Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.
Risk Management Options
James Robison -- RAFI-USA
Charles Zink -- USDA Farm Service Agency
Molly Nicholie --ASAP
Welcome and Introductions (Molly Nicholie- 5 minutes)
2
Five primary sources of risk
—
Production Risks
Marketing Risks
Financial Risks
Legal Risks
Human Resource Risks
3
Managing Risk: Planning
Managing Risk: Diversification
Managing Risk: Market Opportunities
Managing Risk: Regional Branding
Managing Risk:
Know your strengths
Know your weaknesses
Recognize opportunities as they arise
Understand threats
Whole Farm Revenue
Protection
James Robinson, Research and Policy Associate
The Rural Advancement Foundation International (RAFI)
combines on-the-ground services with policy and market advocacy in o...
Sections
1. Crop Insurance Overview: Why does RAFI work on crop
insurance?
1. Whole Farm Revenue Protection (WFRP): An Ove...
Crop Insurance
Overview: Why Does
RAFI Work on Crop
Insurance?
How many have considered crop
insurance?
How many of you have crop
insurance?
What comes to mind when you hear…
“crop
insurance”
A farm’s risk management strategy
and overall level of risk is directly
linked with what financial concept?
Credit Worthin...
The structure of lending and crop insurance programs drives investment and
production decisions long before a disaster tak...
What does this mean for specialty
crop, diversified, and livestock?
• If obtaining credit is difficult for specialty crop ...
1.Whole Farm
Revenue Protection
(WFRP): An
Overview
Why is WFRP Important?
• Multi-peril Insurance
• Pest related losses
• Weather related losses
• Losses in price caused by ...
What’s Covered by WFRP?
• Crops
• Any agricultural product established or produced on your farm
operation, except timber, ...
What’s Not Covered by WFRP?
• Yield
• Negligence, mismanagement, wrongdoing
• Act of person rather than nature (chemical d...
Why Did Prior Whole Farm Revenue
Crop Insurance Policies Not Work?
• Adjusted Gross Revenue (AGR) & Adjusted Gross Revenue...
Whole Farm Revenue Protection
WFRP Comparison
WFRP AGR-Lite AGR
Type of Coverage Revenue Revenue Revenue
5-year Tax History Yes- Schedule
F
Yes- Schedul...
Additional Needed Reforms
• Beginning farmers do not have
access to WRFP until 7th year of
farming
• 5 years of Schedule F...
The Nuts and Bolts:
WFRP in Action
Crop Insurance 101
• Past records → On average, you earn $1,000 in revenue on the farm, so
expect to earn this in 2015
• Y...
Crop Insurance 101
• Past records → On average, you earn $1,000 in revenue on the farm, so
expect to earn this in 2015
• Y...
Application Process: Tax
Records
• Requires 5 consecutive years of Schedule F
• Sales of products raised on your farm for ...
Approved
revenue
Coverage
level
Actual
revenue
Application Process: Calculating
Approved Revenue
• The lower of historic and expected revenue
• Historic revenue from 5 years of Schedule F
calculated using Allowable Reve...
Year Revenue
2009 $5,608
2010 $6,789
2011 $4,578
2012 $3,567
2013 $7,890
5-Year Average = $5,686
*Can also expand by 10% w...
Approved
revenue
Coverage
level
Actual
revenue
Calculating expected revenue
• Farm Operation Reports
• Submitted at sales ...
Farm Operation Report - Sample
Commodity
Name
Method
of Estab. Yield/Acre Expected Value
Expected
Value/Ac
Intende
d
Quantity
Expected
Revenue
Cucumbers ...
Approved
revenue
Coverage
level
Actual
revenue
• Approved revenue = $5,105
• 50% to 85% in 5% increments available
– 85% l...
Approved
revenue
Coverage
level
Actual
revenue
Commodity
Name
Expected
Revenue
10% Loss,
Actual
Revenue
40% Loss,
Actual R...
Approved
revenue
Coverage
level
Actual
revenue
Review
• Approved revenue is the lowest of 5-year
historical revenue from S...
1. Timeline: What to do after experiencing a loss?
1. Documentation: What forms will I need to file a claim?
1. Claims Cal...
Timeline
• 72 hours after initial discovery to
notify insurer of loss
• 60 days after farm tax
forms filed
Required Documentation
Claim Year
Updated
Application
forms
• Allowable Expenses Worksheet
• Allowable Revenue Worksheet
•...
Claims For Indemnity Form
Claims For Indemnity Form
Claims For Indemnity Form
Approved Revenue * Coverage Level =
Allowable revenue with
adjustments =
Insured
Revenue
Revenue...
