1. 2012 Farm Bill: Implications for Crop Insurance
Insuring Iowa’s Agriculture Workshop
Ames, Iowa
Nov. 5, 2012
Chad Hart
Associate Professor/Grain Markets Specialist 1 1

2. Farm Bill Progress? Senate passed their version, S. 3240, on June 21
House Ag. Committee passed their version, H.R. 6083, on July 11
The full House never took up the farm bill
The 2008 farm bill expired Sept. 30, but remember crop insurance is permanently authorized
Right now, we are under the permanent legislation of the 1933 and 1948 farm bills

3. Ideas on the Next Farm Bill
Let’s look at the common features
Both versions of the farm bill eliminate direct payments, countercyclical payments, ACRE, and SURE
The marketing loan program would continue
Livestock disaster programs would be reestablished
Some sort of revenue-based countercyclical program would be created

5. Crop Insurance Ideas
Many crop insurance provisions are similar across the Senate and House proposals
Revenue insurance for peanuts
Whole farm coverage up to 85%
Standard Reinsurance Agreement savings to be reinvested in the crop insurance program

6. Crop Insurance Ideas
Stacked Income Protection (STAX) for upland cotton
Revenue-based, area-wide policy
Pays indemnities when county revenue losses are greater than 10% of expected revenue
One new twist from the Senate
15% subsidy cut for producers with high AGIs, $750K

7. Crop Insurance Studies
Food safety and contamination loss coverage for specialty crops
Catastrophic disease coverage for hogs
Margin coverage for catfish
Business disruption coverage for poultry

8. Conservation Provisions
Subsidy reduction for the 1st 4 years of coverage on native sod
House version would apply this only to the Prairie Pothole region (which covers part of Iowa)
Senate would remove subsidies for producers who go out of compliance with wetlands (immediately) and highly erodible land (within 5 years)

9. But the Biggest Change Would Be…
The Supplemental Coverage Option (SCO)
An additional policy to cover “shallow losses”
Shallow loss = part of the deductible on the producer’s underlying crop insurance policy
SCO is county-level yield or revenue policy
Indemnities are paid when the county experiences losses greater than 10% of the expected yield or revenue level, but payments are not more than the original deductible

10. SCO Availability
SCO is to be made available for all crops if sufficient data are available
Under the House, SCO can not used if the producer has STAX or the revenue-based countercyclical program
Under the Senate, if the producer has the revenue-based countercyclical program, the loss trigger increases to 21% of expected yield or revenue

11. SCO Subsidies, Timing, and Administration
SCO premiums are to receive a 70% subsidy
SCO would begin for the 2013 crop year
RMA would run SCO and set the premiums

12. SCO Examples
Source: Congressional Research Service

13. Thank you for your time. Any questions. My web site: http://www. econ
Thank you for your time! Any questions? My web site: Iowa Farm Outlook: Ag Decision Maker: