Risk Management AgencySpokane Regional Office

Spring 2010

General update on the Federal crop insurance program in the State of Washington:

Insurable Crops in Washington Federal Crop Insurance Participation General Program Update

2010 Changes

Cherries – New ARH Program

2011 – New Common Crop Policy

◦ Partnership Agreements

Premium Premium SubsidySubsidy

Federal Crop Insurance Private Sector Delivery SystemFederal Crop Insurance Private Sector Delivery System

Agricultural ProducersAgricultural Producers(1.1 Million Policies)(1.1 Million Policies)

264 M Acres264 M Acres

$79.95B in Coverage$79.95B in Coverage

RMA/FCICRMA/FCIC

16 Private Insurance 16 Private Insurance CompaniesCompanies

Insurance Agents Insurance Agents (25,000+)(25,000+)

Loss Adjusters Loss Adjusters (5,000+)(5,000+)

FCIC FCIC Approved Approved Insurance Insurance

PolicyPolicy

SRASRA8 writing in WA

Apples, Barley, Blueberry, Cabbage, Canola, ARH Cherry Pilot, Corn, Cranberries, Dry Beans, Dry Peas, Flax, Forage Production, Forage (Alfalfa) Seed Pilot, Grapes, Table Grapes, Green Peas, Mint, Mustard, Nursery, Oats, Onions, Pears, Potatoes, Processing Beans, Processing Sweet Corn, Safflower, Stonefruit, Sugar Beets, and Wheat

Adjusted Gross Revenue Pilot (AGR) Adjusted Gross Revenue-Lite (AGR-Lite) Pasture, Rangeland & Forage (PRF) Pilot Livestock Risk Protection – Cattle, Swine, Lamb Apiculture (API) Pilot Livestock Gross Margin Dairy Cattle

Note: Program availability varies by county and subject to change

2010 Crop Insured By-State/County2010 Crop Insured By-State/County

Post on RMA Spokane RO Internet PagePost on RMA Spokane RO Internet Pagehttp://www.rma.usda.gov/aboutrma/fields/wa_rso/http://www.rma.usda.gov/aboutrma/fields/wa_rso/

PNW Total Crop Insurance Participation

6* data not final updated 2/2010

2009 Losses = $502 Million

Washington Insurance Participation – All Crops

0

500

1,000

1,500

2,000

2000 2001 2002 2003 2004 2005 2006 2007 2008 *2009

Coverage in Millions of Dollars

CAT Buy-Up2.6M ac insured in 2009

Updated 2/2010* data not final7

Washington Loss Payments – All Crops

0

50

100

150

200

250

300

350

2000 2001 2002 2003 2004 2005 2006 2007 2008 *2009

Loss Payments in Millions of Dollars

CAT Buy-Up

updated 2/2010* data not final8

2009 Insurance Participation Washington State - Fruit

CropsPotential Acres

Insured

Acres %Acres Insured

Amount of Coverage

Apples 173,000 123,508 71% $413.5M

Cherries 37,200 23,135 63% $150M

Pears 25,200 14,490 57% $28M

Grapes 62,700 46,312 75% $57.5M

Fresh Peaches 2,850 1,502 53% $2M

Fresh Apricots 1,100 757 69% $1.7M

Fresh Nectarines 1,550 1,244 80% $1.6M

Updated 2/2010

+$1.1M

+$5M

+$97M

+$105M

+3K ac

2009 Insurance Participation Washington State – other select crops

Crops Potential Acres

Insured Acres

%Acres Insured

Amount of Coverage

Onions 20,800 14,682 70% $16.9M

Dry Peas 142,000 129,811 91% $25.9M

Barley 125,000 43,807 35% $6.5M

Dry Beans 65,500 16,679 25% $5.5M

Potatoes 155,000 105,320 68% $139M

Sweet Corn 81,600 62,681 77% $29.7M

Wheat 2,420,000 1,931,974 80% $736M

updated 2/2010

+48K ac +$10M

-60K ac -$12.5M

-12.5K ac -$.5M

+$317M +180K ac

FSA Uninsured

NAP Program

also available

FSA Uninsured

NAP Program

also available

* New Program for 2010

Additional coverage and endorsement available for

some commodities

Additional coverage and endorsement available for

some commodities

Our job to tailor programs and coverage for producers we serve

Multiple Peril Crop Insurance (MPCI) Protects producer’s loss of revenue resulting from low yields Based on Producer’s individual Actual Production History