Claims For Indemnity Form
Insured Revenue – Revenue-to-Count =
Claims For Indemnity Form
Insured Revenue – Revenue-to-Count =
I bought coverage for $140,000. My farm’s actual
revenue wa...
Insured Revenue
What you bought insurance for,
expected revenue during application process
• Claim = Insured Revenue – Rev...
Revenue-to-Count
• Claim = Insured Revenue – Revenue-to-Count
• Allowable revenue from claim year Schedule F
- As determin...
Revenue-to-Count
• Claim = Insured Revenue – Revenue-to-Count
• Allowable revenue from claim year Schedule F
- As determin...
Inventory grows
(End > Beginning)
Add to revenue-to-count Lowers claim
Inventory falls
(End < Beginning)
Subtract from rev...
Inventory grows
(End > Beginning)
Add to revenue-to-count Lowers claim
Inventory falls
(End < Beginning)
Subtract from rev...
Revenue-to-Count
• Claim = Insured Revenue – Revenue-to-Count
• Allowable revenue from claim year Schedule F
- As determin...
Accounts receivable grows
(End > Beginning)
Add to revenue-to-count Lowers claim
Accounts receivable falls
(End < Beginnin...
Revenue-to-Count
• Claim = Insured Revenue – Revenue-to-Count
• Allowable revenue from claim year Schedule F
- As determin...
Market Inventory and Other
Adjustments
• Market animal and nursery inventory
• Other
- Revenue loss from uninsured cause o...
Claims For Indemnity Form
Approved Revenue * Coverage Level =
Allowable revenue with
adjustments =
Claims For Indemnity Form
Insured Revenue – Revenue-to-Count =
Model Farm Examples
• What is Diversification?
• WFRP offers a premium discount for more diverse
operations
– But what doe...
But How Much Does it Cost?
• It depends!
– How much revenue you want to insure
– The premium level
– The specific crops yo...
Crop Revenue % of Revenue
Cucumbers $400,000 33%
Bell Peppers $400,000 33%
Tomatoes $400,000 33%
85% 80% 75% 70% 65% 60% 5...
Crop Diversification
Crop Revenue % of Revenue
Cucumbers $390,000 32%
Bell Peppers $390,000 32%
Tomatoes $390,000 32%
Wate...
Income Diversification
Crop Revenue % of Revenue
Cucumbers $500,000 42%
Bell Peppers $200,000 16%
Tomatoes $500,000 42%
85...
Crop Revenue % of Revenue
Cucumbers $300,000 25%
Bell Peppers $300,000 25%
Tomatoes $300,000 25%
Watermelons $300,000 25%
...
How Can I Calculate Premiums
for My Farm?
http://tinyurl.com/USDA-WFRP
1) Click Quick Estimate
2) Fill in Quick Criteria
3) Fill in Individual Coverage
How much is covered by other policies?
Historical, Schedule F, Revenue
Expected, Farm Outpu...
4) Premium Estimates & Details
RECAP
• Sign-up for more info on sign-in sheet
• Talk to crop insurance agents, try out the tools
yourself and please plea...
THANK YOU.
Follow-up thoughts or questions?
James, james@rafiusa.org, 919-542-1396 ext. 209
USDA – Farm Service
Agency
Charles E. Zink
County Executive Director
Madison/Buncombe County FSA Office
Farm Number (Why)
• Voluntary.
• ID’s the land.
• Required to apply for USDA programs.
• Many NCDA and Soil and Water gran...
Farm Number (How)
• Landowner file a request with local FSA
Office.
• Copy of the deed. (Address of property,
survey, tax ...
NAP
• Non Insurable Crop Disaster
Assistance Program
• Provides coverage for crop losses on
crops when crop insurance is n...
Approved NAP Crops
CROP APPLICATION CLOSING
DATE
CROP APPLICATION CLOSING
DATE
Alfalfa 11/15/14 Millet 02/28/15
Apples 11/...
NAP (Eligibility)
• Application and administrative fee must
be filed by sales closing date for the
crop.
• Eligible produc...
NAP (Coverage)
• Basic Coverage guarantees 50% of normal
yield at 55% of established price
– Cost for basic coverage is $2...
NAP (Coverage)
• Producers who elect buy up coverage
must pay the administrative fee plus a
premium equal to:
– The produc...
NAP (Eligibility)
• Limited resource, traditionally
underserved, and beginning farmers
are eligible for a waiver of the
ad...
NAP (Eligibility)
• Beginning Farmer – a person or entity
who:
– Has not operated a farm or ranch for more
than 10 years, ...
