P U B L I C AT I O N O F N AT I O N A L C R O P I N S U R A N C E S E R V I C E S ®

FEBRUARY 2012 • VOL. 45, NO. 1

Committee Sees ResearchFirst Hand

Trade Talk 2011

Explaining the Costsof the Crop Insurance Program

Rural Community Insurance Agency, Inc., D/B/A RCIS. RCIS is an equal opportunity provider. © 2012 Rural Community Insurance Agency, Inc. All rights reserved.

Committed to youRCIS AGENTS GET OUR VERY BEST EVERY DAY—AND IT SHOWS. FROM OUR COMMITMENT TO BETTER TECHNOLOGY TO DEDICATED FIELD STAFF THAT KNOW THEIR CROPS AND THE PRODUCERS WHO GROW THEM. WE PARTNER WITH YOU TO INSURE AMERICA’S PRODUCERS. GO TO RCIS.COM TO LEARN MORE.

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TODAYPRESIDENT’S MESSAGE

NCIS® EXECUTIVE COMMITTEESteve Rutledge, Chairman

Ted Etheredge, Vice ChairmanTim Weber, Second Vice Chairman

NCIS® MANAGEMENTThomas P. Zacharias, PresidentP. John Owen, General CounselJames M. Crist, CFO/COO

Frank F. Schnapp, Senior Vice PresidentMike Sieben, Senior Vice President

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Printed on recycled paper.

Laurie Langstraat, Editor

TODAY IS PROVIDED AS A SERVICE OF

NATIONAL CROP INSURANCE SERVICES®

TO EDUCATE READERS ABOUT THE RISK

MANAGEMENT TOOLS PRODUCERS USE

TO PROTECT THEMSELVES FROM

THE RISKS ASSOCIATED WITH

PRODUCTION AGRICULTURE.

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Continued on page 34

CROP INSURANCE TODAY® 1

Over the past twelve to eighteen months,many of us have been in the process of makingthe transition to the iPad or similar tablet-basedcomputers. As we embrace this new technology,we have become increasingly exposed to thesomewhat Brave New World of “applications,“commonly referred to as “apps.”So, what is an “app” - how do they work;

what do they do? On a very basic level, apps aresimply software designed to perform specificfunctions or computational operations. In thetablet environment, apps run the course of filemanagement systems, office and personalproductivity systems, calorie counters, etc. - youname it.Now, the stretch...what if we APPly this

thought process to agricultural risk management and agricultural policy. Just suppose weneeded to develop an infrastructure to provide financial stability and risk managementtools for our nation’s farmers and ranchers. Suppose we wanted to combine the strengthsof both the public and private sector to create such an infrastructure that would providecomprehensive risk management coverage to the majority of food and fiber crops foundin the U.S. Hmm…let me think, isn’t there an app for that? Wow, Inspector Gadget?!?!What about the crop insurance program? Since the 1980s this public - private partnershiphas continually expanded to become the centerpiece of the agricultural safety net for U.S.farmers and ranchers.If this “app” is going to work, we would need to make sure that farmers get enrolled

in the program, purchase adequate levels of coverage, and are aware of the various typesof crop insurance products available. Isn’t there an app for that? Hmm...what about thenationwide network of state-licensed crop insurance agents? These hard working menand women scattered throughout rural America do just that. In 2011, the agency forceenrolled more than 264 million acres, providing over $113 billion in crop insuranceprotection on over 1.1 million policies.Well, it just so happened that in 2011 we experienced major flooding and levee breaks

along both the Mississippi and Missouri River systems. According to RMA, more than800,000 acres of cropland was flooded in 2011 in Missouri, Nebraska and Kansas (RebeccaDavis, Topeka RO - January 29, 2012). More pervasive and more devastating, in terms ofimpacted acres than the flooding, was the widespread drought experienced in theSouthwest and Southern Plains. With all of those flooded and drought-stressed acres cov-ered by crop insurance, how are farmers going to get paid in a timely basis for theirinsured losses? Isn’t there an app for that? Hmm…How about the nationwide network of

Tom Zacharias, NCIS President

Isn’t there anApp for that?

Table of Contents

16

26

4

VOL. 45, NO. 1

FEBRUARY 2012

www.cropinsuranceinamerica.comVisit

Copyright NoticeAll material distributed by National Crop Insurance Services is protected by copyright and other laws. All rights reserved.Possession of this material does not confer the right to print, reprint, publish, copy, input, transform, distribute or use samein any manner without the prior written permission of NCIS. Permission is hereby granted to Members in good standing ofNCIS whose Membership Class (and service area, if membership is limited by service area) entitles them to receive copiesof the enclosed or attached material to reprint, copy or distribute such NCIS copyrighted material in its present formsolely for their own business use and solely to employees, adjusters or agents who are under contract with them, andas a condition to receiving such copies, such employees, adjusters and agents agree that they will not reprint, copy ordistribute, or permit use of any such NCIS copyrighted material to or by any other person and/or company, or transforminto another work such NCIS copyrighted material, without prior written permission of NCIS.© 2011 National Crop Insurance Services, Inc.

1 Isn’t there an App for that?

4 Explaining the Costs of the Crop Insurance Program

12 NCIS Awards Two Scholarships

14 2012 Spring Update Conference

16 Committee Sees Research First Hand

18 Trade Talk 2011

20 Retirements: Ben Latham and Steve Harms

22 In Memory of Patrick Flanagan

24 In Memory of Marx M. Mannberger

26 Step 5-Testing the Current Farm:Will the current farm be feasible in the future?

32 2011 Premiums: State Rankings

38 Insurable Crops: Locations & Plans

Producers Ag Insurance Group, Inc., d/b/a ProAg®, is a wholly owned subsidiary of CUNA Mutual Group. ProAg is an equal opportunity provider.

© 2012 ProAg. All Rights Reserved.

Making Cents of theWeather

Weather forecasting is, by nature, inexact. Not even a trained meteorologist canaccurately predict the weather with 100% certainty. On a daily basis, a farmer

starts his morning with the goal of a successful harvest, but knows a devastatingweather event seriously impacting production could instantly occur.

This uncertainty means billions of dollars of crops are always at risk. This impactsnot only the farmer’s livelihood, but food prices, fuel costs and national economies.

Last year, crop insurance policies protected over $113 billion of crops. This makesgood economic sense. Contact your ProAg agent to create a risk management planthat will provide you with the peace of mind and financial security you deserve.

The Past, Present and Future ofAgricultural Risk Management®

TODAYcrop insurance

This article examines the informationtypically presented to the public on thecosts of the Federal crop insurance pro-gram. Government presentations, thesource of most program cost data, rangefrom simple to very complex. We believethat many presentations lead to misunder-standing of the role of payments made toapproved insurance providers (AIPs), thecompanies that deliver the program to pro-ducers. Confusion about the financial datamay lead to misunderstandings of the costsand benefits of the program to producers,taxpayers and the companies.A couple of examples illustrate the

issue of interpreting program financialdata. While the risks of underwriting gains

and losses are shared between the govern-ment and the companies, the underwritinggains and losses of the government are sel-dom, if ever, presented. Often when theAIPs have a large underwriting gain, thegovernment has one as well, whichreduces the cost of the crop insurance pro-gram to the taxpayer. Another source ofconfusion is the vaguely labeled “adminis-trative and operating expense reimburse-ment” that is paid to the companies tocover their costs to deliver the program,such as agent commissions, office space,equipment, etc. However, these payments,while a cost to the government, do notfully reimburse companies for their deliv-ery expenses. Moreover, these payments,

which are often seen as a subsidy to theAIPs, are more properly viewed as a sub-sidy to producers. This article presentsfinancial data on the crop insurance pro-gram to help clarify these ambiguities.

