are likely to be in the range of only five-six percent of their cumulative retained premiums. Since under-writing gains are only part of gross revenue, pre-tax net income returns would be consid-erably lower.

Corn and soybeans continued to be the top premium crops, accounting for two-thirds of U.S. premiums in 2014, with wheat coming in third. Minnesota had the highest loss ratio among major states and Iowa had the highest level of claims among all states, with excess moisture and lower prices being the principal causes of loss in both states. Minnesota and Texas were second and third in claims while Oklahoma and Iowa were second and third in loss ratio among major states. By crop, loss ratios were highest for ELS cotton, olives, macadamia nuts, burley tobacco and pistachios. The losses on ELS cotton, olives and pistachios were all due to California’s persistent drought.

Implementation of the 2014 Farm Bill led the list of program and policy developments in 2014. The new Farm Bill was signed into law on February 7, 2014 and features many

one of the world’s major cattle markets. The Kan-sas City stockyard was founded in 1870, and the Kansas City Livestock Exchange located there was, in the early 20th century, the largest building in the world devoted ex-clusively to livestock interests. The American Royal, a horse show and rodeo was founded in 1899 and was recently voted the best horse show in the U.S.

Kansas City is said to have more foun-tains than any other city except Rome, and more boulevards than any other city except Paris. Historians say that jazz was born in New Orleans, but grew up in Kansas City. Great performers traveled to Kansas City and people flocked to hear this new mod-ern sound. Musicians like Count Basie and Charlie Parker were known to participate in all night jam sessions in many local es-tablishments. Barbeque is also well known throughout Kansas City and everyone has their favorite place to enjoy it.

Kansas City also boasts the Agricultural Hall of Fame, the Federal Reserve, Kansas City Board of Trade and is home to the inter-section of three major trade routes that had their start in the early 1800s: Santa Fe Trail, a trade route with Mexico; the Oregon Trail, a migration route for settlers to the North-west; and the California Trail that led western emigrants to California to find (or not) their fortune in gold.

The Congress ItselfOne of the best features of the Congress

is the opportunity for participants to engage and network with agricultural leaders span-ning the globe. Speakers and attendees will be from all over Europe, North America, South America, Asia, Russia and many oth-er regions. While conference attendees are in Kansas City, participants will also be able to take in several of the sights, sounds, and tastes of Kansas City. Our guests will enjoy a wonderful evening taking in the beautiful artwork and sculptures at the Nelson-Atkins Museum of Art and listening to a jazz and blues ensemble at the beautiful Kauffman Center for the Performing Arts. Attendees of the conference will stay at the Inter-Con-tinental Hotel on the historic and beautiful Country Club Plaza.

While the extracurricular activities Kansas City has to offer are sure to delight, 2015 AIAG Congress attendees will be as equally educated during the informative ses-sions. U.S. government officials will be on hand to discuss the U.S. crop insurance sys-tem and why it was chosen during the 2014 Farm Bill to serve as the centerpiece of U.S. farm policy.

This year’s theme for the Congress is “Pub-

l i c - P r i v a t e Partnerships and

New Technologies to Se-cure the Food Supply.” Keynote presen-

tations include topics on crop insurance in the United States, Russia, China and South Amer-ica, the role of reinsurance, precision farming, Canadian livestock insurance, greenhouse insurance in Europe, animal revenue loss in-surance in Germany, as well as other topics of interest.

Why is This Important?World population is projected to grow to

nine billion by 2050. That growth, combined with expected increases in global disposable income and worsening adverse weather pat-terns, will surely strain the supply of food and fiber worldwide. This should be a concern to all of us as the importance of agriculture to the international community and the importance of agriculture to each individual country’s economy cannot be overstated. To meet the need to provide for a financially stable agricul-tural sector, the United States and the interna-tional community will require the presence of a viable farm safety net. As such, crop insur-ance has become the lynchpin of the farm safe-ty net in the United States, being there when agriculture needed it most. We must continue to provide the tools farmers need to deal with everyday risks and rise to the occasion.

America’s crop insurance structure has proven to be so popular with U.S. farmers that

Continued from page 1

32 SEPTEMBER2015

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We know what it takes to be successful in the crop insurance business; relentless determination, endless patience, self-reliance and a commitment to our agents and growers that is second to none. Rain and Hail continues to empower our agent partners by providing service and technology that lead the industry so you can focus on your success. Rain and Hail, the partner your growers deserve. Join our team today.

