Transcript Standing Disaster Program Dr. G. A. “Art” Barnaby, Jr Kansas State University Phone: (785) 5321515 Email: [email protected] Check out our WEB at: AgManager.info Copyright 2008, All Rights.

Standing Disaster Program
Dr. G. A. “Art” Barnaby, Jr
Kansas State University
Phone: (785) 5321515
Email: [email protected]
Check out our WEB at:
AgManager.info
Copyright 2008, All Rights Reserved
1
Supplemental Disaster Program
Supplemental Revenue Assistance Payments (SURE)
Farm Bill & administrative changes to crop insurance
Livestock Forage Disaster Program (LFP)
Livestock Indemnity Program (LIP)
Tree Assistance Program (TAP)
Emergency Assistance for Livestock, Honey Bees & Farm
Raised Fish (EALHF) Program
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Supplemental Disaster Program
The devil is in the details!
Many assumptions were made in this analysis because a
number of important details are not defined or left to the
Secretary to define.
No warranties are implied or given in this analysis.
Use slides and analysis at your own peril!
Copyright 2008, All Rights Reserved
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Supplemental Revenue Assistance (SURE)
Qualifying requires CAT or higher and NAP be
purchased. For 2008 only, farmers will have 90 days
(August 20) to pay the CAT/NAP fees to qualify for
SURE but there is no CAT/NAP payments.
County requires a Secretary disaster declaration
(include contiguous counties) or the whole farm must
have a 50% Loss.
Coverage is whole farm and includes all crops in all
counties (crosses state lines??).
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Supplemental Revenue Assistance (SURE)
SURE guarantee = planted acres x % crop insurance
coverage x APH/program yield x CI price election x
115%
SURE cap = 90% of expected revenue for each crop.
Planted acres x APH/proven yield x insurance price
guarantee
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Supplemental Revenue Assistance (SURE)
Revenue to count = indemnities, prevented planting,
15% of direct payments, CC, ACRE, marketing loan
gains, crop values (harvested acres x yield x MYA
price)
SURE Payment = SURE Guarantee less the Revenue to
count X 60%
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Crop Insurance with a Price Decrease with Half of a
Crop
Bu.
aph Cov Gu.
CAT 143 50% 71
APH 143 70% 100
CRC 143 70%
RA-HPO 143 70%
RA 143 70%
Price
Elect
$2.61
$4.75
$5.40
$5.40
$5.40
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Min
$5.00
Rev Max Rev
Lost Havst
Guar
Guar. Prod Bu. Price
$187
71
0
$475
71
29
$540
690
71
$5.00
$540 No Limit
71
$5.00
$540
71
$5.00
Final
Rev Indem
Guar Count Pymt
0
136
$540 $357 $183
$540 $357 $183
$540 $357 $183
Net
Prem Indem Plant
Ac. Pymt
Ac.
3.00
-3 100
13.80
122 100
24.74
158 100
25.92
157 100
17.41
165 100
Total
Indem
Pymt
-300
12,191
15,812
15,694
16,545
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SURE Payments with a Price Decrease with
Half of a Crop
CAT
APH
CRC
RA-HPO
RA
Adj.
aph Exp. Rev
147 $38,441
147 $69,893
147 $79,457
147 $79,457
147 $79,457
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115% of
Ins. Cov
$21,460
$54,625
$62,100
$62,100
$62,100
Max
Cov
56%
78%
78%
78%
78%
Sure
Guar.
21,460
54,625
62,100
62,100
62,100
MYA
$4.50
$4.50
$4.50
$4.50
$4.50
Crop
Value
32,143
32,143
32,143
32,143
32,143
Indem 15% of CC &
Pymt Direct Loans
0
319
0.0
12,191
319
0.0
15,812
319
0.0
15,694
319
0.0
16,545
319
0.0
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SURE Payments with a Price Decrease with
Half of a Crop
Net Premium
CAT
APH
CRC
RA-HPO
RA
Sure Total Rev
Guar. to Count
21,460
32,462
54,625
44,653
62,100
48,273
62,100
48,155
62,100
49,006
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Sure
Pymt
0
5,983
8,296
8,367
7,856
Gross Premium
Total
Total
Rev +
Sure Rev +
SURE
Pymt SURE
32,462
0 32,462
50,636
5,155 49,808
56,569
6,812 55,085
56,522
6,812 54,967
56,863
6,812 55,818
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Summary of SURE Payments with a $5 Price
& Half of Crop
CAT
APH
CRC
RA-HPO
RA
70%
0
5,983
8,296
8,367
7,856
Net Premium
75%
80%
85%
0
0
0
6,622 7,461 6,544
9,277 10,656 10,304
9,421 10,904 10,693
8,694 9,837 9,110
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Gross Premium
70%
75%
80%
0
0
0
5,155 5,461 5,766
6,812 7,159 7,506
6,812 7,159 7,506
6,812 7,159 7,506
85%
0
4,015
5,516
5,516
5,516
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Summary of SURE Payments with a $8 Price
& Half of Crop
CAT
APH
CRC
RA-HPO
RA
70%
0
0
0
0
5,970
Net Premium
75%
80%
0
0
0
0
0
0
0
0
8,694 9,837
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85%
0
0
0
0
9,110
Gross Premium
70%
75%
80%
0
0
0
0
0
0
0
0
0
0
0
0
4,926 7,159 7,506
85%
0
0
0
0
5,516