Federal BudgetPresentations of CropInsurance Program CostsThe Federal government presents data

on the costs of Federal programs, includingthe crop insurance program, in a numberof ways. To provide some background forthose searching government data bases forcrop insurance data, the following primaryconcepts are used in the Federal budgetpresentations:

Explaining the Costsof the Crop Insurance Program

By Keith Collins and Frank Schnapp, NCIS

4 FEBRUARY 2012

CROP INSURANCE TODAY® 5

• Budget Authority: The authority of theExecutive Branch to commit funds ofthe Federal Treasury. Congress providesthis authority to agencies to spendfunds to carry out programs as provid-ed in law through annual appropria-tions acts and other legislation thatauthorizes spending.

• Program Level: The gross value of allfinancial assistance provided to thepublic through a program. This assis-tance may be in several forms: grants;guaranteed or direct loans; cost-sharing;research, technical assistance or otherservices; or, in-kind benefits such ascommodities. Program level mayexceed actual spending when assis-tance provided does not result inspending. An example is a loan guaran-tee program where the program level isthe value of all loans guaranteed, butthe actual Federal spending may onlybe the payments made to lenders for afew defaulted loans.

• Outlays: The actual cash spent fromthe Federal Treasury to meet the fund-ing commitments of agencies. Outlaysare less than budget authority when theagency does not spend all the fundingit is authorized to spend in a fiscal year(FY). This may happen for a variety ofreasons, such as ineligibility of expect-ed beneficiaries or spending that is paidout over several fiscal years. Outlays arefurther divided into discretionary out-lays and mandatory outlays.• Discretionary outlays: Cash spentunder authority of the annual appro-priations acts developed by theCongressional appropriations com-mittees as part of the yearly appro-priations process.

• Mandatory outlays: Cash spentthat is not controlled by the annualappropriation process. Mandatoryoutlays generally cannot beincreased or decreased in a givenyear without a change in substantivelaw by the authorizing committeesthat have jurisdiction over the gov-erning statute.

For crop insurance, the data on thesefinancial concepts are variously present-ed on a crop year, fiscal year, calendaryear and reinsurance year basis for the

Risk Management Agency (RMA) and theFederal Crop Insurance Corporation(FCIC). There are four important sourcesof budget information for the crop insur-ance program. The first of these is RMAitself, which presents tables on theirwebsite for crop years and fiscal yearsfor “Government Costs of the CropInsurance Program, 2002-2011” with

additional tables for “Premium andOther Income.” These are available athttp://www.rma.usda.gov/aboutrma/budget/costsoutlays.html. The tablesshow direct outlays and some of direct andindirect income flows that relate to outlays.A second source is the USDA Office

of Budget and Program Analysis(OBPA), which publishes the Budget

6 FEBRUARY 2012

Summary and Annual PerformancePlan of all USDA agencies athttp://www.obpa.usda.gov/budsum/FY12budsum.pdf. Summary data are pre-sented for budget authority, program leveland outlays. The third source is detailedbudget explanations of each agency’s budgetat http://www.obpa.usda.gov/explan_notes.html. The fourth source is thePresident’s Budget, available from theOffice of Management and Budget. Thecrop insurance accounts are presented indetail in the Appendix to the Budget athttp://www.whitehouse.gov/sites/default/files/omb/budget/fy2012/assets/agr.pdf. In addition, there are othersources, such as FCIC financial reports.These sources present an array of data

that are made very complicated by use ofalternative time periods and budget con-cepts. In some cases, a single table willmix crop year, fiscal year and budget con-cepts. A fiscal year includes data from twocrop years, so it may be difficult to relatea fiscal year’s program costs to how natu-ral disasters or price changes for one cropyear show up in the data. Timing of pay-ments and receipts also affect fiscal yeardata. To simplify our discussion here, wefocus primarily on data closely associatedwith a crop year.The difference between the three

budget concepts also needs to be con-sidered. Because the crop insuranceprogram has authority to spend funds asnecessary to operate the program, “bud-get authority” is usually determined byand thus very similar to outlays. Theconcept of “program level” is essentiallygross indemnities plus payments tocompanies, i.e., the gross assistancebefore producer-paid premiums areconsidered. The goal in this discussionis to present the cost of the crop insur-ance program as “outlays,” that is, directspending associated with delivering theprogram and paying claims for theannual cycle of planting and harvestinga crop. In reality, some small level ofoutlays may be obligated in the cropyear but paid out during the next cropyear, or some outlays within a crop yearmay be for obligations made during theprior crop year.

Crop Insurance ProgramOutlaysAs an example of a crop insurance pro-

gram cost presentation by USDA, considerthe data in USDA’s Budget Summary andAnnual Performance Plan (p. 30) used toexplain RMA’s budget proposed by theadministration for FY 2012. Table 1 showscost data for FYs 2010 and 2011.While Table 1 provides an overview

of the costs of the crop insurance pro-gram, it does not explicitly provide dataon payments to the companies, subsidiesto producers or underwriting gains of thegovernment. The data presented make itdifficult to understand the distribution ofthe program costs among the programparticipants. However, other governmenttables provide additional information. Inaddition, the accounting firm GrantThornton, LLP publishes an annual reporton the profitability and effectiveness ofthe crop insurance industry using dataobtained from the AIPs. Using these alter-native sources, Table 2 was constructedto provide greater insight into the pro-gram outlays, the distribution of programbenefits and costs, and the relationship ofthe costs to crop year production per-formance. RMA agency and relatedadministrative cost data are not included.Most of the data presented are RMA rein-

surance report data but crop year dataare also used.Because government and private data

sources do not report all variables for thesame time periods and include differentcost components, total program outlays inTable 2, which use reinsurance data andcrop year data may differ slightly fromother presentations. Some presentationsinclude RMA administrative costs (e.g.,salaries, IT costs, etc.) and other income(e.g., interest, transfers from other appro-priations, etc.) and other expenses (e.g.,research costs from mandatory funding).These categories are very small in com-parison with the items presented in Table2. Even variables in government sourcesthat are presented for the same time peri-od and appear to include the same com-ponents sometimes differ across sources,and not enough detail is presented toexplain the differences.Focus on the last column of Table 2,

program outlays. We first discuss outlays astypically presented: cost items that aredirect spending by the government. Suchspending items are payments to producers,which are net indemnities (defined as grossindemnities, column (3), minus farmer-paidpremium, column (2)) plus paymentsmade to AIPs. We then examine alternativepresentations.

FY 2010 FY 2011 1/

DiscretionaryRMA Operating Expenses 80 80MandatoryDelivery and Other Administrative Expenses 2/ 1,430 1,393Gross Indemnities 3,118 7,588Underwriting Gains 3/ 2,448 999Transfer to Agricultural Management Assistance Program -6 -6Program Level 6,996 9,980Less Producer Paid Premium and Other Fees -2,449 -2,986Budget Authority, Discretionary and Mandatory 4,627 7,074Outlays 4/ 4,784 7,069

Table 1. Crop Insurance Program Government Costs (million dollars)

1/ Estimate based on initial FY 2011 Continuing Resolution.

2/ Includes research, development and other expenses.

3/ Payments to approved private insurance companies.