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34 SEPTEMBER2015

INDUSTRY AWARDSNCIS VisitWebsite

ag-risk.org

The NCIS industry awards were established in 2001 to honor those individuals who provide exemplary service to the industry as a whole and/or to producers. The award criteria has been changed slightly and a new award category has been added.

Outstanding Service AwardThis award is presented to a crop insurance agent or individual

outside of the industry who provides exceptional service indus-try-wide and outstanding outreach efforts to all farmers, especially limited-resource and/or socially disadvantaged farmers.

Industry Leadership AwardThis award, targeted primarily to members of the NCIS region-

al/state cop insurance and/or NCIS standing committees recognizes individuals who are directly involved in the crop insurance industry and who consistently serve the industry by providing outstanding leadership. One award may be given to a member of a regional/state crop insurance committee and/or a member of a standing committee.

Lifetime Achievement AwardThis new category of award will be given to those people who have

served or are currently serving in leadership capacities within the in-dustry who exhibit(ed) outstanding leadership, guidance and knowl-edge to and of the crop insurance industry.

Criteria for all awards are: 1. Unyielding personal and business ethics. 2. Demonstrated service above and beyond the crop insurance

industry. 3. Represents themselves, their company and the crop insurance in-

dustry well.The winners will be presented with their awards at the crop insur-

ance industry annual convention held in February of each year.All nominations must be submitted in writing to NCIS by October

15, 2015, for awards to be presented at the 2016 Annual Convention. For nomination information and forms to be submitted, please visit the NCIS website at www.ag-risk.org to download. If you have any questions regarding the criteria or whom is eligible for the awards, please contact Laurie Langstraat at NCIS at [email protected] or 913-685-2767.

during consideration of the Farm Bill, grow-ers voluntarily gave up direct payments fund-ed by the government in exchange for insur-ance that farmers pay $4 billion a year from their own pockets to access. In other words, U.S. farmers now get a bill in the mail instead of a check, and taxpayers are no longer shoul-dering all the risk.

U.S. farmers made this choice because the U.S. crop insurance system offers them the unparalleled ability to tailor policies for the unique risks of each individual farm. They chose crop insurance because they know the hardworking men and women who comprise the U.S. industry will be there to quickly, fairly and accurately deliver help when it is need-ed most. And they appreciate the exceptional track record of crop insurance’s public-private partnership during the floods of 2011, the droughts of 2012, and the adverse weather events seen since.

U.S. agricultural officials also recognize that accomplishments of the past do not al-ways equate to future successes. That is why U.S. farm organizations of all shapes and sizes are diligently working to ensure that crop in-surance policies remain affordable and widely

available, and that the program remains eco-nomically viable for private-sector participa-tion over the long haul.

In the coming days, international crop insurance industry leaders will learn many of the best practices used in America and our plans for maintaining a strong insur-ance infrastructure for the future. Conversely we will learn from the breadth and depth of experiences our foreign colleagues, and we will eagerly listen to their valuable opinions that can help us make improvements here at home. Such camaraderie is what makes the AIAG Congress so special, and it is this kind of cooperation that will help us all meet the challenges of tomorrow.

This issue of TODAY® features an in-depth look at how the U.S. farm safety net has evolved from offering limited crop insurance, price supports and disaster assistance in the early years to today’s crop insurance safety net that protects 90 percent of the planted acreage in the United States. Agriculture has always been the backbone of the U.S. economy and a strong, viable and effective farm safety net is paramount to ensuring the success of Ameri-ca’s farmers and ranchers. Dr. Kurt Weinberg-

er, President of AIAG, writes about the histo-ry and mission of this important international organization that gives insurers from around the world the opportunity to collaborate on critical issues affecting crop and livestock in-surance programs. Dr. Mark Zarnstorff pres-ents the results of the 2014 NCIS agronomic research program. This research is vital in im-proving current loss adjustment procedures that more accurately reflect crop damage in an ever-changing agricultural landscape. We also feature Mr. John Pillow, a farmer from Yazoo City, MS, who, after a river flooded destroying more than 80 percent of his corn crop, said “…crop insurance, for me, not only proved to be essential, it’s the reason I’m in business today.”

