National Crop Insurance Services Farm Small Town Conference

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National Crop Insurance Services Farm & Small Town Conference South Dakota Independent Agents February

National Crop Insurance Services Farm & Small Town Conference South Dakota Independent Agents February 6, 2019

National Crop Insurance Services • Value Proposition • NCIS Video © NCIS 2019 2

National Crop Insurance Services • Value Proposition • NCIS Video © NCIS 2019 2

Federal Crop Insurance Program • Post Shutdown • Farm Bill Summary • NCIS Role

Federal Crop Insurance Program • Post Shutdown • Farm Bill Summary • NCIS Role © NCIS 2019 3

Post Shutdown • RMA Up & Running • No Major Hiccups © NCIS 2019

Post Shutdown • RMA Up & Running • No Major Hiccups © NCIS 2019 4

Agriculture Improvement Act of 2018 • Signed on December 20, 2018 • General overview

Agriculture Improvement Act of 2018 • Signed on December 20, 2018 • General overview of key provisions within several Titles • Not an all encompassing review • Implementation priorities and timeline established by USDA and RMA • Regulatory and procedural development or research is needed for several provisions before they can be implemented. © NCIS 2019 5

Crop Insurance Provisions in the 2018 Act • Title XI – Crop Insurance •

Crop Insurance Provisions in the 2018 Act • Title XI – Crop Insurance • Title XII – Miscellaneous • Hemp • • Title VII – Research, Extension, and Related Matters Title X – Horticulture Title XI – Crop Insurance Title XII – Miscellaneous • Title I - Commodities © NCIS 2019 6

Enterprise Units • Allows producers to establish a single enterprise unit by combining an

Enterprise Units • Allows producers to establish a single enterprise unit by combining an enterprise unit with: • One or more enterprise units in one or more counties; or, • All basic units and all option units in one or more other counties • From the Managers’ Report: Does not mandate that an MCEU would cross state boundaries. © NCIS 2019 7

Cover Crops • Identifies the voluntary practice of using cover crops as a good

Cover Crops • Identifies the voluntary practice of using cover crops as a good farming practice when terminated appropriately, and says cover crops will not “affect the insurability of a subsequently planted insurable crop. ” • Planting of a cover crop into summer fallow land will also not affect insurability of a subsequently planted insurable crop when terminated appropriately. © NCIS 2019 8

Cover Crops, cont. • “COVER CROP TERMINATION – The term ‘cover crop termination’ means

Cover Crops, cont. • “COVER CROP TERMINATION – The term ‘cover crop termination’ means a practice that historically and under reasonable circumstances results in the termination of the growth of a cover crop. • FCIC shall utilize NRCS “in the consideration of acceptable conservation practices, including good farming practices with respect to conservation (such as cover crop termination). ” © NCIS 2019 9

Cover Crops, cont. • Requires continuing education for loss adjusters and agents regarding conservation

Cover Crops, cont. • Requires continuing education for loss adjusters and agents regarding conservation activities and agronomic practices that are common and appropriate to the area where the crop is produced, including organic and sustainable practices. • Includes “Conservation Activities” as a topic for Education and Risk Management Assistance. © NCIS 2019 10

Cover Crops, cont. • From the Managers’ Report: The intention of these provisions is

Cover Crops, cont. • From the Managers’ Report: The intention of these provisions is that producers considering voluntary conservation practices like cover crops should have confidence when following program guidance, procedures, or advice that they will not impact insurability of their subsequently planted crop. © NCIS 2019 11

Crop Production on Native Sod • Continues 2014 Farm Bill provisions, but expands the

Crop Production on Native Sod • Continues 2014 Farm Bill provisions, but expands the reduction in benefits for native sod acreage that has been tilled to any insurable crop • Begins on the date of enactment of the Agriculture Improvement Act of 2018 (application to 2019 crop year to be determined by RMA) © NCIS 2019 12

Whole Farm Revenue Protection • Directs RMA to take steps necessary to streamline and

Whole Farm Revenue Protection • Directs RMA to take steps necessary to streamline and add flexibility or tailor program rules to make the WFRP policy provide more meaningful risk protection, especially for small and beginning farmer operations or operations with less than $1 million in gross revenue • Expands the definition of a Beginning Farmer or Rancher under a WFRP policy from 5 to 10 years © NCIS 2019 13

Research and Development • Directs research and development to improve existing policies or develop

Research and Development • Directs research and development to improve existing policies or develop policies for: Tropical storm or hurricane insurance Quality Losses Citrus Hops Subsurface irrigation practices Grain sorghum Limited irrigation practices Irrigation practices for rice Greenhouses Local foods Batture land Note: Some initiatives may be developed as a 508(h) program © NCIS 2019 14