4/ Outlays are from the USDA Budget Summary and Annual Performance Plan (p. 121). Outlays differ from budgetauthority for the following reasons. The FY 2010 outlay exceeds the budget authority because unpaid obligationsfrom FY 2009 were paid out in FY 2010, and these exceeded the unpaid obligations from FY 2010 carried into FY2011. For FY 2011, the level of unpaid obligations carried into FY 2012 is estimated to be $5 million more than thelevel of unpaid obligations carried into FY 2011 from FY 2010.

Gross Producer Gross Loss UNDERWRITING GAINS PRODUCER SUBSIDIES AIP Actual ProgramYear Premium Share of Indemnities Ratio Gross AIP FCIC For For A&0 Outlays

(1) Premium (3) (4) (5) Share 1/ Share Premium AIP A&0 Expenses (8) + (9) – (7)(2) (6) (7) (8) (9) (10) (11)

2001 2,978 1,206 2,965 1.00 12 346 -334 1,772 636 816 2,7412002 2,909 1,168 4,058 1.39 -1,149 -48 -1,101 1,741 628 826 3,4702003 3,434 1,392 3,259 0.95 176 377 -201 2,042 736 900 2,9802004 4,186 1,709 3,291 0.79 895 691 203 2,477 894 1,021 3,1672005 3,945 1,601 2,341 0.59 1,604 915 689 2,344 833 990 2,4882006 4,709 2,027 3,551 0.75 1,158 822 336 2,682 962 1,159 3,3082007 6,547 2,724 3,465 0.53 3,082 1,572 1,510 3,823 1,335 1,565 3,6482008 9,832 4,141 8,719 0.89 1,113 1,095 18 5,691 2,013 2,173 7,6862009 8,949 3,522 5,216 0.58 3,733 2,298 1,435 5,427 1,619 2,130 5,6112010 7,592 2,882 4,235 0.56 3,357 1,919 1,438 4,710 1,371 1,815 4,643Total 55,081 22,372 41,100 0.75 13,981 9,987 3,993 32,709 11,027 13,394 39,742

Table 2. Crop Insurance Program Outlays (million dollars)

1/ After net book quota share.

The data in this table are taken from publicly available sources. Crop year and reinsurance year data are used; as a result, aggregated numbers may differ slightly from other pre-sentations.

Sources by column number:

� Columns (1), (3), and (6) are reinsurance data from RMA Reinsurance Reports accessed on 1/3/12, available online at http://www.rma.usda.gov/tools/reinsurance.html. Column(4) is (3) divided by (1). Column (5) is column (1) minus column (3). Column (7) is column (5) minus column (6), and represents the AIP share of underwriting gains on a reinsuranceyear basis and adjusted for quota share.

� Column (2) is column (1) less column (8), where column (8) is from the RMA National Summary of Business Reports, available online at http://www.rma.usda.gov/data/sob.html.

� Column (9) is from an RMA table "Crop year government cost of federal crop insurance," available online at http://www.rma.usda.gov/aboutrma/budget/cycost2002-11.pdf.

� Column (10), actual expenses as a percent of gross premium, is from Grant Thornton, LLP, "Federal Crop Insurance Program Profitability and Effectiveness Analysis, 2010Update," January 13, 2011, available online at http://www.ag-risk.org/NCISPUBS/SpecRPTS/GrantThornton/Grant_Thornton_Report-2010_FINAL.pdf. The reported expenseshares are for calendar years and were multiplied by gross premium for the corresponding reinsurance year (e.g., 2009 expense share multiplied by 2009 gross premium). The aver-age expense share for 2005-09, 23.9%, was used to estimate actual expenses for 2010.

CROP INSURANCE TODAY® 7

Typical presentationOutlays = net indemnities + AIP underwrit-

ing gains + payments made to AIPson behalf of producers for programdelivery (A&O payments)

Using column numbers:(11) = (3) - (2) + (6) + (9)

This aggregation highlights, for exam-ple, that increases in farmer paid premiums(2) reduce program costs and increases inAIP underwriting gains (5) increase them.However, program outlays may be

obtained by aggregating the data in thetable several different ways. The differentways chosen can be used to illustratewhich activities add to, or reduce, cropinsurance program costs.

Alternative presentation #1Outlays = gross indemnities - gross premi-

ums + AIP underwriting gains + pro-ducer premium subsidies + pay-ments made to AIPs on behalf ofproducers for program delivery(A&O payments)

Using column numbers:(11) = (3) - (1) + (6) + (8) + (9)

Although premium subsidies are notdirect spending by the government, thisaggregation shows the important role ofpremium subsidies and A&O subsidiespaid on behalf of the producer in the totalcost of the program. This presentation alsohighlights a common error in evaluatingthe cost of the program. Critics tend to

focus on the revenue paid to the AIPs, (6)+ (9), disregarding the large premium sub-sidies to producers. The ability for AIPs toearn the underwriting gains shown in (6)comes about from the gross underwritinggains for the program itself as shown in (5).These gains are shared between the AIPsand FCIC.

Alternative presentation #2Outlays = producer premium subsidies +

payments made to AIPs on behalf ofproducers for program delivery(A&O payments) - FCIC underwrit-ing gains

Using column numbers:(11) = (8) + (9) - (7)

This aggregation is used in the headingfor column (11) of Table 2. The aggrega-tion shows how positive FCIC underwritinggains reduce program outlays. This abilityof the government to reduce its cost viaunderwriting gains is generally not consid-ered in discussions of the performance ofthe program.

Insights from CropInsurance Program CostData

Several conclusions may be drawnfrom the data presentation in Table 2 thatmay not be generally reported when cropinsurance program costs are presented indiscussions about crop insurance.• The crop insurance companies donot receive all the crop insuranceprogram underwriting gains, partic-ularly in recent years. For back-ground, underwriting gains are part ofthe gross income of AIPs. Gross incomemust be high enough to cover grossexpenses and a profit. The profit mustbe sufficiently high to provide a com-petitive rate of return (net return onretained premium, assets or equity) toensure private sector participation inthe program. Otherwise, private invest-ments in crop insurance would migrateto more profitable industries over time.Underwriting gains are not profit; theyare gross income that contributes toprofits. In any year, underwriting gains

8 FEBRUARY 2012

CROP INSURANCE TODAY® 9

may be positive or negative. To offsetyears with low or negative gains, gainsmust be high—above average—in otheryears to ensure that AIPs earn a com-petitive rate of return over time. Since2001, the crop insurance companieshave received 71 percent of the under-writing gains generated by the program.Over the past five years (2006-10), theindustry has received just 62 percent ofthe underwriting gains.

• The government receives a highshare of underwriting gains. Theshare of underwriting gains notreceived by the AIPs—29 percent ofgains over the past 10 years and 38 per-cent of the gains over the past fiveyears—went to FCIC.

• Government underwriting gainsreduce the cost of the crop insur-ance program. These gains representa benefit to the Treasury and taxpayersthat is not identified in most govern-ment accounts of program costs.

• Total program cost is usually lessthan the total of premium subsi-dies, AIP underwriting gains anddelivery payments to companies.This emphasizes that the combinedpayments to companies and premiumsubsidies to producers overstate thecommitment of the taxpayer to the pro-gram. The true cost to taxpayers alsoneeds to take into consideration theexcess of premiums over indemnitiesas indicated in (5). An illustration of thecash flows is presented in Figure 1.

• Producer subsidies include pay-ments made to companies on behalfof producers to pay program deliv-ery expenses. In insurance marketsgenerally, a purchaser of insurancepays a premium for protection thatincludes two components: a riskpremium, which covers expectedlosses due to insured risks, and anexpense load, which covers deliverycosts including sales, loss adjust-ment and other administrativecosts. Under the crop insurance pro-gram, producers receive a subsidy thatcovers on average about 60 percent ofthe risk premium and a subsidy thatcovers 100 percent of the expense load.