We hope that you enjoy reading your copy of TODAY® and we look forward to bringing you our next issue in November which will feature many of the speakers and presenta-tions from the AIAG Congress, as well as a look at how other countries utilize crop insur-ance and many who look to the U.S. model for guidance when developing a safety net for their farmers and ranchers. We hope to see you at the 2015 AIAG Congress!


SIDEBAR

2015 Regional/State ChairmanArizona/California/Nevada–Doug Ollenberger, AgriLogic Insurance ServicesColorado/Wyoming–Brandon Thomas, ProAg InsuranceEast–Joey Brickhouse, ProAgGulf States–Scott Altfillisch, Rain and HailIllinois/Wisconsin–Jason Gama, Rain and HailIndiana/Ohio/Michigan–Sharon Shock, Great AmericanIowa–Brad Veenstra, Great AmericanKansas/Oklahoma–Christopher Deetjen, Heartland Crop InsuranceKentucky/Tennessee–Zach Alexander, Rain and HailMinnesota–Chad Groen, Farmers Mutual HailMissouri–Jeff Dexter, Rain and HailMontana–Bob McPherson, ProAgNebraska–Chad Mixdorf, Farmers Mutual HailNorth Dakota–Mark Askerooth, ADMNorthwest–Jim LaPointe, ProAgSouth Dakota–Tim Franz, Rain and HailSoutheast–Michael Smith, Rain and HailSouthwest–Steve Fortenberry, ARMtech

36 SEPTEMBER201536 NOVEMBER2014

National Crop Insurance Services

Visit our websitewww.cropinsuranceinamerica.org

Let us know what you think by sending us a comment on our Facebook page www.facebook.com/cropinsuranceinamerica.

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37 AUGUST2013

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Yield Protection

YP – Plan 01

Revenue Protection

RP – Plan 02

RP with the HarvestPrice Exclusion

RPHPE – Plan 03

Area Yield Protection

AYP – Plan 04

YP provides protection against a loss in yield due to unavoidable, naturally occurring events. For most crops, that includes adverse weather, fire, insects, plant disease, wildlife, earthquake, volcanic eruption, and failure of the irrigation water supply due to a naturally occurring event. Like the APH (Actual Production History) plan of insurance, YP guarantees a production yield based on the individual producer’s APH. Unlike the APH plan of insurance, a price for YP is established according to the crop’s applicable commodity board of trade/exchange as defined in the Commodity Exchange Price Provisions (CEPP). The projected price is used to determine the yield protection guarantee, premium, any replant payment or prevented planting payment, and to value the production to count. The coverage and exclusions of YP are similar to those for the APH plan of insurance. An indemnity is due when the value of the production to count is less than the yield protection guarantee. The main crops covered under this plan include barley (includes malting type), canola/rapeseed, corn, cotton, grain sorghum, rice, soybeans, sunflowers, and wheat.

Abbreviation–Code

Revenue protection provides protection against a loss of revenue caused by price increase or decrease, low yields or a combination of both (for corn silage and rapeseed, protection is only provided for production losses). This coverage guarantees an amount based on the individual producer’s APH and the greater of the projected price or harvest price. Both the projected price and harvest price are established according to the crop’s applicable commodity board of trade/exchange as defined in the Commodity Exchange Price Provisions (CEPP). While the revenue protection guarantee may increase, the premium will not. The projected price is used to calculate the premium and replant payment or prevented planting payment. An indemnity is due when the calculated revenue (production to count x harvest price) is less than the revenue protection guarantee for the crop acreage. Crops covered under this plan include barley (includes malting type), canola/rapeseed, corn, cotton, grain sorghum, rice, soybeans, sunflowers, and wheat. (Please note the “Maximum Price Movement” for rapeseed and corn silage are on the following pages.)

RP HPE is similar to RP, however RP HPE coverage provides protection against loss of revenue caused by a price decrease, low yields or a combination of both. Unlike RP, the revenue protection guarantee for RP HPE is based on the projected price only and it does not increase based on a harvest price. Crops covered under this plan include barley (includes malting type), canola/rapeseed, corn, cotton, grain sorghum, rice, soybeans, sunflowers, and wheat.

