1. AGR Lite Crop Insurance: A potential option for your farm? Jennifer Lamb, Fellow, Appalachian Sustainable Development Presentation for Grayson Landcare Meeting Independence, VA February 18, 2013

2. A Brief Introduction to Risk Management Different types of risk in operating an agricultural business Production Risk-weather, pest, disease Marketing Risk-prices, rising input costs Financial Risk—ex. farm policy on your buildings/livestock Legal Risk—ex. liability insurance Human Resource Risk—relationships that affect your business http://farm-risk-plans.rma.usda.gov/index.aspx?action=riskman.home Designing a risk management program adapted for your operation takes all of these factors into account This presentation addresses two options you may want to consider to help manage production and marketing risk

3. Risk Management Options Yield Insurance APH (Actual Production History) Protects against yield loss Revenue Insurance Revenue protection Whole Farm Revenue Insurance Index Insurance Loss determined by area— hay/forage NAP (purchased through FSA) Non-Insured Crop Disaster Assistance Program $250/crop, up to $750 for an operation Special request Policy is not available in your county

4. A look at managing production risk through AGR Lite Crop Insurance Subsidized whole farm revenue crop insurance Not commodity based Means that you can be growing different crops, expanding, or experimenting Can insure both crops and livestock in one policy (only federally subsidized crop insurance policy which does this) Allows organic/local producers to incorporate price premiums they receive into their projected revenue calculation Purchased through private insurer, underwritten by federal government (USDA RMA) Provides producer with a payment when revenue falls below projected revenue while incurring at least 70% of average costs Covers a wide range of risks which would cause low revenue weather, price, pest, and disease etc. Not neglect or mismanagement

5. Do you qualify? Must have had the same farm for 7 years, producing 5 years and able to supply farm income tax records For 2013, need 2007-2011 tax records Have less than 2 million in Farm Income (1 million in liability) Targeted toward organic and mixed/diversified producers Minimum of 1-3 commodities based on coverage level Tends to be the ‘best value’ when producers have between 3-10 commodities Important exemptions: Does not cover any value-added activities Ex: making apple cider from apples No more than 50% income from resale No more than 83.35% potatoes

6. How it works: Adjusted Gross Revenue (AGR) is calculated based upon tax records for past 5 years Average expenses calculated for past 5 years When revenue falls below loss inception point due to causes other than neglect or mismanagement and average expenditures are made, a payment is triggered

7. Determining whether AGR Lite is right for you AGR Lite Wizard Developed and tested with farmers Web and CD based tool Allows you to input information from your farm to determine Eligibility Walk through various loss scenarios Uses county specific actuarial data to calculate premiums and payouts under different scenarios Allows you to print the forms to take to an agent, and search for an agent in your area

8. Appalachian Harvest Farm Example -AGR Lite Wizard https://www.agrlitewizard.com Small diversified farm Greenhouse 1 acre Tomatoes 1 acre Squash 1 acre Turnips 3 head Cattle

9. Flood Loss Scenario Lose about 25% of greenhouse crop and all tomatoes Projected income: $94, 672 Actual income: $67,888 Loss inception point: $75, 738 Loss payment: $7,065 (90% of loss below inception point) Premium: $2,759

10. Flood Loss-Comparison to NAP PolicyNAPAGR Lite Coverage55% of the loss below 50% of expected production.50 x.55 = 27.5% 90% of loss below 72% of AGR Loss payment(Tomatoes only) 27.5% x $5,952 =$1,636.8 $7,065 Less Premium-$750-$2,759 Net:$886.80$4,306

11. Severe Loss Scenario- Pest Infestation 50% yield loss on greenhouse, tomatoes, squash, and turnips Projected income: $94, 672 Actual income: $51, 619 Loss inception point: $75,738 Loss payment: $21,707 (90% of loss below inception point) Premium: $2,759

12. Pest loss-Comparison to NAP PolicyNAPAGR Lite Coverage55% of the loss below 50% of expected production.50 x.55 = 27.5% 90% of loss below 72% of AGR Loss payment$0—no single crop loss exceeds 50% $21,707 Less Premium$750$2,759 Net:-$750$18,948

13. Final notes Whether or not this is a good fit will depend upon your operation, records, and future plans Encourage you to try the online wizard and see what you think https://www.agrlitewizard.com Wizard uses actuarial data, and prints the forms for you to take to an agent directly—no one is trying to sell you something National Center for Appropriate Technology (NCAT) ATTRA hotline for expert help 1-800-346-9140 (English) 7 a.m. to 7 p.m. Central Time https://attra.ncat.org/ask.php Sign up for AGR Lite is by March 15, 2013 Good luck! Contact me: Jennifer Lamb jlamb@asdevelop.orgjlamb@asdevelop.org