2014 Crop Insurance Update FARM BILL LISTENING SESSIONS STONEVILLE & VERONA MISSISSIPPI

1. 2014 Crop Insurance UpdateFARM BILL LISTENING SESSIONSSTONEVILLE & VERONA MISSISSIPPI RMA Administrator Brandon Willis October 29, 2014

2. General Overview – Top Ten Crops

3. 2014 Farm Bill Changes & Implementation

4. Farm Bill Overview - Interim Rule • Conservation Compliance • CAT Endorsement/SCO • Beginning Farmer/Rancher (BFR) • Native sod • Correction of errors • Administrative eligibility reinstatement • Coverage Level and Enterprise units for irrigated/non-irrigated acreage • Exclude low APH yields

5. Conservation Compliance • Comply with Highly Erodible Land and Wetland Conservation rules = Eligible for premium subsidy (applies to all policies) • Determined by USDA (FSA-NRCS-RMA) • FSA-Form AD-1026 on file • Once filed, remains in effect unless violation or producer plans change • File by June 1 – Yearly Verification with FSA Records • Current FSA/NRCS program participants subject to compliance – not impacted • No certification = no premium subsidy available

6. Conservation Compliance • Winter 2015 – 7 CFR Part 12 Interim Rule and related handbook procedures released • Winter 2014 - Initial list of producer status available to AIP’s • Information/media available: • Joint RMA/FSA/NRCS Fact sheet on RMA website • FAQ’s (WWW.RMA.USDA.GOV Farm Bill Page) • Agent brochure available

7. Beginning Farmer/Rancher (BFR) • Qualification • Not “actively operated or managed” any farm or ranch with an interest in crop or livestock-5 years • As individual or SBI holder • Regardless of insurance • Excluding Years • Under age 18 • Full-time active military duty • Post-secondary education

8. Beginning Farmer/Rancher (BFR) • Benefits • 10% additional percentage points in premium subsidy for buy-up • Example-Subsidy is 48% + 10% = 58% premium subsidy • Waive administrative fee (CAT and buy-up) • Use other persons production history if previous involvement on farm • Yield substitution 80% of T-Yield instead of 60% • Actual yield must be below 60% of T-Yield

9. Administrative Eligibility Reinstatement • Ability to reinstate policy for current crop year, instead of ineligibility in certain cases • Request no later than 60 days after termination or other applicable date • Two Situations: • Administrator discretion - unavoidable or unforeseeable event, or active duty obligation prevented timely payment • AIP discretion - Omitted small amount of payment

10. Administrative Eligibility Reinstatement • No evidence of fraud/misrepresentation • Determination by the Administrator exhausts all administrative remedies • Updated Basic policies/Subpart U/FCIC Procedures

11. Enterprise Units (EU) for Irrigated/Non-Irrigated • Available where EU allowed on actuarial documents - elected by sales closing date (on application or policy change) • Separate EUs must individually qualify based on existing EU requirements • Premium discount factors to be determined for each EU • Smaller acreages-discount lower • Premium subsidy rates being evaluated

12. Coverage Levels by Practice • Separate coverage level elections for buy-up coverage • All irrigated acreage of the crop in the county • All non-irrigated acreage of the crop in the county • Elected by sales closing date (on application or policy change) • No additional administrative fee • Available where irrigation practice is in the actuarial documents

13. Actual Production History Yield Exclusion • Insured may exclude yields from APH • Eligible Years - county yield is less than 50% of prior 10-year average • Actuarial Documents will identify qualifying crop years, counties and surrounding counties eligible for exclusion • Several discretionary issues • NOW AVAILABLE for THESE 2015 SPRING CROPS: CORN, SOYBEANS, SPRING WHEAT, COTTON, GRAIN SORGHUM, RICE, BARLEY, CANOLA, SUNFLOWERS, PEANUTS, POPCORN

14. Coming Initiatives • Peanut Revenue • Margin Coverage • Revise Concept Proposal procedures • Indexed Based Weather Insurance • Numerous R&D studies, evaluations

15. Supplemental Coverage Option (SCO) • Area-based coverage for a portion of insurance policy deductible • Purchased with an underlying individual crop policy • Liability (max payout) based on the liability of the individual underlying policy • 65% premium subsidy • Available for corn, barley, soybeans, cotton, rice, sorghum, and wheat

16. Stacked Income Protection (STAX) • Area-based coverage for a portion of expected county revenue • Upland cotton only • Purchased with an individual crop policy or can be stand-alone • Liability (max payout) based on expected crop value for the area (generally county) • 80% premium subsidy