CROP INSURANCECropInsurance TODAY

The NCIS Crop Insurance Plan Comparison (CIPC) has been updated for the 2016 crop year and is current as of August 1, 2015. This popular NCIS product is designed for use as a quick reference job aid for crop insurance company personnel, corp insurance agents and producers alike.

The CIPC is a thorough, yet compact list of major crop insurance plans of coverage. It includes a general overview and a side-by-side comparison of the available insurance products which are available on a national or almost-national basis.

Please note that the products and product topics summarized in this chart are NOT all-encompassing and do NOT substitute for the policy provisions. Plaese refer to the policy provisions and/or contact your company for a complete description of the available coverages and their terms and conditions.

38 SEPTEMBER2015

Area Yield Protection

AYP – Plan 04

Area Revenue Protection

ARP – Plan 05

Area Revenue Protection w/Harvest

Price ExclusionARPHPE – Plan 06

Actual ProductionHistory

APH – Plan 90

PLAN COMPARISON

AYP coverage is based on the experience of the county rather than individual farms. Maintaining the insured’s actual production history is now mandatory and may be used by RMA as a data source to establish and maintain the area programs. AYP indemnifies the insured in the event the final county yield falls below the insured’s trigger yield. The Federal Crop Insurance Corporation (FCIC) will issue the final county yield in the calendar year following the crop year insured. Since this plan is based on county yields and not individual yields, the insured may have a low yield on their farm and not receive payment under AYP.

Like the other area plans, ARP is based on the experience of the county rather than individual farms. Coverage is provided against loss of revenue due to a county level production loss, a price decline, or a combination of both. Upside harvest price protection is included which increases the policy protection at the end of the insurance period if the harvest price is greater than the projected price and if there is a production loss. ARP will pay a loss when the final county revenue is less than the trigger revenue which is calculated using the higher of the projected price or harvest price.

Like AYP, ARP-HPE is based on the experience of the county rather than individual farms. Maintaining the insured’s actual production history is now mandatory and may be used by RMA as a data source to establish and maintain the area programs. An ARP-HPE policy provides protection against loss of revenue due to a county level production loss, price decline, or a combination of both. This plan only uses the projected price and does not provide upside harvest price protection. An indemnity is due under ARP-HPE when the final county revenues published by FCIC are less than the trigger revenue. Since this plan is based on county revenue and not individual revenue, the insured may have a loss in revenue on their farm and not receive payment under ARP-HPE.

APH is the oldest insurance product listed on this comparison. The APH plan of insurance provides protection against a loss in yield due to nearly all natural disasters. For most crops, that includes drought, excess moisture, cold and frost, wind, flood and unavoidable damage from insects and disease. Like YP, the APH plan of insurance guarantees a yield based on the individual producer’s actual production history. Unlike YP, the available price elections are established by the Risk Management Agency. An indemnity is due when the value of the production to count is less than the liability. Of the small grain crops, only oats, rye, flax, and buckwheat remain covered under the APH plan of insurance for the 2015 crop year.


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t ap

plic

able

to A

YP.

RP

and

RPH

PE’s

har

vest

pri

ce is

no

t to

exce

ed th

e pr

ojec

ted

pric

e tim

es 2

.00

(the

exc

eptio

n to

this

ru

le is

whe

n co

rn s

ilage

and

rap

e-se

ed e

qual

s th

e pr

ojec

ted

pric

e).

AR

P a

nd A

RP

HP

E’s

har

vest

p

rice

is n

ot t

o e

xcee

d th

e p

ro-

ject

ed p

rice

tim

es 2

.00.

* Y

P =

Yie

ld P

rodu

ctio

n, A

PH =

Act

ual P

rodu

ctio

n H

isto

ry, R

P =

Rev

enue

Pro

tect

ion,

RPH

PE =

Rev

enue

Pro

tect

ion

Har

vest

Pri

ce E

xclu

sion

, AY

P =

Are

a Y

ield

Pro

tect

ion,

AR

P =

Are

a R

even

ue P

rote

ctio

n, A

RPH

PE =

Are

a R

even

ue P

rote

ctio

n w

ith H

arve

st P

rice

Exc

lusi

on, C

AT

= C

atas

trop

hic

Ris

k Pr

otec

tion

*For

bol

ded

wor

ds, p

leas

e re

fer

to p

age

four

for

a m

ore

in-d

epth

exp

lana

tion.