Underserved Producers • Definitions expanded to: • Refine “participation rate” to include “by crop”;

Underserved Producers • Definitions expanded to: • Refine “participation rate” to include “by crop”; • Include a member of an Indian tribe, veteran farmer or rancher, or a socially disadvantaged farmer or rancher • Calls for an initial report on how to increase participation in States and amongst underserved producers that are not adequately served by available policies and plans of insurance, with a follow up report every 3 years • As part of the report FCIC is encouraged to examine the types of production common among underserved producers, including diversified production for local markets © NCIS 2019 15

Specialty Crops • Updates the role of the Specialty Crop Coordinator • Requires a

Specialty Crops • Updates the role of the Specialty Crop Coordinator • Requires a Specialty Crop Liaison in each regional office • Requires the FCIC Board to annually review research and development of insurance for new crops, expansion of existing insurance to additional counties or States, and crops with existing insurance • Requires data collected through the Noninsured Crop Disaster Assistance Program be provided for improving crop insurance coverage © NCIS 2019 16

Livestock • Allows for participation in both the FSA Dairy Margin Coverage (formerly the

Livestock • Allows for participation in both the FSA Dairy Margin Coverage (formerly the Margin Protection Program) and crop insurance coverage under LGM Dairy program • Allows 2018 LGM Dairy participants to retroactively participate in the Dairy Margin Coverage © NCIS 2019 17

Underwriting Rules • AIPs will be required to limit the decrease in actual production

Underwriting Rules • AIPs will be required to limit the decrease in actual production history of a producer, at the producer’s election, to not more than 10 percent of the actual production history of the previous crop year if the decline was due to drought, flood, natural disaster, or other insurable loss • An actuarially sound premium rate must be charged to cover the additional risk • Note: Codifies existing procedures © NCIS 2019 18

Use of Resources • If the Board determines it is necessary, the Board shall

Use of Resources • If the Board determines it is necessary, the Board shall use, to the maximum extent practicable: • NRCS in assisting the Board in the classification of land as to risk and production capability • FSA in assisting the Board in: (A) the determination of individual producer yields; (B) sharing information on beginning farmers and ranchers and veteran farmers and ranchers; (C) investigating potential waste, fraud, or abuse; (D) sharing information to support the transition of crops and counties from the noninsured crop disaster assistance program; and (E) serving as a local point of contact for the dissemination of information on risk management options available to farmers and ranchers • © NCIS 2019 Other Federal agencies as needed 19

Use of NASS Data • Aggregate published and unpublished NASS data is to be

Use of NASS Data • Aggregate published and unpublished NASS data is to be provided to RMA for use in providing insurance • The data is to be kept confidential • RMA may use published aggregate data from NASS or any other data source to— • (i) detect yield disparities or other data anomalies that indicate potential fraud; and • (ii) target the relevant counties, crops, regions, companies, or agents © NCIS 2019 associated with that potential fraud for audits and other enforcement actions 20

Other Miscellaneous Title XI Provisions • 508(h) Changes • RMA may share program data,

Other Miscellaneous Title XI Provisions • 508(h) Changes • RMA may share program data, including NAP data from FSA, with concept proposal applicants • 508(h) developers shall be eligible for the reimbursement of reasonable research and development costs if the policy is approved by the Board • Reduces permanent funding for certain program administration and operational activities, and in maintaining actuarial soundness and financial integrity © NCIS 2019 21

Other Miscellaneous Title XI Provisions, cont. • Modifies topics and funding for Education and

Other Miscellaneous Title XI Provisions, cont. • Modifies topics and funding for Education and Risk Management Assistance • Repeals Crop Land Reports annual update and makes a technical correction for pilot programs to the Federal Crop Insurance Act • Increases Catastrophic Fees from $300 to $655 © NCIS 2019 22

Veteran Farmer or Rancher • The term ‘veteran farmer or rancher’ means a farmer

Veteran Farmer or Rancher • The term ‘veteran farmer or rancher’ means a farmer or rancher who (A) has served in the Armed Forces (as defined in section 101 of title 38, United States Code); and (B)(i) has not operated a farm or ranch; (ii) has operated a farm or ranch for not more than 5 years; or (iii) is a veteran (as defined in section 101 of that title) who has first obtained status as a veteran (as so defined) during the most recent 5 -year period © NCIS 2019 23

Veteran Farmer or Rancher, cont. • Extends Beginning Farmer or Rancher crop insurance benefits