Consider data for 2010, a year in whichproducers paid $2.9 billion in premi-ums. In an unsubsidized market,assuming the same premium rates as in2010, had producers purchased thesame level of coverage, they mighthave paid a total premium of $9.4 bil-lion ($7.6 billion in risk premium and$1.8 billion in expense load, columns(1) and (10)), assuming 2010’s actualdelivery expenses. The $2.9 billion pro-ducers actually paid amounted to only31 percent of the premium that mighthave prevailed in an unsubsidized mar-ket. Of course, actual delivery expens-es in a free market are unknown, and2010’s actual expenses are used as aproxy for the free market delivery cost.

• Producer subsidies account for thebulk of crop insurance programcosts and benefits. Alternative pres-entation #1 showed that program costsare equal to gross indemnities lessgross premiums plus AIP underwritinggains plus producer premium subsidiesplus producer A&O subsidies. For thepast five years, program outlays aver-aged $5 billion. Premium and deliveryexpense subsidies to producers aver-aged $5.8 billion, as compared an aver-age of $1.5 billion in AIP underwriting

gains. AIP underwriting gains werepaid out of the $2.5 billion in averageunderwriting gains for the program,with the government retaining theremaining gains.

• Producer subsidies for A&O do notcover the actual delivery costs ofcompanies. Discussions of the pro-gram often treat the producer A&Osubsidy as a benefit to the AIPs or evenas an additional source of profit. Inreality, the existence of the A&O sub-sidy is simply a consequence of theway the government accounts for itscosts. In a typical insurance program,policyholders would pay for the cost ofdelivery as part of their premium.Under the Federal crop insurance pro-gram, FCIC pays this cost directly toAIPs on behalf of producers. Thisworks to the benefit of taxpayers andto the disadvantage of AIPs in that pay-ments have been below actual deliveryexpenses by an average of over $250million per year during 2005-2009.Although the 2011 StandardReinsurance Agreement will cap agentcompensation at the total A&O pay-ment, it is likely that total delivery costswill continue to exceed the A&O sub-sidy to producers.

Figure 1. The Financial Flows Underlying Crop Insurance for 2008

RMA

AIPsProducers

Subsidiesfor Premium, $5.7 bil.,and A&O, $2.0 bil.

Indemnities,$8.7 bil.

Total Premium,$9.9 bil.

A&O Payment,$2.0 bil.

UnderwritingGain, $1.1 bil.

10 FEBRUARY 2012

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An Alternative Perspective on theGovernment’s RoleThe presentation of government outlays in support of the

Federal crop insurance program, as described above, could easilybe misinterpreted. Table 2 describes the program as though thegovernment was the risk bearer and the AIPs were merely ameans for delivering the program to producers. The reality is quitedifferent: AIPs actually take the lead role in bearing the risk. Assuch, AIPs are entitled to an economically fair return or profit dueto their willingness to risk their own capital in the program. Ratherthan being the risk bearer, FCIC is more accurately described asparticipating in the program as a reinsurer. FCIC is not the onlyreinsurer active in the program—private sector reinsurers are alsoheavily involved. The difference is that AIPs have the ability tonegotiate both the structure and cost of reinsurance with theirreinsurers, whereas their ability to negotiate with FCIC is extreme-ly limited. FCIC’s involvement as a reinsurer comes about for twodistinct reasons. First, the terms of the SRA require AIPs to issuepolicies to all eligible producers. However, many producers wouldfind it difficult to obtain insurance for various reasons in a fullyprivate insurance market. To satisfy the social objective of makinginsurance available to all eligible producers, AIPs have been will-ing to insure these risks, but only under the condition that FCICprovide reinsurance protection due to the likelihood that theserisks will be unprofitable. The second reason is to address the pos-sibility of widespread losses due to drought or other weatherevents that are beyond the capacity of the insurance industry toabsorb. This was an important issue in the early years of the pro-gram but is much less important today, as private sector reinsur-ers have gained familiarity with the program. Even though theneed for or benefit of reinsurance through FCIC is relatively limit-ed, FCIC still takes a large share of the potential underwritinggains. While it might be possible for AIPs to obtain more favorableterms from private sector reinsurers than from FCIC, this option isnot available to them. However, if FCIC did not participate as areinsurer, the taxpayer cost of the program could be expressedmore directly as the total producer premium subsidies in (8) and(9). From this perspective, the government’s role in the crop insur-ance program is more clearly understood as ensuring the function-ing of the market by providing financial support to producers andproviding incentives to AIPs to ensure that protection is availableto all eligible producers.

ConclusionIn conclusion, the components of the public costs of the Federal

crop insurance program are not easy to find and may be interpret-ed in various ways, depending on how the components are aggre-gated and described. Various interpretations may be seen in mediaarticles that emphasize the importance of different components,such as payments to companies or producer premium subsidies.Hopefully, this article will further the understanding of how differ-ent financial flows in the crop insurance program interact toexplain overall program costs.

12 FEBRUARY 2012

TODAYcrop insurance

In the fall of 2011, NCIS began award-ing two college scholarships to studentsenrolled at an 1890 Land-Grant University.The purpose of the scholarships is to helpstudents further their education but alsoexpose them to the business of cropinsurance.

The first recipient is Paige Liggens, astudent from Langston University inLangston, Oklahoma. Miss Liggens is a jun-ior majoring in Natural ResourceManagement. She is very active on and offcampus with various organizations, clubs,performance groups and community serv-ice. Miss Liggens also mentors childrenthrough local schools and sports programs.“Miss Liggens shows great interest in

learning and is enthusiastic in classroomquestion and discussion sessions,” said Dr.Steve Zeng, chair of the Department ofAgriculture & Natural Resources. “I strong-ly endorse her for this scholarship becauseshe has demonstrated scientific intelli-gence, sound study habits, hard-workingnature and team-oriented skills.”Miss Liggens is extremely appreciative

of this tremendous scholarship and said“By awarding me the National CropInsurance Services scholarship, you allhave lightened my financial burden, whichallows me to focus more on the importantaspects of school i.e. learning and studying.

Your generosity has inspired me to help oth-ers give back to the community. I hope oneday I will be able to help students achievetheir goals just as you have helped me.”Miss Liggens had to delay her dream of

obtaining a college education for a fewyears after high school graduation. Sheworked several jobs to help support herfamily and save money for tuition.Langston University, established in

1987, is named after John Mercer Langston,a black educator from Virginia who organ-ized the first department of law at HowardUniversity. Langston University offers sev-eral degrees including agriculture andapplied science, business, education andnursing. Over 3,000 students attend theuniversity.

Megan Sullivan is the recipient of thesecond NCIS scholarship. Miss Sullivan is ajunior at Alcorn State University majoring inHomeland Security Science Technologywith a concentration in GeographicInformation Science.“Miss Sullivan’s leadership qualities are

outstanding and she is able to initiate dis-cussions, ideas, and constructive sugges-

tions,” said Dr. Yaw Twumasi, assistantprofessor, GIS and Remote Sensing. “Shepossesses excellent oral and written com-munication skills.”Born in Vicksburg, Mississippi, Miss

Sullivan is the oldest of three children. Shehas always enjoyed learning and after earn-ing her bachelors would like to pursue amaster’s degree. She has had severalopportunities to participate in programsthat further her education. Recently sheparticipated in the NASA LangleyAerospace Research Summer Scholarship(LARSS) Project where she researched GIStechniques in environmental safety and cli-mate change throughout the U.S. Her goalis to become a GIS programmer/analystspecializing in agricultural science.Alcorn State University is the oldest

public historically black land-grant univer-sity founded in 1871. More than 3,800 stu-dents attend this university with three cam-puses located in Southeast Mississippi.Students can receive undergraduate andgraduate degrees in seven different schoolsincluding arts and sciences, agriculture andapplied sciences, nursing and education.