NAP (Eligibility)
• Limited resource farmer – a person or
entity that:
– Earns no more than $176,800 in each of the 2
prev...
NAP (Eligibility)
• Socially disadvantaged farmer – a person or
entity that consider their identity to be in one of
the fo...
NAP (Loss)
• Eligible crop losses include the
following;
– Damaging weather, such as drought,
freeze, hail, excessive rain...
NAP (Loss)
• Producers with NAP coverage must notify
FSA within 15 days of the earlier of:
– A natural disaster occurrence...
NAP (Loss)
• May report loss by:
– phone (follow up with office visit).
– Office visit.
• FSA will schedule an adjustor to...
NAP (Premium Calculations)
• Premium Calculator
– www.fsa.usda.gov
NAP (Premium Calculations)
NAP (Premium Calculations)
NAP (Premium Calculations)
NAP (Premium Calculations)
NAP (Premium Calculations)
NAP (Premium Calculations)
NAP (Premium Calculations)
NAP (Crop Reporting)
• NAP producers are required to make crop
acreage reports each year. Must report by
crop reporting de...
NAP (Record Keeping)
• Producers are required to provide record of
production of the crop. Records must be:
– Verifiable -...
NAP
• Failure to make crop acreage report and
provide production information for NAP
covered crops may result in reduced o...
FSA Loans
• FSA’s loan programs are designed to
help family farmers to start, purchase or
expand their farming operation.
...
FSA Loans
Questions
Upcoming SlideShare
Loading in …5
×

2015 Business of Farming Conference: Risk Management Options: Crop Insurance and Accessing Credit

878 views

Published on

Risk Management Options: Crop Insurance and Accessing Credit
The 2014 Farm Bill brought a variety of changes and opportunities for both small and mid-sized farmers. This workshop is designed to offer an overview of what it means to manage risk for your farm and options for both beginning and experienced farmers. Area experts will help you navigate crop insurance choices and opportunities for accessing credit, offering the information and tools you need to determine the best options for your farm.

Published in: Business
  • The #1 Woodworking Resource With Over 16,000 Plans, Download 50 FREE Plans... ■■■ http://ishbv.com/tedsplans/pdf
       Reply 
    Are you sure you want to  Yes  No
    Your message goes here

2015 Business of Farming Conference: Risk Management Options: Crop Insurance and Accessing Credit

  1. 1. Risk Management Options James Robison -- RAFI-USA Charles Zink -- USDA Farm Service Agency Molly Nicholie --ASAP
  2. 2. Welcome and Introductions (Molly Nicholie- 5 minutes) 2
  3. 3. Five primary sources of risk — Production Risks Marketing Risks Financial Risks Legal Risks Human Resource Risks 3
  4. 4. Managing Risk: Planning
  5. 5. Managing Risk: Diversification
  6. 6. Managing Risk: Market Opportunities
  7. 7. Managing Risk: Regional Branding
  8. 8. Managing Risk: Know your strengths Know your weaknesses Recognize opportunities as they arise Understand threats
  9. 9. Whole Farm Revenue Protection James Robinson, Research and Policy Associate
  10. 10. The Rural Advancement Foundation International (RAFI) combines on-the-ground services with policy and market advocacy in order to ensure that farmers have the opportunity to make the right choices for their farm and families and that these are also the right choices for the environment and farming communities.
  11. 11. Sections 1. Crop Insurance Overview: Why does RAFI work on crop insurance? 1. Whole Farm Revenue Protection (WFRP): An Overview 1. The Nuts and Bolts of WFRP: How does it work? • Crop Insurance 101 • Application Process • Claims Process • Model Farm Premiums
  12. 12. Crop Insurance Overview: Why Does RAFI Work on Crop Insurance?
  13. 13. How many have considered crop insurance? How many of you have crop insurance?
  14. 14. What comes to mind when you hear… “crop insurance”
  15. 15. A farm’s risk management strategy and overall level of risk is directly linked with what financial concept? Credit Worthiness
  16. 16. The structure of lending and crop insurance programs drives investment and production decisions long before a disaster takes place. Farmer Decisions • Specialty crops? • More diverse cropping systems? • Other production- based risk management practices? Creditors • Limited recognition of production-based risk management, like crop, and income diversification • So, creditors reduce risk by requiring crop insurance Crop Insurance • Historically not designed for specialty crop, diverse, or livestock producers Farmers Find Limited Credit Opportunities for Specialty Crop, Diversified and Livestock Operations
  17. 17. What does this mean for specialty crop, diversified, and livestock? • If obtaining credit is difficult for specialty crop and diversified producers, then it is: • Harder to access land, • More likely producers farm under production contracts, • And harder to expand operations.