Cro

pIn

sura

nce

TOD

AY

40 SEPTEMBER2015

Cov

erag

e Le

vel P

erce

nt A

vaila

ble

(In

mo

st a

reas

fo

r m

ost

cro

ps)

All

of t

he y

ield

cro

p in

sura

nces

off

er 5

0%, 5

5%, 6

0%, 6

5%, 7

0%,

75%

, 80%

and

85%

co

vera

ge le

vels

.A

YP

’s c

ove

rage

leve

ls a

re 6

5%

(with

CA

T),

70%

, 75%

, 80%

, 85

% a

nd 9

0%.

AR

P a

nd A

RP

HP

E’s

co

vera

ge

leve

ls a

re 7

0%, 7

5%, 8

0%,

85%

and

90%

AP

H/A

crea

ge R

epo

rtR

equi

red

to h

ave

an A

PH

and

an

acre

age

rep

ort

.R

equi

red

to h

ave

an A

PH

and

an

acre

age

rep

ort

.

Wri

tten

Agr

eem

ent

YP

and

AP

H h

ave

wri

tten

ag

reem

ents

ava

ilab

le.

RP

and

RP

HP

E h

ave

wri

tten

ag

reem

ents

ava

ilab

le, b

ut th

ey

cann

ot e

stab

lish

reve

-nue

pro

-te

ctio

n w

hen

cove

rage

for

the

cro

p is

no

t pro

vid

ed in

the

stat

e.

Wri

tten

agr

eem

ents

are

no

t ava

ilab

le.

Gua

rant

ee F

orm

ula

(Exa

mp

le o

f w

hat

Yie

ld P

ro-

tect

ion

Gua

rant

ee F

orm

ula

loo

ks li

ke is

sho

wn

on

pag

e th

ree)

Yie

ld p

rote

ctio

n gu

aran

tee

= A

PH

appr

oved

yie

ld x

cov

erag

e le

vel x

pr

ojec

ted

pric

e.

APH

pro

duct

ion

guar

ante

e =

A

PH a

ppro

ved

yiel

d x

cove

rage

le

vel.

All

area

cro

p in

sura

nce

guar

ante

e fo

rmul

as a

re:

Polic

y p

rote

ctio

n =

do

llar

amo

unt o

f ins

uran

ce p

er a

cre

x ac

res

x sh

are

Ap

plic

able

Pri

ce(s

)/

Pri

ce E

lect

ion(

s)Y

P, R

P a

nd R

PH

PE

pre

miu

ms:

A

PH

pre

miu

m:

1) R

ate

x lia

bilit

y x

appl

icab

le

1) R

ate

x lia

bilit

y x

appl

icab

le fa

ctor

(s)

adju

stm

ent p

erce

ntag

e fa

ctor

s

2) R

esul

t of 1

x s

ubsi

dy

2) R

esul

t of 1

x s

ubsi

dy

3) R

esul

t of 1

- 2

3)

Res

ult o

f 1 -

2

(Po

licy

pro

tect

ion

x ra

te) -

sub

sid

y

Ind

emni

ty if

…Y

P: T

he p

rod

uctio

n to

co

unt

mul

ti-p

lied

by

pro

ject

ed p

rice

is

less

than

the

yiel

d p

rote

ctio

n gu

aran

tee

times

insu

red

acr

es.

AP

H:

The

pro

duc

tion

to c

oun

t m

ultip

lied

by

pri

ce e

lect

ion

is

less

than

the

valu

e o

f the

pro

-d

uctio

n gu

aran

tee

mul

tiplie

d b

y in

sure

d a

cres

.

AY

P: T

he fi

nal c

oun

ty y

ield

is

less

than

the

exp

ecte

d c

oun

ty

yiel

d ti

mes

co

v-er

age

leve

l.

RP

and

RPH

PE:

The

prod

uctio

n to

cou

nt m

ultip

lied

by h

arve

st

pric

e is

less

than

the

reve

nue

prot

ectio

n gu

aran

tee

mul

tiplie

d

by in

sure

d ac

res.

AR

P: T

he fi

nal c

oun

ty r

eve-

nue

is le

ss th

an th

e ex

pec

ted

co

unty

yie

ld ti

mes

the

grea

ter

of

pro

ject

ed o

r ha

rves

t pri

ce ti

mes

co

vera

ge le

vel.