NCIS Awards

Megan Sullivan

Paige Liggens

Two Scholarships

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14 FEBRUARY 2012

The 2012 Spring Update Conferenceheld November 9-10, 2011, had a recordattendance. It was easy to see why whenyou looked at the agenda and saw theguest speakers and topics covered.Michael Scuse, USDA Acting Under

Secretary for Farm and Foreign AgServices, was the first guest speaker toaddress the packed conference room. “Thefuture for American agriculture and ruralcommunities is bright. The most importantthing we can do is to provide them [farm-ers] with the very best crop insuranceproduct we can,” he said.This national conference is designed for

NCIS training contacts and company train-ing personnel, with the overall objective toprovide trainers with updated technicalinformation and training materials neededto prepare and conduct their companyspring training for the 2012 crop year.In addition to covering the myriad of

updates to policies and procedures, thisconference also addressed recent majorannouncements by the Risk ManagementAgency. Trend Adjusted Actual ProductionHistory (APH) was released by RMA inmid-October for corn and soybean policiesin select counties in 14 Midwestern states.Dr. Bruce Sherrick, from the University ofIllinois where Trend Adjusted APH wasdeveloped, presented aspects of theresearch and analysis that went into theproduct’s development and provided sev-eral examples that company trainers canuse when explaining the new program toagents.RMA also recently introduced several

new pilot programs for the industry. As thedeveloper of a few of these, Alex

Offerdhal, with Watts & Associates,explained the new popcorn revenue andspecialty soybean revenue pilot programs.Ron Lundine, with RMA, discussed the newpistachios, olives and camelina policies.NCIS staff, including Chris Lindsay, LisaCain, Michael O’Connor, Dean Strasser,Lynnette Dillon, Loretta Sobba and DonHutsell presented changes on the CropInsurance Handbook, other crop policiesand procedural changes – including crop-hail, actuarial updates, Written AgreementHandbook, the Loss Adjustment Manual,and a handful of other topics.With the deadline of the Congressional

Super Committee approaching shortly afterthe conference, NCIS invited Mary KayThatcher, American Farm BureauFederation, to speak on the status of the2012 Farm Bill. At that time, the rankingmembers of the House and SenateAgriculture Committees were working

feverishly to write what was, in essence,the 2012 Farm Bill in the hopes of present-ing it to the Super Committee for inclusionin their final legislation to reduce the feder-al deficit by $1.2 trillion dollars. MissThatcher gave a quick overview of the pro-posals that were introduced by variousfarm organizations in the hopes that thecrop insurance program would be main-tained or strengthened. (Ultimately theSuper Committee did not reach an agree-ment on their proposal by the statutorydeadline so Farm Bill discussions will con-tinue with the hopes that a new legislationwill be finalized prior to the expiration ofthe current 2008 Farm Bill in September2012.)Dr. James Hipple, RMA Strategic Data

Acquisition and Analysis (SDAA), providedan overview of the large claim forensicremote sensing that is being conducted topromote program integrity. Through the

Michael Scuse, Deputy Under Secretary,USDA

Dr. Bruce Sherrick, University of Illinois

2012Spring Update Conference

CROP INSURANCE TODAY® 15

use of satellite imagery, a series of compli-ance-related activities are being pursued toaid the AIPs in loss verification.Michael Hand, Deputy Administrator,

RMA Compliance Division, discussed alitany of current compliance issues andhighlighted lessons learned from conduct-ing large claims and routine data miningreviews. He also looked ahead to chal-lenges for 2012 compliance, includingmore and better data for internal and exter-nal content, and the continuing Federalbudget constraints.The conference ended with a panel dis-

cussion on miscellaneous issues and Q&Awith representatives from RMA and NCIS.This time is used for conference presentersto supply answers to questions that cameup during their presentation and neededfurther study or clarification from RMA.

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In November of 2011, the NCIS Crop-Hail Actuarial & Statistics (A&S) Committeetraveled to Chandler, Arizona, for an offsitemeeting. The Crop-Hail A&S Committeegenerally meets twice a year and is respon-sible for the review of crop-hail actuarialmethodologies, crop-hail statistical report-ing techniques and state insurance depart-ment filing requirements.

While in Arizona the Committee had theopportunity to go beyond the meetingroom and see firsthand what goes on in thefield. Sam Wang of the Maricopa Ag Centerprovided a tour of cotton fields at theresearch center. Mr. Wang briefed the

group on some of the research currentlybeing conducted. Due to the difference inthe cotton growing season, there had beenconcern that the loss adjusting charts forcotton may not be accurate for the Arizonaarea since the original research for the

Committee Sees ResearchFirst Hand

TODAYcrop insurance

Committee member Dale Farnham (far left) and Tom Vetter, ProAg and member of the NCISCrop-Hail Policy, Procedure and Loss Adjustment Committee, listen to Dr. Wang (far right)describe current research projects.

By Therese Stom, NCIS

16 FEBRUARY 2012

CROP INSURANCE TODAY® 17

charts were conducted in Arkansas andMississippi. Research is being conductedon the limb removal and cutoff portions ofthe charts.Committee members attending the

meeting included: Jim Aldeman,American Farm Bureau Insurance; DeanClarke, Great American; Dale Farnham,

Farmers Mutual Hail; Brian Gugat, Rainand Hail; Mike Hargrove, ARMtech;Rachel Henke, NAU Country; KendallJones, ProAg; Mary Sutton, RCIS; and,Mary Wandro, Grinnell Mutual. Membersunable to attend were: Greg Livingston,John Deere Risk Protection; and, GeoffRedman, ADM.

Frank Schnapp, NCIS (far left), Mary Wandro and Kendall Jones

Therese Stom, NCIS and staff liaison to theCrop-Hail A&S Committee

Dean Clarke, Rachel Henke, Brian Gugat, Mary Sutton and Mike Hargrove

TODAYcrop insurance

18 FEBRUARY 2012

The 67th annual convention of theNational Association of Farm Broadcasting(NAFB) was held in Kansas City, MO,November 9-11, 2011. The “centerpieceevent” of the convention is Trade Talk.Trade Talk affords company and organiza-tion participants access to member broad-casters to discuss the issues and topics thatare important to them.NCIS participated in Trade Talk this

year and met with several broadcasters todiscuss crop insurance and its strengths asthe linchpin of the farm safety net.“It was a good use of our time,” said

Laurie Langstraat, NCIS. “Not only did wevisit with several farm broadcasters, itallowed us the opportunity to networkwith our peers from other commodity andfarm organizations.”

2011

Miss America 2011, Teresa Scanlan, spokesperson for “The Hand That Feeds U.S.” stopped by tovisit our booth. The crop insurance industry is a proud supporter of THTFUS, and we welcomedthe opportunity to visit with Miss America, who is helping to promote the importance of agricul-ture. In the picture, left to right: Laurie Langstraat, Keith Collins, Miss America, and Tom Zacharias.

Keith Collins (left) visits with a farm broadcaster during Trade Talk.

Trade Talk

“We have heard again andagain from producers that

crop insurance is the best riskmanagement tool available.”

-Senators Frank Lucasand Pat Roberts

“I’m very opposed to cuttingmore from crop insurance.”