  18. 18. 1.Whole Farm Revenue Protection (WFRP): An Overview
  19. 19. Why is WFRP Important? • Multi-peril Insurance • Pest related losses • Weather related losses • Losses in price caused by “natural” events • Incentivizes Diversification • Insures multiple crops without requiring a producer to purchase multiple policies • Premiums reduced for growing up to 7 additional crops • Covers crops and livestock
  20. 20. What’s Covered by WFRP? • Crops • Any agricultural product established or produced on your farm operation, except timber, forest, and forest products, animals for sport, show or pets • Covers livestock up to 35% of revenue or $1 million • Events • Insures against loss of approved revenue due to unavoidable natural causes that occur during the insurance year • Includes declines in both crop yield and price as long as the decline can be linked to a natural cause (i.e., weather-related) • “Decline in local market price will be presumed to be from unavoidable natural causes unless the Company or FCIC is able to specifically identify a man-made cause that resulted in a measurable change in the price.”
  21. 21. What’s Not Covered by WFRP? • Yield • Negligence, mismanagement, wrongdoing • Act of person rather than nature (chemical drift, fire) • Water contained by dam or reservoir • Damage to machinery or equipment • Breakdown in irrigation equipment or practices when not related to natural cause • Theft and vandalism • Price • Quarantine, boycott or refusal of anyone to accept commodities • Lack of labor • Deterioration of commodities in storage, unless due to unavoidable natural cause
  22. 22. Why Did Prior Whole Farm Revenue Crop Insurance Policies Not Work? • Adjusted Gross Revenue (AGR) & Adjusted Gross Revenue- Lite (AGR-Lite) • Geographically Limited- Policies were not available in some major farming states • Coverage- limited to 72% of average adjusted gross revenue • Expensive- Producers frequently reported the policy was not cost- effective • Difficulty Expanding Coverage- producers were required to show a history of crop expansion in prior years before being able to expand coverage • Low Liability Limit- $1 million liability limit • Only 3 policies sold in NC each of the last three years
  23. 23. Whole Farm Revenue Protection
  24. 24. WFRP Comparison WFRP AGR-Lite AGR Type of Coverage Revenue Revenue Revenue 5-year Tax History Yes- Schedule F Yes- Schedule F Yes- Schedule F Diversification Incentive Yes Yes Yes Coverage Level 50%-85% 65%-80% 65%-80% Payment Rate 100% 75%-90% 75%-90% Maximum Subsidy 80% 59% 59% Covers Post Production Expenses Yes, on-farm, post-production expenses that do not add value No No Liability Limit $8.5 Million $1 million $6.5 million
  25. 25. Additional Needed Reforms • Beginning farmers do not have access to WRFP until 7th year of farming • 5 years of Schedule F tax records • Plus 1 lag year • No option to build a history using transitional-yields • How can we reform the policy during the pilot phase to increase access for beginning farmers?
  26. 26. The Nuts and Bolts: WFRP in Action
  27. 27. Crop Insurance 101 • Past records → On average, you earn $1,000 in revenue on the farm, so expect to earn this in 2015 • You decide to buy a policy that insures 85% of your expected revenue: • $1,000 * 85% = $850 Hail hits a week before harvest, wiping out 50% of the crop and leaving you with only $500 in revenue for the year. $1,000 expected revenue $500 actual revenue $350 Pa $850 coverage level $350 indemnity
  28. 28. Crop Insurance 101 • Past records → On average, you earn $1,000 in revenue on the farm, so expect to earn this in 2015 • You decide to buy a policy that insures 85% of your expected revenue: • $1,000 * 85% = $850 Minor flooding in a single field brings your revenue down to $900 in 2015. $1,000 expected revenue $900 actual revenue $350 Pa $850 coverage level NO INDEMNITY
  29. 29. Application Process: Tax Records • Requires 5 consecutive years of Schedule F • Sales of products raised on your farm for sale (or bought for resale), such as livestock, produce, or grains • OR you may use another person’s tax returns if you purchased, inherited, or leased 90% of their farm operation • Prices must be from verifiable sources and come with documentation
  30. 30. Approved revenue Coverage level Actual revenue Application Process: Calculating Approved Revenue
  31. 31. • The lower of historic and expected revenue • Historic revenue from 5 years of Schedule F calculated using Allowable Revenue and Expense Worksheets • May include adjustment for recent or future growth • Expected yield based on expectations for the coming year and the Farm Operation Report Approved revenue Coverage level Actual revenue