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Summary of SURE Payments with a $8 Price,
Half of Crop & Harvest Price Sets SURE
Guarantees and Cap
CAT
APH
CRC
RA-HPO
RA
70%
0
0
12,147
19,073
5,970
Net Premium
75%
80%
85%
0
0
0
0
0
0
9,824 7,898 6,580
16,351 14,059 12,409
8,694 9,837 9,110
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Gross Premium
70%
75%
80%
0
0
0
0
0
0
10,663 7,706 4,748
17,517 14,089 10,660
4,926 7,159 7,506
85%
0
0
1,791
7,232
5,516
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Summary of SURE Payments with a $5 Price
& Zero Yield
CAT
APH
CRC
RA-HPO
RA
70%
1,668
4,912
6,153
6,224
5,713
Net Premium
75%
80%
1,668 1,668
5,551 6,390
7,134 8,513
7,278 8,761
6,551 7,695
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85%
1,668
5,473
8,161
8,550
6,967
Gross Premium
70%
75%
80%
1,488 1,488 1,488
4,084 4,389 4,694
4,669 5,016 5,363
4,669 5,016 5,363
4,669 5,016 5,363
85%
1,488
2,944
3,373
3,373
3,373
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Summary of SURE Payments with a $8 Price
& Zero Yield
CAT
APH
CRC
RA-HPO
RA
70%
1,668
4,912
0
0
5,713
Net Premium
75%
80%
1,668 1,668
5,551 6,390
0
0
0
0
6,551 7,695
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85%
1,668
5,473
0
0
6,967
Gross Premium
70%
75%
80%
1,488 1,488 1,488
4,084 4,389 4,694
0
0
0
0
0
0
4,669 5,016 5,363
85%
1,488
2,944
0
0
3,373
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Summary of SURE Payments with a $8 Price,
Zero Yield & Harvest Price Sets SURE
Guarantees and Cap
CAT
APH
CRC
RA-HPO
RA
70%
1,668
4,912
14,719
16,930
5,713
Net Premium
75%
80%
85%
1,668 1,668 1,668
5,551 6,390 5,473
12,396 10,470 9,151
14,208 11,916 10,266
6,551 7,695 6,967
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Gross Premium
70%
75%
80%
1,488 1,488 1,488
4,084 4,389 4,694
13,234 10,277 7,320
15,374 11,946 8,517
4,669 5,016 5,363
85%
1,488
2,944
4,363
5,089
3,373
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Supplemental Revenue Assistance (SURE)
No payments on 2008 Iowa flood losses until after
September 1, 2009, i.e. end of marketing year.
SURE favors high risk single emprise farms.
SURE reduces value of CRC and HPO.
$100,000 payment limit reduces the value of SURE
versus unlimited CI payments for “large” farms.
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Supplemental Revenue Assistance (SURE)
SURE discourage crop insurance coverage above 80%.
Unclear how GRIP/GRP would be used to set SURE
guarantee.
Unclear if it is net or gross indemnity that counts against
the SURE guarantee.
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What adjustment to the aph will USDA make
for SURE?
(2) ADJUSTED ACTUAL PRODUCTION HISTORY
YIELD.—The term ‘adjusted actual production history
yield’ means—
(A) in the case of an eligible producer on a farm that
has at least 4 years of actual production history yields
for an insurable commodity that are established other
than pursuant to section 508(g) (4) (B) , the actual
production history for the eligible producer without
regard to any yields established under that section;
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What adjustment to the aph will USDA make
for SURE?
-
-
“(B) in the case of an eligible producer on a farm that
has less than 4 years of actual production history
yields for an insurable commodity, of which 1 or more
were established pursuant to section 508(g) (4) (B),
the actual production history for the eligible producer
as calculated without including the lowest of the yields
established pursuant to section 508(g) (4) (B)
If less than 4 years of history, farmers can drop one
“plugged” yield. If more than 4 years, all “plugged”
yields will be dropped.
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How will the Secretary establish SURE
guarantees for GRIP/GRP buyers?
(D) EQUITABLE TREATMENT FOR NONYIELD BASED
POLICIES.—The Secretary shall establish equitable
treatment for nonyield based policies and plans of
insurance, such as the Adjusted Gross Revenue Lite
insurance program.
Note: GRP is based on yields, county yields.
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Net or gross indemnity?
The Law states that crop insurance indemnity
payments will count against the SURE guarantee, but
does this mean net or gross indemnity.
(v) the amount of payments for prevented planting on
a farm;
(vi) the amount of crop insurance indemnities received
by an eligible producer on a farm for each crop on a
farm;
(vii) the amount of payments an eligible producer on a
farm received under the noninsured crop assistance
program for each crop on a farm;
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How will the Secretary define “insurance price
guarantee” for the 90% Cap?