AR

PH

PE

: T

he fi

nal c

oun

ty r

ev-

enue

is le

ss th

an th

e ex

pec

ted

co

unty

yie

ld ti

mes

pro

ject

ed

pri

ce ti

mes

co

ver-

age

leve

l.

Rev

enue

pro

tect

ion

guar

ante

e =

A

PH a

ppro

ved

yiel

d x

cove

rage

le

vel x

gre

ater

of p

roje

cted

pri

ce

or h

arve

st p

rice

.

RPH

PE p

rote

ctio

n gu

aran

tee

=

APH

app

rove

d yi

eld

x co

vera

ge

leve

l x p

roje

cted

pri

ce.

Rat

ing

Co

ntin

uous

ind

ivid

ual y

ield

rat

edA

rea

yiel

d r

ated

No

tice

of

Loss

and

Lo

ss

Ad

just

-men

t P

roce

dur

eR

equi

red

No

t req

uire

d

* Y

P =

Yie

ld P

rodu

ctio

n, A

PH =

Act

ual P

rodu

ctio

n H

isto

ry, R

P =

Rev

enue

Pro

tect

ion,

RPH

PE =

Rev

enue

Pro

tect

ion

Har

vest

Pri

ce E

xclu

sion

, AY

P =

Are

a Y

ield

Pro

tect

ion,

AR

P =

Are

a R

even

ue P

rote

ctio

n, A

RPH

PE =

Are

a R

even

ue P

rote

ctio

n w

ith H

arve

st P

rice

Exc

lusi

on, C

AT

= C

atas

trop

hic

Ris

k Pr

otec

tion

*For

bol

ded

wor

ds, p

leas

e re

fer

to p

age

four

for

a m

ore

in-d

epth

exp

lana

tion.


IND

IVID

UA

L C

OV

ERA

GE

(GR

OU

P) A

REA

CO

VER

AG

E

Yie

ld B

ased

Rev

enue

Bas

edY

ield

Bas

edR

even

ue B

ased

Sub

sid

y A

mo

unt

YP

and

AP

H s

ubsi

dy

amo

unts

:

• C

AT

= 1

.00

• B

asic

and

op

tiona

l uni

ts a

t

50%

co

vera

ge le

vel =

.67

;

55

-60%

= .6

4

65

-70%

= .5

9

75

% =

.55

80%

= .4

8

85

% =

.38

• E

nter

pri

se u

nits

at 5

0-70

%

co

vera

ge le

vel =

.80

75%

= .7

7

80%

= .6

8

85%

= .5

3

• C

urre

ntly

ther

e ar

e no

co

m-

mo

diti

es fi

led

and

insu

red

un

der

this

insu

ranc

e p

lan

for

whi

ch c

ove

rage

is o

ffer

ed

bas

ed o

n w

hole

-far

m u

nits

.

RP

and

RP

HP

E s

ubsi

dy

amo

unts

:

• B

asic

and

opt

iona

l uni

ts a

t 50%

cove

rage

leve

l = .6

7

55-6

0% =

.64

65-7

0% =

.59

75%

= .5

5

80

% =

.48

85%

= .3

8

• E

nter

pri

se u

nits

at 5

0-70

%

co

v-er

age

leve

l = .8

0

80%

= .7

1

85

% =

.56

Hig

h-R

isk

Land

, Hig

h-R

isk

Land

Exc

lusi

on,

Hai

l and

Fir

e E

xclu

sio

n

All

yiel

d c

rop

insu

ranc

e p

lans

are

elig

ible

for

high

-ris

k la

nd c

ove

r-ag

e an

d th

e hi

gh-r

isk

land

exc

lusi

on

is a

vaila

ble

for

each

. The

hai

l an

d fi

re e

xclu

sio

n is

ava

ilab

le fo

r ea

ch o

f the

pla

ns, b

ut it

is r

estr

ict-

ed fo

r a

who

le-f

arm

uni

t.

All

area

cro

p in

sura

nce

pla

ns a

re in

sura

ble

as

long

as

the

acre

age

mee

ts a

ll o

ther

req

uire

-men

ts. H

ow

ever

, the

hig

h-ri

sk la

nd e

xclu

-si

on,

as

wel

l as

the

hail

and

fire

exc

lusi

on,

is n

ot a

vaila

ble

for

any

of t

he a

rea

cro

p in

sura

nce

pla

ns.