  32. 32. Year Revenue 2009 $5,608 2010 $6,789 2011 $4,578 2012 $3,567 2013 $7,890 5-Year Average = $5,686 *Can also expand by 10% with approval of insurance provider Calculating historic revenue Approved revenue Coverage level Actual revenue
  33. 33. Approved revenue Coverage level Actual revenue Calculating expected revenue • Farm Operation Reports • Submitted at sales closing date for each insurance year • Detailed information for each commodity you intend to produce or purchase for resale on your farm • what the farm can reasonably produce during the insurance year • expected revenue for each commodity, reflecting expected sale price in markets where the crop is normally sold • 3 Versions • Intended and Revised – Submitted before season begins and before coverage level is finalized, used to calculated expected revenue • Final – Submitted after season is closed, reflects actual production and sales
  34. 34. Farm Operation Report - Sample
  35. 35. Commodity Name Method of Estab. Yield/Acre Expected Value Expected Value/Ac Intende d Quantity Expected Revenue Cucumbers Acres 425 carton $20/40 lb carton $8,500 0.10 $850 Greens Acres 800 carton $16/20 lb carton $12,800 0.10 $1,280 Strawberrie s Acres 1,750 cont $17/8 lb container $29,750 0.10 $2,975 Total Expected Revenue $5,105 Calculating expected revenue Approved revenue Coverage level Actual revenue • Expected values must be realistic and consistent with available local market information, supported by verifiable records and take into account current local markets, cycles and trends. Historic revenue = $5,686 Expected revenue = $5,105 What is the approved revenue?
  36. 36. Approved revenue Coverage level Actual revenue • Approved revenue = $5,105 • 50% to 85% in 5% increments available – 85% level is only available if you have 3 or more crop – Higher coverage=higher premium cost $5,105 * 50% = $2,553 $5,105 * 85% = $4,339
  37. 37. Approved revenue Coverage level Actual revenue Commodity Name Expected Revenue 10% Loss, Actual Revenue 40% Loss, Actual Revenue Cucumbers $850 $746 $900 Greens $1,280 $990 $1,400 Strawberries $2,975 $2,858 $763 Total Revenue $5,105 $4,594 $3,063
  38. 38. Approved revenue Coverage level Actual revenue Review • Approved revenue is the lowest of 5-year historical revenue from Schedule F or expected revenue from Farm Operation Report • Coverage level is up to farmer, based on premiums and perceived risk
  39. 39. 1. Timeline: What to do after experiencing a loss? 1. Documentation: What forms will I need to file a claim? 1. Claims Calculation Process: How is my indemnity calculated? 1. Miscellaneous Claims Information: When am I eligible for a replant payment? What happens if I amend tax forms after a payment is received? What happens if I’m audited? Claims Process
  40. 40. Timeline • 72 hours after initial discovery to notify insurer of loss • 60 days after farm tax forms filed
  41. 41. Required Documentation Claim Year Updated Application forms • Allowable Expenses Worksheet • Allowable Revenue Worksheet • Final Farm Operation Report Additional Forms • Inventory and Accounts Receivable • Market Animal and Nursery Inventory if applicable • Replant Payment Worksheet if applicable Claim for Indemnity Form
  42. 42. Claims For Indemnity Form
  43. 43. Claims For Indemnity Form
  44. 44. Claims For Indemnity Form Approved Revenue * Coverage Level = Allowable revenue with adjustments = Insured Revenue Revenue-to- count
  45. 45. Claims For Indemnity Form Insured Revenue – Revenue-to-Count =
  46. 46. Claims For Indemnity Form Insured Revenue – Revenue-to-Count = I bought coverage for $140,000. My farm’s actual revenue was $130,000. What’s my claim?
  47. 47. Insured Revenue What you bought insurance for, expected revenue during application process • Claim = Insured Revenue – Revenue-to-Count • Insured Revenue - Approved Revenue * Coverage Level - Both from application process - Approved revenue based on farm’s history - Coverage level elected by farmer • Potential adjustment for crop losses
  48. 48. Revenue-to-Count • Claim = Insured Revenue – Revenue-to-Count • Allowable revenue from claim year Schedule F - As determined by Allowable Revenue and Allowable Expenses worksheets • Adjustments with forms for changes in - Inventory - Accounts receivable & payable - Market animal and nursery inventory - Other What actually happened?