(APH). Actual Production History (APH): Actual amount of

production from a farm unit used to determine the insurance guarantee (4 build to 10 average)

Insured can purchase from 50 up to 75%

(85% on some crops) coverage based

on Average APH on Insurance Unit If unit yield is below production guarantee

insured gets paid a set amount (price election)

for every bushel/lb, etc. below production

guarantee. Most crops include quality coverage

MPCI – Causes of Loss

Adverse weather conditions Fire Insects

if adequate control measures applied Plant disease

if adequate control measures applied Wildlife Earthquake Volcanic eruption Failure of the irrigation water supply due to

an unavoidable cause of loss occurring within the insurance period

Revenue Plans Available in PNW Revenue Assurance (RA)

Barley Idaho, Oregon and Washington – Spring Only Canola Idaho AND NEW for 2010 Oregon and

Washington Spring Only

Wheat Idaho only – Winter and Spring Income Protection (IP)

Barley Idaho, Oregon and Washington Wheat Idaho Oregon and Washington

Crop Revenue Coverage (CRC) Corn Idaho, Oregon and Washington Wheat Idaho, Oregon and Washington

These products provide coverage to protect against loss of revenue caused by low prices or low yield’s or a

combination of both.14

Other Revenue Based Plans Revenue Plans

Adjusted Gross Revenue * Adjusted Gross Revenue-Lite (AGR-Lite) * Livestock Risk Protection (LRP) [Cattle, Sheep, Swine] Livestock Gross Margin (LGM) [Dairy]

Program availability varies by crop / state / county & is subject to change.

*whole farm insurance – all ag commodities produced are eligible for insurance based on insured adjusted gross revenue on a whole farm basis. Nearly 100 different commodities insured in Washington State many of which don’ t have separate MPCI policies available.

Catastrophic (CAT) Crop Insurance What does this policy cover / provide?

Catastrophic loss 50% deductible 55% of established price Basic Unit

What doesn’t this policy cover / provide? Optional units Price fluctuation on crops like wheat/barley with revenue

protection Other policy optionsCost: $300 per crop / county * *Waivers are available to Limited-Resource Farmers

Recent Program Changes in Washington Barley and Canola Revenue Assurance (RA)

Expansion into all Barley and Canola counties Potato Policy

Whatcom County: Final Planting Date changed from May 31 to June 15

Grape Policy Changes for 2010 Insure by varietal type, (expanded from 5 groups to

23 varietal specific types) May insure the value of grapes at the contract price

(less harvest cost) Expanded into seven Western Washington counties:

Clark, Island, Kitsap, Mason, Pierce, San Juan, Skagit

17

Recent Program Changes in Washington Mustard Policy

Converted to regulatory program (Asotin, Columbia, Garfield, Lincoln, Spokane, Walla Walla, and Whitman).

Cabbage Policy Insurance will not attach to any acreage planted to

cabbage or any other Brassicaceae crop (e.g., cauliflower, broccoli, etc.) in either of the two previous crop years unless a written agreement request is initiated prior to sales closing date.

Specialty Use Barley for 2010 5 types covered Must be under contract Allows insured to insure based on contracted price Implement of 2010, except fall barley counties will be

implemented in 201118

Recent Program Changes in Washington Dry Peas / Lentils

New policy 2009 Expanded into Douglas County, WA for 2010

Fall and Spring planted Austrians, Fall and Spring planted Smooth Green or Yellow Fall and Spring planted Lentils

Winter Coverage for 2010 Asotin, Douglas, Lincoln, Whitman

Buckwheat WA Expansion 2010 Grant, Franklin and Walla Walla counties

Apple Policy Proposed rule is out for comment. RMA plans to have the final rule

published for 2011 crop year.