Rep

lant

ing

req

uire

men

ts a

nd

pay

men

tsA

vaila

ble

No

t ava

ilab

le

Late

pla

ntin

g an

d p

reve

nted

p

lant

ing

pro

visi

ons

Ap

plic

able

No

t ap

plic

able

AY

P s

ubsi

dy

amo

unts

:

• C

AT

= 1

.00

• 70

-75%

co

vera

ge le

vel =

.59

80-8

5% =

.55

90%

= .5

1

AR

P a

nd A

RP

HP

E s

ubsi

dy

amo

unts

:

• 70

% c

ove

rage

leve

l = .5

9

75-8

0% =

.55

85%

= .4

9

90

% =

.44

* Y

P =

Yie

ld P

rodu

ctio

n, A

PH =

Act

ual P

rodu

ctio

n H

isto

ry, R

P =

Rev

enue

Pro

tect

ion,

RPH

PE =

Rev

enue

Pro

tect

ion

Har

vest

Pri

ce E

xclu

sion

, AY

P =

Are

a Y

ield

Pro

tect

ion,

AR

P =

Are

a R

even

ue P

rote

ctio

n, A

RPH

PE =

Are

a R

even

ue P

rote

ctio

n w

ith H

arve

st P

rice

Exc

lusi

on, C

AT

= C

atas

trop

hic

Ris

k Pr

otec

tion

*For

bol

ded

wor

ds, p

leas

e re

fer

to p

age

four

for

a m

ore

in-d

epth

exp

lana

tion.

42 SEPTEMBER2015

Expl

anat

ion

Ind

ivid

ual C

rop

Insu

ranc

e V

.S. A

rea

Cro

p In

sura

nce

Yie

ld C

rop

Insu

ranc

e in

clud

es y

ield

pro

tect

ion,

rev

enue

pro

tect

ion,

RP

with

the

harv

est p

rice

exc

lu-

sio

n an

d a

ctua

l pro

duc

tion

hist

ory

. Are

a cr

op

insu

ranc

e in

clud

es a

rea

yiel

d p

rod

uctio

n, a

rea

reve

nue

pro

tect

ion

and

are

a re

venu

e p

rote

ctio

n w

ith h

arve

st p

rice

exc

lusi

on.

GLO

SS

AR

Y

CA

TC

AT

sta

nds

for

cata

stro

phi

c cr

op

insu

ranc

e. T

his

form

of c

rop

insu

ranc

e is

in p

lace

in c

ase

of n

atur

al

dis

aste

rs s

uch

as e

arth

qua

kes,

hur

rica

nes

and

flo

od

s.

CE

PP

CE

PP

sta

nds

for

com

mo

dity

exc

hang

e p

rice

pro

visi

ons

. Acc

ord

ing

to th

e U

SD

A, t

he “

CE

PP

sp

ecifi

es

how

and

whe

n th

e p

roje

cted

and

har

vest

pri

ce c

om

po

nent

s w

ill b

e d

eter

min

ed b

y cr

op

.”

Wri

tten

agr

eem

ents

The

US

DA

sta

tes

that

a w

ritt

en a

gree

men

t “is

a d

ocu

men

t des

igne

d to

pro

vid

e cr

op

insu

ranc

e co

ver-

age

for

insu

rab

le c

rop

s w

hen

cove

rage

or

rate

s ar

e un

avai

lab

le in

a c

oun

ty.”

Bas

ic, o

pti

ona

l, en

terp

rise

and

who

le-f

arm

ava

ilab

le

unit

str

uctu

res

Bas

ic u

nit s

truc

ture

= A

bas

ic u

nit s

truc

ture

is d

eter

min

ed b

y o

wne

rshi

p o

f a c

om

mo

dity

and

is b

ased

o

ff o

f cas

h re

nt a

nd o

wne

d la

nds,

whi

ch a

re c

ons

ider

ed o

ne b

asic

uni

t. D

iffer

ent s

hare

cro

pp

ed a

r-ra

ngem

ents

res

ult i

n m

ultip

le u

nits

with

in th

e co

unty

.

Op

tiona

l uni

t str

uctu

re =

Op

tiona

l uni

t str

uctu

res

are

sub

div

ided

bas

ic u

nits

are

po

pul

ar a

mo

ng fa

rm-

ers.