  49. 49. Revenue-to-Count • Claim = Insured Revenue – Revenue-to-Count • Allowable revenue from claim year Schedule F - As determined by Allowable Revenue and Allowable Expenses worksheets • Adjustments with forms for changes in - Inventory - Accounts receivable & payable - Market animal and nursery inventory - Other What actually happened?
  50. 50. Inventory grows (End > Beginning) Add to revenue-to-count Lowers claim Inventory falls (End < Beginning) Subtract from revenue-to-count Increases claim Claim = Insured Revenue – Revenue-to-Count Inventory Report
  51. 51. Inventory grows (End > Beginning) Add to revenue-to-count Lowers claim Inventory falls (End < Beginning) Subtract from revenue-to-count Increases claim Claim = Insured Revenue – Revenue-to-Count Inventory Report WFRP only covers revenue from commodities produced within the current tax year
  52. 52. Revenue-to-Count • Claim = Insured Revenue – Revenue-to-Count • Allowable revenue from claim year Schedule F - As determined by Allowable Revenue and Allowable Expenses worksheets • Adjustments with forms for changes in - Inventory - Accounts receivable & payable - Market animal and nursery inventory - Other What actually happened?
  53. 53. Accounts receivable grows (End > Beginning) Add to revenue-to-count Lowers claim Accounts receivable falls (End < Beginning) Subtract from revenue-to-count Increases claim Accounts Report
  54. 54. Revenue-to-Count • Claim = Insured Revenue – Revenue-to-Count • Allowable revenue from claim year Schedule F - As determined by Allowable Revenue and Allowable Expenses worksheets • Adjustments with forms for changes in - Inventory - Accounts receivable & payable - Market animal and nursery inventory - Other What actually happened?
  55. 55. Market Inventory and Other Adjustments • Market animal and nursery inventory • Other - Revenue loss from uninsured cause of loss ▪ Quarantine, neglect, etc. - Abandoned acreage - Other indemnity payments - Gains from hedging - Anything else discussed by insurer and farmer
  56. 56. Claims For Indemnity Form Approved Revenue * Coverage Level = Allowable revenue with adjustments =
  57. 57. Claims For Indemnity Form Insured Revenue – Revenue-to-Count =
  58. 58. Model Farm Examples • What is Diversification? • WFRP offers a premium discount for more diverse operations – But what does this mean? • Crop Diversification – Count of crops grown • Income Diversification – How much farm income comes from each crop RMA WANTS BOTH
  59. 59. But How Much Does it Cost? • It depends! – How much revenue you want to insure – The premium level – The specific crops you grow and how they interact – How many crops you grow (more diversity = lower premium!) • Ultimately, this must be settled with your agent • For your own purposes, http://tinyurl.com/USDA- WFRP
  60. 60. Crop Revenue % of Revenue Cucumbers $400,000 33% Bell Peppers $400,000 33% Tomatoes $400,000 33% 85% 80% 75% 70% 65% 60% 55% 50% Total $71,808 $40,090 $24,300 $19,992 $16,692 $14,256 $12,012 $10,200 Per Acre $334 $186 $113 $93 $78 $66 $56 $47 • Mid-scale specialty crop commercial operation: – $1.2 million in revenue, 215 acres Model Farm Example Producer-Paid Premium
  61. 61. Crop Diversification Crop Revenue % of Revenue Cucumbers $390,000 32% Bell Peppers $390,000 32% Tomatoes $390,000 32% Watermelons $30,000 3% 85% 80% 75% 70% 65% 60% 55% 50% Total $72,706 $40,646 $24,660 $20,160 $16,848 $14,256 $12,276 $10,440 Differenc e $898 $556 $360 $168 $156 $0 $264 $240 Producer-Paid Premium
  62. 62. Income Diversification Crop Revenue % of Revenue Cucumbers $500,000 42% Bell Peppers $200,000 16% Tomatoes $500,000 42% 85% 80% 75% 70% 65% 60% 55% 50% Total $78,091 $43,709 $26,460 $21,840 $18,096 $15,264 $13,068 $11,160 Differenc e $6,283 $3,619 $2,160 $1,848 $1,404 $1,008 $1,056 $960 Producer-Paid Premium
  63. 63. Crop Revenue % of Revenue Cucumbers $300,000 25% Bell Peppers $300,000 25% Tomatoes $300,000 25% Watermelons $300,000 25% 85% 80% 75% 70% 65% 60% 55% 50% Total $69,564 $38,698 $23,580 $19,656 $16,380 $13,968 $12,012 $10,320 Differenc e ($2,244) ($1,392) ($720) ($336) ($312) ($288) $0 $120 Combined Diversification Producer-Paid Premium
  64. 64. How Can I Calculate Premiums for My Farm? http://tinyurl.com/USDA-WFRP
  65. 65. 1) Click Quick Estimate
  66. 66. 2) Fill in Quick Criteria
  67. 67. 3) Fill in Individual Coverage How much is covered by other policies? Historical, Schedule F, Revenue Expected, Farm Output Report, Revenue
  68. 68. 4) Premium Estimates & Details
  69. 69. RECAP • Sign-up for more info on sign-in sheet • Talk to crop insurance agents, try out the tools yourself and please please let us know how it goes • WFRP – Completed application must be submitted no later than the sales closing date specified in the actuarial documents (corresponds to spring sales closing dates for the county). – February 28th, March 15th
  70. 70. THANK YOU. Follow-up thoughts or questions? James, james@rafiusa.org, 919-542-1396 ext. 209
  71. 71. USDA – Farm Service Agency Charles E. Zink County Executive Director Madison/Buncombe County FSA Office
  72. 72. Farm Number (Why) • Voluntary. • ID’s the land. • Required to apply for USDA programs. • Many NCDA and Soil and Water grants and programs require a Farm Number. • Other benefits depending on the county.