19

Recent Program Changes in Washington Livestock Gross Margin (LGM)

Expanded into all WA counties The Livestock Gross Margin for Dairy Cattle Insurance

Policy provides protection against the loss of gross margin (market value of milk minus feed costs) on the milk produced from dairy cows.

Livestock Risk Protection - Lamb Expansion to Washington State Changing the limit for an individual Specific Coverage

Endorsement (SCE) from 7,000 to 2,000 head Addition of a 20 week endorsement to better fit the

production and marketing cycles of range and inter-mountain operations

A change from the ‘formula live’ AMS price series to the ‘formula carcass’ AMS price series converted to a live basis by use of the dressing percent to establish coverage

20

Washington: Adams, Benton, Chelan, Douglas, Franklin, Grant, Klickitat, Okanogan, Walla Walla and Yakima

Huge increase in business in 2009 with 23,172 acres insured - $151 M in coverage and as of 2/8 $23.4 M in losses with many still being worked.

Problems with Warehouses not accepting fruit.

RMA met with hundreds of industry representatives and AIP’s and worked through all the issues as best we could providing maximum flexibility within the constraints of the policy

2010 Business looks promising even after the problems we had in 2009. Policies sold increased from 955 to 1,062.

RMA modified the quality standards in Washington to reflect Washington’s Marketing Order and revised the Underwriting Guides and Loss Standards

Probably the single most important and fundamental change in the program in over 20 years – big rollout planned this year

One policy will provide yield protection, revenue protection, revenue protection w/the harvest price exclusion

CRC (Crop Revenue Coverage), RA (Revenue Assurance), IP (Income Protection), and IIP (Indexed Income Protection) are replaced by the following two new plans of insurance: Revenue Protection Revenue Protection w/the

Harvest Price Exclusion Combo - 24

Partnership Agreements The Risk Management Agency (RMA) is committed to

Alaska, Idaho, Oregon, and Washington agricultural producers by: Providing Risk Management information and training, Establishing research projects to create additional tools for

farmers/ranchers to better manage their risks, and Providing community outreach to traditionally underserved

producers. The Agriculture Risk Protection Act of 2000 (ARPA)

earmarked funds for RMA to form “partnerships” with public and private organizations. Alaska, Idaho, Oregon, and Washington agricultural producers have benefited from over $13.6 million since FY 2001, for outreach, education, and research.

2010 Announcement Published in Federal Register

Washington Partnerships (active in 2010)

OUTREACH Partnerships“Building Blocks for Risk Mitigation for Socially Disadvantaged Farmers and Ranchers”

Rural Community Development Resources

Provide outreach and technical assistance to underserved/unserved farmers/ranchers to meet RMA’s strategic goal of ensuring their customers and others are well informed.

 “Mobile Workshops for Women, Underserved, Latino and Socially Disadvantaged Farmers and Ranchers”

Washington State Department of Agriculture

Help Latino and women producers understand the variety of risk management tools available to help make risk management choices to better manage their farms in Washington State.

Education SMALL SESSION Partnerships“Risk Management Training for Washington Livestock Producers.”

Custom Ag Solutions

Provide risk management training opportunities for 250 Washington livestock producers expected to participate in the 2009 Washington Cattlemen’s Association Annual Meeting.

Spokane Regional OfficeDave Paul, Director

11707 E. Sprague Ave, Suite 201Spokane Valley, WA 99206

509-228-6320

www.rma.usda.gov1-800-205-9953 Toll Free

RMAs New Online Resource Tool USDA Risk Management Agency home page

◦ http://www.rma.usda.gov/ OR

◦ http://farm-risk-plans.usda.gov/