Crop Insurance Update: Understanding the Actual Production History Yield Exclusion

Written by M. Sean High—Staff Attorney

Under the 2014 Farm Bill, the United States Department of Agriculture (USDA) Risk Management Agency (RMA) offers crop insurance policy holders the potential to exclude certain bad production years when calculating yields used to establish crop insurance coverage.  Known as the Actual Production History (APH) Yield Exclusion (YE), this provision allows for the exclusion of certain years when the average per planted acreage yield for a specific county is at least 50% below the simple average for the previous 10 consecutive crop years.

According to RMA, the agency conducts a review of the crop insurance actuarial documents to identify years that will be eligible for APH YE.  RMA states that the agency primarily uses RMA data to identify eligible years, but “[i]f RMA data is not sufficient for any given crop year, National Agriculture Statistics Service data is used, if available and appropriate, and then, in a limited number of situations, the applicable county transitional yield may be used, as appropriate, to complete a 10-year consecutive period.” Information regarding eligible APH YE years can be found at: http://prodwebnlb.rma.usda.gov/apps/MapViewer/index.html.

According to RMA, to be permitted to exclude bad production years when calculating yields used to establish crop insurance coverage, an agricultural producer “must choose the Actual Production History Yield Exclusion Option by the sales closing date for [their] insurance policy.” Importantly, RMA states that this option is continuous, and once chosen, “will automatically exclude all eligible crop years from your actual production history database, unless you specifically opt out of the exclusion for a specific crop year because you wish to retain your yield for an eligible crop year in your actual production history database.” Consequently, if the policy holder decides to end this coverage, they must request a cancellation of the option by the sales closing date.

Finally, RMA states that the exclusion of bad production years may result in “an increased approved yield, a higher insurance guarantee and greater indemnity payment could occur due to the yield exclusion.” Because of this potential benefit, the policy holder claiming the exclusion will have their policy premium adjusted to reflect the higher effective coverage level.  

Crop Insurance Update: Understanding the Risk Management Agency

Written by M. Sean High—Staff Attorney

Established in 1996, the United States Department of Agriculture’s (USDA) Risk Management Agency (RMA) provides assistance to America’s farmers through the promotion, support, and regulation of risk management tools designed to “strengthen the economic stability of agricultural producers and rural communities.” According to RMA, the work of the Agency consists of three main program areas: (1) promoting and supporting crop insurance services; (2) developing, testing, and reviewing crop insurance products; and (3) assessing and investigating crop insurance compliance.

Significantly, RMA manages the Federal Crop Insurance Corporation (FCIC) which administers the Federal crop insurance program.  According to RMA, “FCIC promotes the economic stability of agriculture through a sound system of crop insurance and providing the means for the research and experience helpful in devising and establishing such insurance.”

A wholly owned government corporation, FCIC is governed by a nine member Board of Directors consisting of three members from USDA and six members from the private sector.  The three FCIC Board members from USDA are: (1) the Under Secretary of Farm and Foreign Agricultural Services; (2) USDA’s Chief Economist; and (3) the current manager of FCIC (in a nonvoting role).  The six FCIC Board members from the private sector are: (1) four farmers, one of whom grows a specialty crop; (2) an individual involved in insurance; and (3) an individual knowledgeable about reinsurance or regulation.

Subject to the general supervision of the Secretary of Agriculture, “[t]he FCIC Board approves any new policy, insurance plan, or major modification to an existing plan or other materials under procedures established by the Board.”

According to RMA, under the Federal crop insurance program, “Approved Insurance Providers (AIP) sell and service Federal crop insurance policies in every state and in Puerto Rico through a public-private partnership with RMA…[and] RMA backs the AIPs who share the risks associated with catastrophic losses due to major weather events.” To locate an AIP or RMA insurance agent, an agricultural producer can contact any USDA service center or visit RMA’s Agent Locator webpage at: http://www.rma.usda.gov/tools/agent.html.  

Crop Insurance Update: Pennsylvania Sales Closing Date for Fall-Planted Wheat Nears

Written by M. Sean High—Staff Attorney

In August 2016, the United States Department of Agriculture (USDA) Risk Management Agency (RMA) Raleigh Regional Office—Raleigh, NC issued a revised Wheat crop insurance fact sheet for Delaware, Maine, Maryland, New Jersey, New York, North Carolina, Pennsylvania, Vermont, Virginia, and West Virginia for the 2017 crop year.

Accordingly, for fall-planted wheat in Pennsylvania, the sales closing date is September 30, 2016, for the insurance period ending August 31, 2017. 

Actuarial information regarding insurable counties is available for viewing on RMA’s website at http://webapp.rma.usda.gov/apps/actuarialinformationbrowser/. A listing of crop insurance agents is also available on RMA’s website at http://www.rma.usda.gov/tools/agent.html. 

Crop Insurance Update: Pennsylvania Sales Closing Date for Forage Production Nears

Written by M. Sean high—Staff Attorney

In August 2016, the United States Department of Agriculture (USDA) Risk Management Agency (RMA) Raleigh Regional Office—Raleigh, NC issued a revised Forage Production crop insurance fact sheet for Pennsylvania for the 2017 crop year.

According to RMA, crop insurance for forage production “[c]overage begins on October 16, 2016, for acreage seeded during the fall of 2015 and on May 22, 2017, for acreage seeded during the spring of 2016, if there is an adequate stand as of those dates.” Additionally, RMA stated “[i]nsurance ends with the earliest occurrence of one of the following:

• Total destruction of the crop;
•  Removal from the windrow or the field for each cutting;
• Final adjustment of a loss;
• Abandonment of the crop;
• The date grazing begins on the insured crop; or
• October 15.” 

The sales closing date for forage production crop insurance in Pennsylvania is September 30, 2016. 

Actuarial information regarding insurable counties is available for viewing on RMA’s website at http://webapp.rma.usda.gov/apps/actuarialinformationbrowser/. A listing of crop insurance agents is also available on RMA’s website at http://www.rma.usda.gov/tools/agent.html. 

Finally, the sales closing date for forage production Area Risk Protection Insurance (ARPI) (which “provides coverage based on the experience of an entire area, generally a county”) is September 30, 2016.  According to RMA, ARPI replaces the Group Risk Plan and the Group Risk Income Protection Plan and “provides for more flexibility in the data source used for establishing yields and requires production reporting requirements for producers enrolled in area-based plans, which will improve accuracy and allow the program to be offered in more areas.”

Crop Insurance Update: Pennsylvania Sales Closing Date for Fall-Planted Barley Nears

Written by M. Sean High—Staff Attorney

In July 2016, the United States Department of Agriculture (USDA) Risk Management Agency (RMA) Raleigh Regional Office—Raleigh, NC issued a revised Barley crop insurance fact sheet for Delaware, Maine, Maryland, New Jersey, New York, North Carolina, Pennsylvania, Vermont, Virginia, and West Virginia for the 2017 crop year.

Accordingly, for fall-planted barley in Pennsylvania, the sales closing date is September 30, 2016, for the insurance period ending August 31, 2017.  Additionally, for spring-planted barley in Pennsylvania, the sales closing date is March 15, 2017, for the insurance period ending October 31, 2017.  

Actuarial information regarding insurable counties is available for viewing on RMA’s website at http://webapp.rma.usda.gov/apps/actuarialinformationbrowser/. A listing of crop insurance agents is also available on RMA’s website at http://www.rma.usda.gov/tools/agent.html.