  73. 73. Farm Number (How) • Landowner file a request with local FSA Office. • Copy of the deed. (Address of property, survey, tax maps, or adjoining property owners helpful.) • ID numbers and address for each owner listed on the deed. • Entities have additional requirements.
  74. 74. NAP • Non Insurable Crop Disaster Assistance Program • Provides coverage for crop losses on crops when crop insurance is not offered. • Covered losses are caused by natural disaster. • Apply for the program at your local FSA Office.
  75. 75. Approved NAP Crops CROP APPLICATION CLOSING DATE CROP APPLICATION CLOSING DATE Alfalfa 11/15/14 Millet 02/28/15 Apples 11/20/14 Oats 09/30/14 Artichoke 02/28/15 Okra 02/28/15 Asparagus 02/28/15 Onions 01/01/15 Barley 09/30/14 Peaches 11/20/14 Basil 02/28/15 Peanuts 02/28/15 Beans 03/15/15 Pears 11/20/14 Beets 01/01/15 Peas 02/28/15 Blackberries 11/20/14 Pecans 02/28/15 Blueberries 11/20/14 Peppers 02/28/15 Broccoli 01/01/15 Plums 11/20/14 Brussels Sprouts 02/28/15 Potatoes 01/31/15 Cabbage 02/28/15 Pumpkins 02/28/15 Caneberries 11/20/14 Radishes 02/28/15 Canola 09/30/14 Raspberries 11/20/14 Cantaloupes 02/28/15 Rutabaga 01/01/15 Carrots 01/01/15 Rye 09/30/14 Cauliflower 01/01/15 Sage - herb 09/01/14 Celery 01/01/15 Sorghum 02/28/15 Chinese Bitter Melon 02/28/15 Soybeans 02/28/15 Chives 01/01/15 Spinach 01/01/15 Cilantro 01/01/15 Sprite Melon 02/28/15 Corn (SWT, POP, TRO) 02/28/15 Squash 02/28/15 Cucumbers (FH) (Proc) 02/28/15 Strawberries 09/01/14 Dill 01/01/15 Sunflowers 02/28/15 Eggplant 02/28/15 Sweet Potatoes 02/28/15 Grapes 11/20/14 Tomatillos 02/28/15 Grazing (Grass/Mixed Forg) 11/15/14 Tomatoes 02/28/15 Greens 01/01/15 Triticale 09/30/14 Hay (Mixed Forage & Grass) (codes 0102 & 0296) 11/15/14 Turnips 01/01/15 Honey 11/20/14 Watermelons 02/28/15 Honeydew 02/28/15 Wheat 09/30/14 Kale 01/01/15 Kenaf 02/28/15 Kohlrabi 02/28/15 VALUE LOSS: Aquaculture, Christmas Trees, Ginseng, Turf Grass Sod, Mushrooms, Floriculture & Strawberry Rootstock 09/01/14Korean Golden Melon 02/28/15 Leeks 02/28/15 Lespedeza 11/15/14 VALUE LOSS: Ornamental Nursery/Propagation Stock Nonornamental Nursery 05/01/14 Lettuce 01/01/15
  76. 76. NAP (Eligibility) • Application and administrative fee must be filed by sales closing date for the crop. • Eligible producer is a landowner, tenant, or sharecropper who shares in the risk of producing the eligible crop and the individual or entity’s average adjusted gross income (AGI) cannot exceed $900,000.