17. SCO & STAX Indemnities SCO SCO STAX Payment Begins: Actual Rev < 90% of Expected Revenue Max Payout: Actual Revenue <= 70% (Or Coverage Level Percent of Companion Policy, if Higher) • Payment Begins: • Actual Revenue < 86% of Expected Revenue • Max Payout: • Actual Rev <= Coverage Level Percent of Underlying Policy

18. SCO Implementation • Late July • SCO Release July 29, including maps/premium rates/expected yields for SCO winter wheat • Late August • Spring Crop Availability Maps Released • Early October • Premium rates and expected yields for spring SCO crops released

19. 2015CropYearSupplementalCoverage Option(SCO)AvailabilityforCorn

20. 2015CropYearSupplementalCoverageOption (SCO)AvailabilityforUplandCotton

21. 2015CropYearSupplementalCoverage Option(SCO)AvailabilityforRice Legend ProgramOffered SCORicecoverageis estimatedtobeavailablefor: 97%ofacreageinsured(basedon2013cropinsuranceparticipation) 97%ofallplantedacreage(basedon2013NASSestimates)

22. 2015CropYearSupplementalCoverage Option(SCO)AvailabilityforSorghum Legend ProgramOffered SCOSorghumcoverageis estimatedtobeavailablefor: 90%ofacreageinsured(basedon2013cropinsuranceparticipation) 87%ofallplantedacreage(basedon2013NASSestimates)

23. 2015CropYearSupplementalCoverage Option(SCO)AvailabilityforSoybeans Legend ProgramOffered SCOSoybeancoverageisestimatedtobeavailablefor: 99%ofacreageinsured(basedon2013cropinsuranceparticipation) 98%ofallplantedacreage(basedon2013NASSestimates)

24. 2015CropYearSupplementalCoverage Option(SCO)AvailabilityforWheat

25. STAX Implementation • August • STAX policy and materials released • Map of availability released • Educational tool released • Early October • Premium rates and expected yields for STAX cotton released

26. 2015 Crop YearStackedIncomeProtection(STAX)AvailabilityforCotton

27. Expected Yields • Expected Yields for all crops other than cotton based on NASS • Expected Yields for cotton based on crop insurance data • RMA looking to expand use of crop insurance data to other crops in 2016 • Why base Expected Yields on crop insurance data? • Allows for practice specific data in more areas • Enables aggregation into larger groups • RMA yields for area plans are based on future projection of yields • Includes projection of yield trends (by practice) • Exceptional years (high or low) can be given less weight when calculating projected yield

28. Crop Insurance Data and NASS Data Cotton yield data from a county in GA Note that NASS published an aggregated yield for this county

29. Aggregating Counties • To offer SCO or STAX coverage, there must be enough acres and producers to establish a group large enough to qualify for area based coverage • For each practice in the county, general criteria for actuarial soundness are: • Yield data (reported through crop insurance) for 10 most recent years • An average of at least 10,000 acres in the 5 most recent years • At least 20 distinct producers reporting in each of the 5 most recent years

30. Standalone Counties County has (by practice) • 10+ years of history • 10,000+ acres in past 5 years • 20+ producers in past 5 years • Actuarial offer will include yield history and final yield of only that county (by practice) • Some room for judgment for counties that miss criteria by a small amount

31. Two County Group (or Proxy County) County missing one (+) criteria and: • Is adjacent to a standalone • Actuarial offer will include yield history and final yield of that county and the adjacent county • If more than one adjacent county qualifies one is picked considering: • Yield correlation • Acreage of standalone county

32. Circle Group County missing criteria and: • Is adjacent to a standalone • Can meet criteria when combined with surrounding adjacent counties • Actuarial offer will include yield history and final yield of that county and all of the adjacent counties

33. Double Circle and NASS District County missing criteria and: • Is adjacent to a standalone • Can meet criteria when combined with adjacent counties • Can meet criteria when combined with counties at double circle or NASS crop reporting district level • Actuarial offer will include yield history and final yield of that county and (the option with fewer acres): • All of the adjacent counties and counties adjacent to them • All counties in the NASS district

34. Outlying Counties County missing criteria and: • Is adjacent to a standalone • Can meet criteria when combined with adjacent counties • Can meet criteria at double circle or NASS crop reporting district level • Actuarial offer will include yield history and final yield of that county and some combination of counties sufficient to meet criteria for actuarial soundness • Requires judgment – input solicited from • RMA Regional Office personnel • Producer organizations Possible Group Options • Nearest standalone county • Practice specific • Triple Circle • Non-irrigated practice in the county • For irrigated practice only • Yield variance of practices considered • Geographic grouping • e.g. a series of counties that all have similar soil, climate, etc.

35. Challenges Ahead? Visit: www.rma.usda.gov Thanks to All!