Veteran Farmer or Rancher, cont. • Extends Beginning Farmer or Rancher crop insurance benefits and CAT Fee waiver to Veteran Farmers • Adds veteran farmers or ranchers to the targeted audience of Education and Risk Management Assistance 24

Industrial Hemp • Defines hemp as an agricultural commodity, and allows hemp insurance coverage

Industrial Hemp • Defines hemp as an agricultural commodity, and allows hemp insurance coverage to extend beyond the period of time it is in the field (as allowed for tobacco, potatoes, and sweet potatoes) • Amends the Agricultural Marketing Act of 1946 to allow states and Indian tribes to regulate, or follow a plan established by the Secretary to regulate hemp production that includes: • • © NCIS 2019 Locations of hemp production Sample testing for THC concentration Random inspections of producers Disposal of plants that are out of compliance 25

Industrial Hemp, cont. • From the Managers’ Report: USDA or the appropriate state or

Industrial Hemp, cont. • From the Managers’ Report: USDA or the appropriate state or tribal authority, and not AIPs, agents, or loss adjusters, bear the responsibility of determining that a crop grown as hemp complies with the applicable regulations and guidelines under Subtitle G • Requires the Secretary to conduct a study on the hemp research pilot program under the 2014 Farm Bill that includes a review of the economic viability of the domestic production and sale of industrial hemp and hemp products, and to submit a report describing the study to Congress within 120 days © NCIS 2019 26

Industrial Hemp, cont. • Makes industrial hemp eligible for certain funding under existing research

Industrial Hemp, cont. • Makes industrial hemp eligible for certain funding under existing research authorities • Amends section 508(h) of the Act to authorize the FCIC Board, in the case of a policy, pilot program, and other materials relating to the production of hemp, to waive the viability and marketability requirements under section 508(h) © NCIS 2019 27

Other Potential Program Impacts • Expansion of the Acreage Crop Reporting Streamlining Initiative (ACRSI)

Other Potential Program Impacts • Expansion of the Acreage Crop Reporting Streamlining Initiative (ACRSI) • Use of RMA data in establishing county yields for the Agriculture Risk Coverage (ARC) program • Potential use of data in identifying conservation practices and their effects on farm and ranch profitability relative to crop yields, soil health, and other risk related factors • Sharing of program data between RMA, FSA, NRCS and NASS © NCIS 2019 28

NCIS Role • Liaison Between USDA/RMA and Approved Insurance Providers (AIPs) • Communications •

NCIS Role • Liaison Between USDA/RMA and Approved Insurance Providers (AIPs) • Communications • Facilitation • Training © NCIS 2019 29

State Regulated Crop-Hail Insurance • NCIS Role • Actuarial Filings • Every two years

State Regulated Crop-Hail Insurance • NCIS Role • Actuarial Filings • Every two years • Form Filings • As needed/required • Development of Crop-Hail Loss Procedures • Training © NCIS 2019 30

State Regulated Crop-Hail Insurance 2018 South Dakota Final Average Loss Cost (FALC) Analysis Summary

State Regulated Crop-Hail Insurance 2018 South Dakota Final Average Loss Cost (FALC) Analysis Summary of Change in Proposed FALCs Capped with Redistribution CROP LIABILITY CURRENT FALC AVERAGE FALC BASED ON PROPOSED FACL % OF CHANGE Grains $5, 654, 023, 619 $6. 45 $6. 71 4. 07 Corn $6, 487, 293, 265 $3. 22 $3. 34 3. 87 Soybeans $4, 767, 746, 405 $3. 99 $4. 09 2. 50 Combined $16, 909, 063, 289 $4. 51 $4. 68 3. 62 Computed Pure Premium is based on the period 1948 -2016. CH 704. 2 March 31, 2017 © NCIS 2019 31

South Dakota Crop Classes Crop classes using Grains (Wheat) base loss costs: Wheat Potatoes

South Dakota Crop Classes Crop classes using Grains (Wheat) base loss costs: Wheat Potatoes Vegetable/Vine Dry Beans/Peas Fruit Oil Seeds Barley Hay/Seed Crops Sugar Beets Lentils Other Crops Crop classes using Corn base loss costs: Corn Crop classes using Soybeans base loss costs: Soybeans © NCIS 2019 32

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QUESTIONS? © NCIS 2019 35

QUESTIONS? © NCIS 2019 35

Ag-Risk. org | Crop. Insurance. In. America. org © NCIS 2019 Crop. Insurance. In.

Ag-Risk. org | Crop. Insurance. In. America. org © NCIS 2019 Crop. Insurance. In. America Crop. Insurancein. America @USCrop. Insurancein. America NCISAmerica Crop. Insurance. In. America 36