  77. 77. NAP (Coverage) • Basic Coverage guarantees 50% of normal yield at 55% of established price – Cost for basic coverage is $250 per crop. – Not to exceed $750 per county. – Not to exceed $1,875 total in all counties. • Starting in 2015 you will have the option of buy up coverage, up 65% yield guarantee at 100% of established price. – Cost for buy up coverage is 5.25% of guarantee not to exceed $6,562.50.
  78. 78. NAP (Coverage) • Producers who elect buy up coverage must pay the administrative fee plus a premium equal to: – The producer's share of the crop; times – The number of acres of the crop; times – The approved yield per acre; times – The coverage level; times the average market price; times – 5.25% premium fee.
  79. 79. NAP (Eligibility) • Limited resource, traditionally underserved, and beginning farmers are eligible for a waiver of the administrative fee and a 50% premium reduction when they file form CCC-860, Socially Disadvantaged, Limited Resource and Beginning Farmer or Rancher Certification.
  80. 80. NAP (Eligibility) • Beginning Farmer – a person or entity who: – Has not operated a farm or ranch for more than 10 years, and – Materially and substantially participates in the operation. • For an entity to qualify as a beginning farmer, all members must be related by blood or marriage and each must be a beginning farmer.
  81. 81. NAP (Eligibility) • Limited resource farmer – a person or entity that: – Earns no more than $176,800 in each of the 2 previous tax years, and – Has a total household income at or below the national poverty level or less than 50% of the county Median household income for the 2 previous years ($23,850 for most WNC counties). • Online tool located at www.lrftool.sc.egov.usda.gov
  82. 82. NAP (Eligibility) • Socially disadvantaged farmer – a person or entity that consider their identity to be in one of the following groups: – African Americans; – American Indians or Alaskan Natives: – Asians or Asian Americans; – Hispanics; – Native Hawaiians or Pacific Islanders; – Women • For entity to qualify the majority interest must be held by socially disadvantaged individuals.
  83. 83. NAP (Loss) • Eligible crop losses include the following; – Damaging weather, such as drought, freeze, hail, excessive rain, wind, etc. – Adverse natural occurrences, such as flood or earthquake – Conditions related to damaging weather or natural occurrences, such as excessive heat, plant disease, or insect infestation.
  84. 84. NAP (Loss) • Producers with NAP coverage must notify FSA within 15 days of the earlier of: – A natural disaster occurrence; – The final planting date if planting is prevented by the natural disaster; – The date that damage to the crop become apparent; – The normal harvest date – Hand-harvested crops and perishable crops must notify FSA within 72 hours of when a loss becomes apparent.
  85. 85. NAP (Loss) • May report loss by: – phone (follow up with office visit). – Office visit. • FSA will schedule an adjustor to visit the farm or farms to determine if the loss was due to natural disaster, amount, and if the crop can be salvaged.
  86. 86. NAP (Premium Calculations) • Premium Calculator – www.fsa.usda.gov
  87. 87. NAP (Premium Calculations)
  88. 88. NAP (Premium Calculations)
  89. 89. NAP (Premium Calculations)
  90. 90. NAP (Premium Calculations)
  91. 91. NAP (Premium Calculations)
  92. 92. NAP (Premium Calculations)
  93. 93. NAP (Premium Calculations)
  94. 94. NAP (Crop Reporting) • NAP producers are required to make crop acreage reports each year. Must report by crop reporting deadline (most crops July 15); – Name and type of crop planted. – Farm, field location and acreage. – Who shares in the crop. – Date crop is planted. – Intended use. • In most cases this requires an office visit because the producer must identify the fields on aerial photography.
  95. 95. NAP (Record Keeping) • Producers are required to provide record of production of the crop. Records must be: – Verifiable - such as sales receipts with dates, name of buyer, product sold, and amount. – Reliable - such as pick records, farm book keeping records. – Records must be easy to read and understand. • Producers should contact FSA for questions regarding acceptable production records.
  96. 96. NAP • Failure to make crop acreage report and provide production information for NAP covered crops may result in reduced or zero NAP assistance. • The acreage and production reports are used to calculate the approved yield. The approved yield is an average of the producer’s actual production history (APH) for a minimum of 4 to a maximum of 10 crop years. • A producer’s approved yield may be calculated using substantially reduced yield data if acreage and suitable production records are not provided.
  97. 97. FSA Loans • FSA’s loan programs are designed to help family farmers to start, purchase or expand their farming operation. • Several loan options are available and each person’s needs are different so visit our booth during lunch to get detailed information.
  98. 98. FSA Loans
  99. 99. Questions

×