-RepresentativeCollin Peterson

“Most farmers now see cropinsurance as a primary tool

for risk management.”

-USDA Chief Economist,Joseph Glauber

CROP INSURANCE TODAY 19

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The NCIS booth at Trade Talk featured several positive quotes from key congressional and USDA representatives.

20 FEBRUARY 2012

Jess “Ben” Latham III, will retire fromThe ProAg Insurance Group in early 2012.Ben is a graduate of the University ofTexas and West Texas State University. Hestarted his career in crop insurance in 1972as an agent in Amarillo, Texas. In 1974, hewent to work as a hail adjuster for hisgrandfather’s company, which was startedin 1926. In 1979, he was promoted to VicePresident of Marketing for the company,then a regional crop-hail insurer mostly inthe state of Texas. In the late 1980s, theymoved into the MPCI market.As the company began to grow, they

put together a business plan to expandinto other states. During the 1990s, Ben,his brother, and his two sons worked onestablishing other offices, growing throughthe 2000s to five regional offices and 450+employees in 42 states. During that time,Ben served as COO and CEO and enjoyed

working with reinsurance and especiallynew employees.“We have been very fortunate to have

put together an excellent managementteam that is with us today at The ProAgInsurance Group,” said Ben. “Along withits parent company, CUNA Mutual, theywill continue carrying on the family tradi-tion.”During his tenure with The ProAg

Insurance Group, Ben was very active inindustry activities and served on severalBoards, including: National Crop InsuranceServices (member and Chairman);American Association of Crop Insurers(member and Chairman); and, theInternational Association of Crop Insurers.Ben was also very active in his commu-

nity, serving on several boards for localhospitals, churches and other educationalinstitutions.

Ben and his wife, Connie, have threechildren; Benson, Brandon and Jessica. Wewish Ben all the best in his retirement andwe thank him for his years of service andmany contributions to the crop insuranceindustry.

Ben LathamRetirements

TODAYcrop insurance

Steve Harms, Rain and Hail L.L.C.,retired in early January 2012, after almost37 years of service. Steve had been theChairman of the Board of Rain and HailInsurance Service, Inc. since 2005, and alsoserved as President of the Company since2001.Steve began his career with Rain and

Hail as an adjuster in 1973 and throughouthis career there served in several differentpositions such as Field Supervisor,Claims/Quality Control Manager, DivisionManager, Executive Vice President,President and Chairman of the Board.Steve was also a member of many indus-try committees during his time with Rain

and Hail. He is a proven leader within theagricultural insurance world and hadserved as Chairman of both National CropInsurance Services (NCIS) and AmericanAssociation of Crop Insurers (AACI).Steve’s personal life is full of interests,

activities and friends, but his greatest joyand accomplishment is his family. Steveand his wife, Diane, have four daughtersand one son. He enjoys time with hisgrandchildren as well as hunting and fish-ing. We wish Steve all the best in his retire-ment and we thank him for his years ofservice and many contributions to the cropinsurance industry.

Steve Harms

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ADM Crop Risk Services is an equal opportunity provider. The products and services described here are written by ADM Insurance Company or American Alternative Insurance Corporation, both of which are reinsured to Agrinational Insurance. The insurance products described here are subject to availability and qualifications. Other terms, conditions, and exclusions may apply. ADM Insurance Company and American Alternative Insurance Corporation are not licensed in all states. Not all products are available in all states. This does not constitute an offer of any product in any jurisdiction.

C

TODAYOBITUARIES

Patrick “Pete” Flanagan, 69, passed awayat his home in Fort Benton, MT, onDecember 27, 2011, after a long battle withcancer.Pat was born December 30, 1941 in

Forsyth, Montana to Pat and EdnaFlanagan. He grew up on a farm with twoolder sisters, Patricia (Trick) Groombridgeand Margaret (Muzz) Noctor. He was a firstgeneration Irishman who embraced his her-itage, including a trip to his father’s home-stead in Ireland. Pat graduated from ForsythHigh School as an outstanding athlete andforever friend. He went to school at NMCand EMC on athletic scholarships and grad-uated with a History/Coaching degree. Hisfirst job took him to Willow Creek, wherehe met and married Walleyne Murphy onDecember 27, 1966.Together the Flanagans taught and

coached at Willow Creek, Hysham, Stanfordand Fort Benton where they made theirhome. After getting his Master’s degree atMSU, Pat touched the lives of many as aschool counselor and psychologist. Heespecially enjoyed the company of histeaching colleagues and later his studentsand players as friends. Pat was a well-loved teacher, coach, counselor and friend.

After retirement in 1992, Pete went towork as a crop insurance adjuster forAgroNational. He loved his job and thepeople with whom he worked. He mademany lasting friendships and was a highlyrespected adjuster. Pat learned the skillsneeded to adjust both crop-hail and MPCIclaims, later becoming a valued claimssupervisor based on his leadership abilities.“His commitment and passion for teach-

ing, mentoring and helping people will belong remembered by those he touched,”said Kim Gibson, Agro Branch Manager andVice President, NAU Country. “Pat was agreat example of ‘you get what you give’and he gave us all so much; he will be great-ly missed.”Pat became very active in NCIS region-

al/state committee functions in 1997 andserved as Chairman of the MontanaRegional/State Committee in 2004-2005. Healways devoted time and effort for thesecommittee activities and felt that by workingwith the industry as a whole we were allbetter served than putting yourself or indi-vidual company ahead of the industry.“Pat demonstrated time and again that

he was very committed to seeing that theMontana Committee remains viable and

strong,” said Dean Strasser, NCIS and staffliaison to the Montana Regional/StateCommittee. “He placed a high value onattendance at the Committee’s regularlyscheduled meetings and loss adjusterschools. Hardly a meeting went by that hisname was not mentioned because he vol-unteered to take on a task or report on anissue.”Pat, an avid sports fan, was a lifelong

Dodger supporter. He and his son were ona quest to visit ballparks and scored eight.He enjoyed skiing, fishing and hunting andbagged a 6 by 7 bull on opening day thisfall. Pat was a wonderful “builder;” build-ing a home, a cabin, a redwood canoe, agazebo and a lifetime of memories andfriendships.Time spent with his children Casey,

Bridget, grandchildren Killian 16, Will 14,Connor 10 and many friends were deeplycherished and will be greatly missed.Friendship, loyalty, laughter and love werethe gifts Pat gave and continues to give.As his best buddy Connor said, “He had agood run.”A Celebration of Life was held December

30, 2011 on Pat’s 70th birthday. The familysuggests gifts to local charities: ChouteauCounty Cancer Support Group, PO Box 674;The Dedman Foundation, PO Box 1282; or,ICC Restoration, PO Box 849, all of FortBenton Montana 59442.

In Memory

22 FEBRUARY 2012

Under the direction of its Board ofDirectors, National Crop InsuranceServices has developed two nationalawards to be given to individuals whoachieve excellence in the criteria set out bythe awards.The first award is the Outstanding

Service Award. This award, primarily foragents, has actually been in existence since2001 and has been awarded to severalexcellent individuals. The purpose of thisaward is to promote exceptional serviceindustry-wide, and encourage outstandingoutreach efforts to all farmers, especiallylimited-resource farmers, by highlightingan individual who has demonstratedexceptional service.

The newest award established is theIndustry Leadership Award. This award,targeted primarily to members of the NCISregional/state crop insurance committees,was created to formally recognize individ-uals who are directly involved in the cropinsurance industry and who consistentlyserve the industry by providing outstandingleadership. Company employees at boththe field and management level are eligibleto be nominated.The criteria for both awards are:1. Strong personal and business ethics.2. Demonstrated service above andbeyond to the crop insurance industry.

