Production Risk Management in the Absence of RMA Products

2. Production Risk Management in the Absence of RMA Products • This section looks at the four options available in absence of RMA actuarial offerings: • Self-Insured • Single-Peril Insurance • Request for Actuarial Change • Non-Insurance Crop

3. Production Risk Management in the Absence of RMA Products: Risk Options • Self-Insured • Single-Peril Insurance • Request for Actuarial Change • Non-insured Crop Disaster Assistance Program (NAP)

4. Production Risk Management in the Absence of RMA Products: Request for Actuarial Change • Available if no RMA actuarial offering exists for the commodity, including CAT coverage • Requests may result in a custom-tailored written insurance agreement • Producer provides production and market information through their insurance agent • RMA reviews the application and considers the existence of RMA products in other locations

5. Production Risk Management in the Absence of RMA Products: Request for Actuarial Change • Requests for actuarial change are not always approved • RMA may provide a written agreement with the premium calculation method noted, and the crop price and APH yield established • If accepted, a producer can choose to accept or decline the agreement • The process is repeated each crop year

6. Production Risk Management in the Absence of RMA Products: Discussion • True or False? • 1. Submitting a Request for Actuarial Changes is available, if there is no RMA actuarial offering for the commodity in the county including CAT coverage • 2. In order to submit a Request for Actuarial Changes, a producer must provide only his production information to his insurance agent to receive an approval • 3. Once you, as the producer, have submitted a Request for Actuarial Changes, you may be given a custom-tailored written insurance agreement • 4. Actuarial Changes are always approved

7. Production Risk Management in the Absenceof RMA Products: NAP • Noninsured Crop Disaster Assistance Program (NAP) is available if there is no RMA actuarial offering for the commodity in the county, including CAT coverage • Offered by the Farm Service Agency • Covers crops that are non-insurable, including crops grown for food, fiber, and livestock feed • Covers low yields, loss of inventory, or prevented planting losses

8. Production Risk Management in the Absence of RMA Products: NAP • Natural Disasters: • Drought • Hail • Freezes • Hurricanes • Rain, wind • Related conditions, such as insect infestations

9. Production Risk Management in the Absence of RMA Products: Eligibility for NAP • Eligible producer: • Landowner • Tenant • Sharecropper • Producer must supply evidence of crop adaptability in the county • Producer must supply acreage and production information by the dates specified

10. Production Risk Management in the Absence of RMA Products: NAP Coverage • Offered only at the basic unit level • Covers losses in excess of 50% of expected production • Payment rate is 55% of the average market price Farm Service Agency (FSA) • Payment may be reduced, if the crop is harvested, not harvested or not planted

11. Production Risk Management in the Absence of RMA Products: NAP Yield • Yields calculated over a four to ten year period • If four years of yields are unavailable, then a yield is assigned • Yields are calculated at the basic unit level • Closing dates vary by crop • Submit application and pay applicable fees • $100 per crop per administrative county • $300 per producer per county • $900 per producer in all counties

12. Production Risk Management in the Absence of RMA Products: NAP Example • Basic Unit 1: 50 acres that you own and farm • Basic Unit 2: 30 acres that you crop share at 2/3 - 1/3 with another producer • Two separate applications would be needed

13. Production Risk Management in the Absenceof RMA Products: NAP • Losses of non-insurable crops that exceed 50% of the expected yield are paid at a rate of 55% of the average market price of the commodity • The state FSA committee sets the average market price • The payment rate may be reduced for a crop that is unharvested

14. Production Risk Management in the Absence of RMA Products: NAP • Crops commonly enrolled in NAP in Wyoming: • Forage Production • Grains planted as hay and not insured as grain • Irrigated and non-irrigated grass hay • Rangeland Production • Only in counties without GRP Rangeland Insurance

15. Production Risk Management in the Absence of RMA Products: NAP • Crops often enrolled in NAP in Wyoming: • Grains harvested as hay • Oats • Wheat • Barley • Perennial forage seedings are not eligible for NAP coverage during the year of stand establishment • Under NAP coverage forage crops intended for harvest can be grazed if livestock are removed by the pull-off date

16. Production Risk Management in the Absence of RMA Products: NAP

17. Production Risk Management in the Absence of RMA Products: NAP Example • Example: Oats Harvested as Hay

18. Production Risk Management in the Absence of RMA Products: Oat Hay Example • The producer’s actual yield was 0.5 tons/acre • Will the producer receive financial assistance? • Calculate the financial assistance in tons/acre • Calculate the financial assistance in dollars/acre

19. Production Risk Management in the Absence of RMA Products: NAP • NAP for Rangeland and Other Grazing: Carrying Capacity • Normal carrying capacity is expressed as animal unit days per acre • Animal unit takes on a very particular definition in NAP

20. Production Risk Management in the Absence of RMA Products: NAP • NAP for Rangeland and Other Grazing: Carrying Capacity • For each forage in each county in Wyoming, where the GRP Rangeland Insurance is not offered, the following is available at the county FSA • Crop • Crop type • Grazing days • Acres per animal unit

21. Production Risk Management in the Absence of RMA Products: NAP • NAP for Rangeland and Other Grazing: Carrying Capacity Example: Carbon County, Wyoming • For each forage in each county in Wyoming, the following type of information is available at the county FSA:

22. Production Risk Management in the Absence of RMA Products: NAP Sign-up Dates • Example: Carbon County, Wyoming • Producer needs to sign-up with their local Farm Service Agency office • Perennial grasses – sign-up date usually is December 1st • Fall-seeded annuals – sign-up date usually is September 30th • Spring-seeded annuals – sign-up date usually is March 15th

23. Production Risk Management in the Absence of RMA Products: NAP • NAP for Rangeland and Other Grazing: Fee Structure Example: Carbon County, Wyoming • Fee grouping for rangeland and other grazing forages: • Alfalfa, alfalfa mixes, and all grasses (collectively) - $100 • Seeded small grain forages – wheat, barley, oats, triticale, and rye - $100 for each crop, ($300 maximum) • Sorghum forages - $100

24. Production Risk Management in the Absence of RMA Products: NAP Loss Assessment • In the case of a loss in grazing capacity due to a natural disaster, the county FSA committee will require an independent assessment of average loss in grazing • Range specialists, range conservationists

25. Production Risk Management in the Absence of RMA Products: NAP

26. Production Risk Management in the Absence of RMA Products: NAP

27. Production Risk Management in the Absence of RMA Products: Example – Johnson County, WY • Suppose a producer had an appraised production loss of 70% • What is the compensated loss in AUD’s? • What is the per acre and the per section (640 acres) compensation?

28. Production Risk Management in the Absence of RMA Products: Summary • Production Management Risk Alternatives • Request for Actuarial Change • Noninsured Crop Disaster Assistance Program (NAP) • Check with the FSA in your county