(5) EXPECTED REVENUE.—The expected revenue for
each crop on a farm shall equal the sum obtained by
adding— (A) the product obtained by multiplying—
(i) the greatest of—
(I) the adjusted actual production history
yield of the eligible producer on a farm; and
(II) the countercyclical program payment yield;
(ii) the acreage planted or prevented from being
planted for each crop; and
(iii) 100 percent of the insurance price guarantee.
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How will the Secretary define “insurance price
guarantee for the 90% Cap?
The insurance price guarantee for RAHPO, CRC, and
GRIPHRO is the higher of the planting price or the
harvest price.
In the past the revenue cap was based on the APH
price election. If this is price is used it will create and
incentive to drop replacement-revenue coverage and
reduce coverage levels.
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Prevented & Late Planting
Under prevented planting the coverage is reduced to
60% of the guarantee. There is also a 1% reduction in
the guarantee for each day the insured plants after the
final planting date.
So is the SURE coverage also reduced or do farmers
maintain the same SURE coverage level but there are
fewer indemnity dollars to count against the
guarantee?
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Setting Sure under GRIP/GRP?
Under GRIP/GRP the coverage levels are typically 85%
and 90% while it is 70% or 75% on aph products, so
will USDA use the 90% GRIP coverage to set the SURE
coverage at 90% or will they use 80%, similar to how
the subsidy is set for GRIP (90% GRIP gets the same
subsidy rate as 80% aph products)?
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SURE Loss Adjusting under GRIP/GRP
Under GRIP/GRP there is no individual loss adjustment
but there is under SURE.
So will FSA also adjust losses in the field?
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Summary of farm bill crop insurance title
Reduces the A&O by 2.3 points with a 50%
“snapback” provision if a state’s loss ratio exceeds 1.2.
Reduces Cat reimbursement rate from 8% to 6%
Raises statutory loss ratio to 1.0 from 1.075.
Raises cat administrative fee to $300 per crop per
county.
Moves up the billing date to August 15 beginning in
2012.
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Summary of farm bill crop insurance title
Delays the payment date for A&O expenses to October
1 in 2012.
Requires USDA to renegotiate the SRA by the
beginning of 2011 reinsurance year and every five
years after that.
Prohibits, at the discretion of the governor, crop
insurance on native sod for five years in states that
are part of the Prairie National Pothole Area.
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Summary of farm bill crop insurance title
Increases focus on risk management education for
socially disadvantaged and beginning farmers.
Expands data mining efforts.
Increases funding to RMA for its IT system.
Requires an expert review of the crop insurance price
setting method for grain sorghum.
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Summary of farm bill crop insurance title
Conduct a pilot that increases the subsidy rate on
enterprise & whole farm units to match optional unit
subsidy.
Administratively, USDA increased the price limits on
CRC from current levels to 2 Times base price, e.g.
would have increased corn from a $6.90 cap ($5.40 +
$1.50) to $10.80 and eliminated the downside price
limit.
Administratively, USDA will apply this same price limit
to RA for the first time.
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Livestock Disaster Program
Excludes cattle in feedlots
Requires crop (livestock/forage insurance; includes
pilots) or NAP
Covers death loss
Pays 75% of market value the day before the death.
Covers forage and grazing losses U.S. Drought
Monitor
Payment rate for drought is 60% of monthly feed cost.
Covers fire on public grazing
Payment rate for fire is 50% of monthly feed costs.
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Livestock Disaster Program
Monthly payment = 30 days X 15.7 pounds of corn for
adult cow or equivalent X 12 or 24 month average NASS
price prior to march 1 divided by 56
Severe Drought (D2) in a county for 8 consecutive weeks
will be eligible to receive assistance of 1 monthly
payment
Extreme Drought (D3) in a county will be eligible to
receive assistance of 2 monthly payments
Extreme Drought (D3) in a county for 4 consecutive
weeks or Exceptional Drought (D4) will be eligible to
receive assistance of 3 monthly payments
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Tree Assistance Program (TAP)
TAP provides assistance to eligible orchardists and
nursery tree growers if tree mortality from damaging
weather or related conditions exceeds 15% (adjusted for
normal mortality).
Payment covers 70% of replanting and 50% of salvage
or land preparation costs.
Tree Assistance Program Payments cannot exceed
$100,000/year, nor be made on more than 500 acres.
AGI limits and the direct attribution rule apply.
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Honey Bees and Farm-Raised Fish
Emergency Assistance for Livestock, Honey Bees, and
Farm-Raised Fish provides up to $50 million/year to
reduce losses from disease, adverse weather, and other
environmental conditions not covered under the other
Livestock programs.
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Thank You
DR. G. A. “ART” BARNABY, JR.
KANSAS STATE UNIVERSITY
& 4B AG CONSULTANTS, LLC
PHONE: 7855321515
EMAIL: [email protected]
Check out our WEB page at
http://www.AgManager.Info
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