3. Represents themselves, their company,and the crop insurance industry well.

The two winners will be presented withtheir awards at the crop insurance industryannual convention held in February ofeach year.All nominations must be submitted in

writing to NCIS by October 15, 2012, forawards to be given at the 2013 AnnualConvention. For nomination informationand forms to be submitted, please go tothe NCIS website at www.ag-risk.org todownload. If you have any questionsregarding the criteria or whom is eligiblefor either award, please contact LaurieLangstraat at NCIS at lauriel@ag-risk.org or913-685-2767.

INDUSTRYAWARDSNCIS

24 FEBRUARY 2012

TODAYOBITUARIES

Marx M. Mannberger, long-time NCISemployee, passed away on December 24,2011, at the age of 83.Marx began his career with the Crop

Hail Insurance Actuarial Association(CHIAA) in 1956 and retired from NCIS in1998. During his tenure with NCIS he heldseveral positions, including assistant to thedirector of data processing; data process-ing customer support; data processing

administrator; and, vice president of dataprocessing.Marx is survived by his daughter,

Melanie Cravens of Dresden, TN; one son,Mike Mannberger of Greenfield, TN; threegrandchildren; and, three great-grandchil-dren. He was preceded in death by hisdaughter, Melia Mannberger.

In Memory

26 FEBRUARY 2012

An important part of planning is under-standing what will happen if you don’tchange anything. Evaluating the futureperformance of your current farm, basedon your assumptions and expectations forthe future, will help you to know if andwhen changes are needed. This evaluationwill provide the base, or benchmark, onwhich to measure the effectiveness ofpotential changes.

The object of this step is to determinewhether the current farm operation willmeet your goals in the future, or whetherchanges should be made to your currentfarm business. In the previous four stepsyou had the opportunity to describe yourcurrent farm operation (Step 1), identifyyour skills and interests (Step 2), specifyyour expectations about the future (Step

3), and set and prioritize your personal andbusiness goals (Step 4).If the analysis indicates that the current

farm does not need to be changed (andyou are not interested in pursuingchanges), Steps 6 and 7 of the planningprocess can be skipped. But if the analysissuggests that changes should be consid-ered (or you are interested in exploringoptions), Steps 6 and 7 outline somethoughts on describing and evaluating

alternatives.The first sections of this step provide an

overview of the analytical process.Subsequent sections address several issuesthat arise in completing the analysis andsuggest actions that can be taken, basedon the result of the analysis.

Analytical ProcedureThe question to be answered by com-

pleting this step is whether the current

Q:Will the current farm befeasible in the future?

STEP 5-TESTING THE CURRENT FARM

TODAYcrop insurance

By Dr. Laurence Crane, NCIS

This is the fifth in a ten-part series of articles on “The Steps of Farm Business Planning.”The introductory article for the series was published in the November 2010 issue of Crop Insurance TODAY® and additional articles

will be printed each quarter.

CROP INSURANCE TODAY® 27

farm business, with no more than minorchanges, will fulfill your personal andbusiness goals in the future. To conductthe test, you should:a. Use the description of the currentfarm as developed in Step 1 and theexpected future prices and costs thatwere specified in Step 3;

b.Apply the analytical processdescribed in Step 1; that is, projectthe farm business’ cash flow, prof-itability, equity accumulation, andresource feasibility several years inthe future;

c. Compare the projections to the longterm business goals set forth in Step4; and,

d.Compare the tasks needed to operatethe farm to the interests and skills theowners want to pursue (as set forthin Step 2).The next several sections of this sec-

tion expand on certain aspects of theanalytical process.

ProjectionsRemember, the focus of this step is on

the future performance of the currentfarm; that is, projecting the financial per-formance of the current business based onthe assumptions you made about thefuture. The procedure is similar to whatwas utilized in Step 1:• An enterprise budget is developed foreach activity;

• The enterprise budgets are combinedto gain an understanding of the whole-farm; and,

• A determination is made as to how wellthe availability of resources matcheswith resource needs.The period of time being analyzed is

the future (rather than the past), andsuch projections often are referred to asbudgets.

Time FrameAnother issue in testing your current

farm operation is selecting the time peri-

ods to be analyzed. Many farmers start bytesting their business for next year andusually are quite confident that theirassumptions are realistic.However, farm business planning

emphasizes a longer time period. To lookfurther into the future, most farmers selecta second time period; perhaps five or tenyears from now. Preparing projectionsbeyond one year encourages you to thinkmore broadly but it also complicates theanalysis due to increased uncertaintyabout your assumptions as the time periodis extended.Most farmers are already implicitly

making these long term assumptions eventhough they may not share or documentthem. For example, when a farmer pur-chases a machine, he has some expecta-tions as to the value of the future produc-tivity of the machine. However, many indi-viduals may feel uncomfortable explicitlyspecifying their assumptions by writingthem down because time may prove them

28 FEBRUARY 2012

wrong. But no one can foresee the futureand if someone’s projection turns out tobe fairly accurate over time, it probablywas good fortune as much as uniqueinsight. Individuals should be encouragedto talk about their vision for the future. Itis only through the sharing of ideas thatowners of the farm can build on oneanother’s foresight, and collectively bebetter prepared for the future.One suggestion for selecting the time

periods for analysis is to have them alignwith the periods followed in describingthe future (Step 3) and setting deadlinesfor goals (Step 4). By using the same timeperiods, the pieces of information fit moreclosely.For example, a farmer may want to

specify assumptions for five years fromnow (Step 3), goals for five years from now(Step 4), and then project the performanceof the current farm for five years from now.Such a consistent time frame allows theassumptions to be used directly in makingthe projections, which in turn, can bedirectly compared to the goals.Most farmers will have two or more

time periods in mind as they completethis step of the planning process-next yearand several years into the future.

Which Changes Shouldbe Considered in thisAnalysis?Because this step involves projecting

the future performance of the currentfarm operation, the analysis assumes thefarm will not change over the time periodbeing evaluated. There will be no changein the commodities being produced, theacreage being operated, nor the produc-tion and marketing strategies being fol-lowed. Only prices and costs are allowedto vary in this analysis, and those varia-tions were specified as part of Step 3.New production techniques or marketingstrategies and changes in the commoditiesbeing produced should be analyzed asalternatives (Step 6) of the planningprocess.This strict limitation should help you

recognize even minor changes that youmake in your farm operations. A concernis that a series of minor changes can have

an impact similar to a major change. Ifonly major changes are analyzed, a seriesof unanalyzed minor changes may collec-tively result in a major change that has notbeen analyzed. Therefore, one goal ofbusiness planning is to help you recognizeand evaluate even relatively minorchanges. Imposing such a limit on thetypes of changes in this analysis shouldreveal minor, as well as major, changesthat you need to address.An exception to this strict limitation

against change is those changes that occurdue to the passage of time. For example,the passage of time alters the availabilityand productivity of labor—young peoplegrow more productive while older individ-uals, transitioning toward retirement, maybe less available. Likewise, as equipmentages some items will likely need to bereplaced in order to maintain the farm’scurrent productive capacity. For example,if one machine is replaced with a machineof identical capacity, it is probably a minorchange. However, the implications of thatpurchase on the farm’s cash flow shouldbe analyzed. Another example of aninevitable change may be paying downlong term debt.But which changes should be analyzed

as part of the current farm and whichchanges should be considered alternativesto be analyzed in the next step of the busi-ness planning process? Rather than list thetypes of changes that may fit in each cate-gory, it may be more helpful to specify acriterion that can applied. One criterionfor deciding which changes to incorporateinto this analysis would be to distinguishbetween:• Changes resulting from the passage oftime, unintentional changes; or,