Far

mer

s m

ust k

eep

sep

arat

e re

cord

s fo

r ea

ch o

f the

ir o

ptio

nal u

nits

and

the

cove

rage

incl

udes

a

rate

sur

char

ge. T

his

stru

ctur

e is

onl

y av

aila

ble

for

leve

ls e

xcee

din

g th

e ca

tast

rop

hic

cove

rage

.

Ent

erp

rise

uni

t str

uctu

re =

Ent

erp

rise

uni

t str

uctu

res

are

a fa

irly

new

ad

diti

on

to c

rop

insu

ranc

e an

d

incl

ude

all s

hare

s o

f a c

rop

with

in a

co

unty

. Thi

s ty

pe

of u

nit c

om

bin

es s

hare

cro

pp

ed la

nd w

ith

ow

ned

and

ren

ted

land

. Ent

erp

rise

uni

t str

uctu

res

star

ted

with

rev

enue

pla

ns a

nd h

ave

exp

and

ed to

M

PC

I. N

ote

that

a d

isco

unt f

rom

the

stan

dar

d p

rem

ium

is g

iven

to th

is ty

pe

of u

nit.

Who

le-f

arm

uni

t str

uctu

re =

Who

le-f

arm

uni

t str

uctu

res

are

onl

y av

aila

ble

on

cert

ain

reve

nue

insu

r-an

ce p

olic

ies.

Thi

s un

it st

ruct

ure

com

bin

es a

ll el

igib

le in

sure

d c

rop

s fa

rmed

with

in a

co

unty

.

Sub

sid

y am

oun

t fi

gure

sT

hese

figu

res

are

det

erm

ined

by

the

fed

eral

go

vern

men

t and

are

vie

wed

mo

re a

s a

dis

coun

t, ra

ther

th

an a

sub

sid

y.

Loss

Ad

just

men

t P

roce

dur

eE

ach

cro

p h

as it

s o

wn

Loss

Ad

just

men

t Sta

ndar

ds

Han

db

oo

k. C

urre

ntly

ther

e ar

e m

ore

than

80

loss

ad

just

men

t bo

oks

in c

ircu

latio

n.

Exa

mp

le o

f a

yiel

d p

rote

ctio

n gu

aran

tee

Let’

s sa

y gi

ven

your

Act

ual P

rod

uctio

n H

isto

ry, y

ou’

ve a

vera

ged

150

bus

hels

of c

orn

in o

ne s

easo

n.

Your

AP

H =

150

. The

co

vera

ge le

vel y

ou

have

is 7

0%, s

o c

ove

rage

leve

l = .7

0; th

e p

roje

cted

pri

ce o

f co

rn th

at y

ear

is $

4.50

so

yo

ur fo

rmul

a w

ill lo

ok

like

this

:

(150

x .7

0) 4

.50

= $

472.

50If

the

actu

al y

ield

is le

ss th

an 1

05 b

ushe

ls fo

r th

at p

artic

ular

yea

r, yo

u co

uld

rec

eive

an

ind

emni

ty to

m

ake

up fo

r th

at s

hort

fall.


We can say... “we remember when”.A T G R E A T A M E R I C A N ,

We wrote our first crop policy back in 1915 — and our steadfast support of the American farmer continues one hundred years later. With deep expertise in crop, farm, ranch and equine exposures, we can look to the future of farming with a vision firmly rooted in the past...

...and we’ll be ready for what’s next.

Policies underwritten by Great American Insurance Company, Great American Insurance Company of New York,

Great American Alliance Insurance Company and Great American Assurance Company, authorized insurers

in fifty (50) states and the District of Columbia. Great American Insurance Company is an equal opportunity provider.

© 2015 Great American Insurance Company, 301 E Fourth Street, Cincinnati, OH 45202.

Crop, Equine and AgriBusiness® Divisions

A Century of Service to America’s Farmers

1915 - 2015

www.GAIG.comCrop Division www.GreatAmericanCrop.com

8900 Indian Creek Parkway, Suite 600Overland Park, Kansas 66210

PRSRT. STD.U.S. POSTAGE

PAIDPermit No. 116LAWRENCE, KS

800.776.4046 | www.RainHail.comThis institution is an equal opportunity provider and employer.

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