1. Can Crop insurance Work to Lower Production and Price Risk of Diversified Farms? Lessons Learned from the AGR-Lite Wizard Project Jeff Schahczenski, Agricultural Economist National Center for Appropriate Technology

2. THE NCAT MISSION Helping People by championing small-scale, local, and sustainable solutions to reduce poverty, promote healthy communities, and protect natural resources. www.ncat.org

3. ATTRA National Sustainable Agriculture Information System Need help with flame weeding? Are you ready to start selling your produce at the farmers market? Need some help with any sustainable-Ag issue? Simply call our English-language ATTRA toll-free hotline at 800-346-9140 or the Spanish- language ATTRA hotline at 800-411-3222 for expert advice....or use the Ask An Ag Expert tool to send us a note.Ask An Ag Expert

4. Why Insure Crops and Livestock? October 2011

5. September 2012

6. January 2013

7. This Crop Year Already

8. Important National Benefit for Agriculture In 2010 it was predicted that the federal subsidization of crop Insurance premiums could be close to $9 billion dollars per year through 2022. Average premium benefit is about 62% of the cost. In 2012 premium subsidy was almost $7 billion dollars- Payouts highest ever over $16 billion dollars and counting

9. 9

10. Is Whole Farm Revenue Insurance an answer?

11. Sustainability-Resilient Diversity “In every deliberation, we must consider the impact on the seventh generation... even if it requires having skin as thick as the bark of a pine.” —Great Law of the Iroquois” –Resiliency –Diversity –Adaptable –Interdependence

12. Commercial Farms

13. Farm Profitability

14. Is Good Crop Insurance for Diverse Farms Possible? “Good”- meaning reasonably priced and with effective coverage “Good”- meaning as good as current commodity or specialty crop-based policies

15. Why Insure Crops- Price Volitility 15

16. What is Insured Nationally- 2012 Major Crop Rankings by Crop Liability Total (Billions of dollars) % Revenue% of Total 51.683%45% Soybeans 25.885%23% Wheat 10.385% 9% Cotton 6.872% 6% Nursery (FG&C) 2.3N/A 2% Other 17.4N/A15%

17. Field Corn Crop Insurance

18. Fresh Market Tomatoes Crop Insurance

19. Why Whole Farm Revenue Insurance Adjusted Gross Revenue Lite Crops with no Multi-Peril (Yield) or Revenue Insurance Commodities with premium prices Organic and specialty crops Varietal differences in yield and price Provides for quality losses Livestock

20. Three Cases from Maryland AGR-lite for small diverse organic vegetable and livestock farm AGR-lite for wholesale larger organic vegetable farm compared to individual policies AGR-lite for organic grain farm vs. individual policies 20

21. Case 1- Maryland Diverse Organic Farm 72- 6’ x 350’ beds ~ 3.6 acres Basil, Kale, Beets, Potatoes, Winter Squash, Onions, Carrots, Tomatoes 15 Bee hives 60 Laying hens (eggs) $62,400 in projected gross revenue for 2013 Loss Scenario: 50% loss of honey yield, 50% loss due to egg price drop, 80% loss onion yield, 50% loss in tomato yield and 50% loss carrot price and yield 21

22. Case 2- Maryland Wholesale Organic Farm 130 acres organic processing sweet corn 30 acres organic fresh market tomatoes 60 acres organic green peas 8 acres of organic apples Loss Scenario: 50% yield or price loss on all crops 22

23. Case 3- Maryland Organic Grain Farm 85 acres of organic wheat 110 acres of organic field corn 60 acres of organic soybeans Loss Scenario: 50% loss yield or price on all crops 23

24. AGR-Lite Wizard 24 CD available for PC (no Mac version) - Sept. 15th for 2013 www.agrlitewizard.com

25. 25 Case 1- Small Organic Vegetable and Livestock Results

26. 26 AGR-Lite AnimalsIntended Revenue Only Bees / HivesIntended Revenue Only Crops Whole Farm Revenue 48-72% - level of coverage elected Losses Covered Production Loss Price Decline Quality Loss CostPremium $ 956 Losses Paid Minus Premium Net Payment $ 1,928 $ 956 $ 972

27. 27 Case 2- Organic Wholesale Results

28. 28 IndividualAGR-Lite Organic Processing Sweet Corn 50% Yield Loss50% Revenue Loss Organic Fresh Market Tomatoes50% Yield Loss50% Revenue Loss Organic Green Peas50% Yield Loss50% Revenue Loss Organic Apples50% Yield Loss50% Revenue Loss Criteria100% price election and 70% of approved APH Yield 90% coverage x 80% payment rate = 72% of approved AGR CostTotal premium for all APH policies $ 24,738 Trigger $ 212,470 Premium $ 7,590 Losses Paid Minus Premium Net Payment $ 42,542 $ 24,738 $ 17,804 $ 57,082 $ 7,590 $ 49,492

29. 29 Case 3- Organic Grain Result

30. 30 IndividualAGR-Lite Organic Field Corn50% Revenue Loss Organic Wheat50% Revenue Loss Organic Soybeans50% Revenue Loss Criteria100% price election and 70% of approved APH Yield projected and havrvest price 90% coverage x 80% payment rate = 72% of approved AGR CostTotal premium for all APH policies $ 8,890 Premium $ 5,543 Losses Paid Minus Premium Net Payment $ 30,304 $ 8,890 $ 21,414 $ 40,698 $ 5,543 $ 35,055

31. Critical Improvements Coverage too low- or deductable to high Premium costs do not decline with diversity Application process and information intensity needs to be lowered---AGR-lite Wizard helps Whole farm revenue should be available nationwide 31

32. 2012 Senate Farm Bill 32

33. Summary Whole farm revenue can work well for some diverse farms as is. With improvements it would be used more extensively Crop based insurance pick’s winner’s and promotes specialization rather than diversity 33