• Changes that result from a reactivemanagement style; or,

• Changes that occur intentionally, orthat result from a proactive manage-ment style.The first type of changes could be

incorporated into this step as part of thecurrent farm, whereas other types ofchanges could be tested as alternatives(Step 6).This criterion would distinguish

between: 1) the changes that occur as a

farmer grows older while continuing thesame enterprises and making only minorrequired changes; and, 2) changes madeto enhance, expand, replace, or redirectthe farm operation. The criterion could berestated as changes resulting from “rollingwith the punches” compared to changesarising from “taking the bull by thehorns.”Many farmers expect that they will

need to make more than minor changesin their farm operations, particularly inthe long run. They may envision involv-ing a new co-owner, adding or changingenterprises, adjusting the scale of opera-tion, or adopting new production tech-nologies and marketing strategies.Despite such expectations and recogniz-ing the need to evaluate alternatives, it isimperative that the current farm shouldbe analyzed so the results can serve as abenchmark against which alternatives canbe compared.

Preparing EnterpriseBudgetsA beginning step in projecting the

future performance of the farm business isto prepare an enterprise budget for thefuture time period. You can use enterpriseanalysis (developed in Step 1) but substi-tute expected prices (from Step 3) to proj-ect revenue and costs. This procedureallows you to understand the profitabilityand feasibility of continuing each enter-prise without change.

Testing the Whole Farm:Resource MatchThe next component of the evaluation

is to develop a projection for the wholefarm in terms of resource feasibility, prof-it, cash flow, and the other standardizedfinancial measures.Resource availability and needs can be

analyzed with the same techniquesdescribed in Step 1. However, you shouldnot need to emphasize testing theresource match during this step becauseof the limitation (as described above) thatthere will be no major changes to thebusiness. This assumption implies thatthere will be no additional or no fewerresources, and that resource needs will

not change either. Existing resource short-ages or surpluses (as identified in Step 1)will presumably continue into the future.The primary exception to this assumptionis that family labor will change as individ-uals grow older.

Testing the Whole Farm:Financial FeasibilityAnother critical aspect of projecting the

performance of the whole farm for a futuretime period is to analyze the business’financial feasibility. This analysis involvespreparing the three basic financial state-ments—income statement, cash flow, andbalance sheet—for the future period. Likethe enterprise budgets described in a pre-ceding paragraph, these are projections,rather than reports of past activities, andare referred to as pro forma financial state-ments. Outcomes for this evaluationshould include:• A budget for each enterprise to project

its future profitability and cash flow forthat year;

• A pro forma income statement for thewhole farm;

• A pro forma cash flow for the wholefarm for the year (a monthly or quarter-ly cash flow projection might be difficultto develop, highly speculative, and pos-sibly not that helpful because the timingof the cash flows are perhaps most crit-ical only for one year at a time sincemost operating loans are arranged foronly one year at a time);

• A projected change in equity (by eitherpreparing a pro forma balance sheet orestimating projected profit minus familyliving); and,

• An assessment of how well your goalsare being met, including whether youractivities align with your skills and inter-ests, and whether an acceptable rate ofreturn is being earned for your laborand investments.

Criteria for DecidingWhether CurrentBusinessis AdequateAfter preparing the projections you

must decide whether the current opera-tion, with no more than minor changes,will be adequate in the future. It is at thispoint that the first five steps of the plan-ning process unite into a single thoughtprocess.How do the projections (as just com-

pleted in Step 5) of operating the currentfarm (as described in Step 1) in the future(as you envisioned it in Step 3) align withyour likes and dislikes (as specified inStep 2) and fulfill your goals (as set forthin Step 4)?You can consider questions such as

whether the projected profit is adequate;whether the business will generate suffi-cient cash flow; whether the activities suf-ficiently align with your interests; and,

30 FEBRUARY 2012

whether the projected performance ade-quately fulfills your goals. No one elsecan make that decision but you. The spe-cific criteria will differ with each person,and the goals, as set forth in Step 4,should express the primary criteria forthis decision. The following list suggestsseveral questions that can be used as cri-teria for deciding the future adequacy ofthe current business.• Would the current business, with nochanges, be satisfactory five yearsfrom now?

• Would the business be profitable?• Would the business generate the nec-essary or desired cash flow?

• Would the owner equity be changingas desired?

• Would the business fulfill your person-al and business goals (Step 4)?

• Would the business permit you to pur-sue activities that you are skilled andinterested in (Step 2)?

• Would the risk exposure align with thebusiness’ capacity to assume risk (Step1) and your willingness to assume risk(Step 2)?In some situations, owners may decide

to revisit one or more of the previoussteps and expand their thoughts or analy-sis, recognizing that the additional effortwill enable them to more confidentlyanswer the preceding questions.

If You Decide YourCurrent Farm isAdequateThere are some steps you may want to

take even though you decide that the cur-rent farm will be adequate to fulfill yourgoals into the future. The questions mayinclude:• Can the business be operated moreefficiently?

• Should the plans for how the businessis operated be enhanced?

• At what point will the current farm likelybecome inadequate to meet my needs?

Testing EfficienciesOne question you may pose for your-

self at this point might be, “Could I do a

better job of accomplishing my goals evenif I do not intend to change the opera-tion?” One criterion for answering thatquestion is whether additional revenuegenerated by making the change exceedsthe cost of making the change. If theanswer is yes, additional profit wouldresult from the change; if the answer is no,the farm operation would earn greaterprofit by not making the change. Thisquestion and various ways of expressingthe criteria are explained more fully inStep 6.The criteria described above empha-

size comparing the projection of the cur-rent farm to the owners’ goals. Other com-parisons include:• Comparing the projection of the cur-rent farm to current and historical per-formance; and,

• Comparing the projection of the currentfarm to performance of peer businesses.There are numerous efficiency meas-

ures, but for most of these measures thereis no specified absolute standard. For thisreason, you have to settle for making com-parisons or other relative measures. Theissue of efficiency is addressed again inStep 6 (Identifying Alternatives) and Step9 (Monitoring and Control).

Revising Functional PlansAnother action that you can take if you

decide that your current operation is ade-quate, is to refine your functional plans;that is, your strategies for production, mar-keting, labor management, risk manage-ment, and capital needs. For example, youmay ask whether the strategies can beimproved even though no major modifica-tions are envisioned.A similar question that you could ask

yourself would be whether you under-stand your functional plans well enoughto explain them to someone else so theycould implement those plans. Along thesame line, do you recognize your assump-tions so you are prepared to alter yourplans if the assumptions turn out to beinvalid. These and similar questionsshould enhance efforts to improve currentfunctional plans.

Managing risk and preparing for unex-pected occurrences are two tasks farmersengage in even if their long-term plans donot include major changes. Step 8 pro-vides ideas you may want to consider indeveloping contingency plans for manag-ing in an environment of uncertainty. Step6 and Step 7 can be bypassed if there is noneed to consider major changes in thefarm business.

If You Decide YourCurrent Farm isInadequateIf you decide that your current farm

business is not adequate to meet yourfuture needs, you will want to developand test some alternatives. Step 6(Identifying and Evaluating Alternatives)and Step 7 (Transitional Plans) offer sug-gestions you may want to explore indeveloping a farm business that bettermeets your interests and goals.The first activity in developing alterna-

tives is to describe (as explained in Step 6)how the current farm is inadequate. Theshortcomings might be an inadequate cashflow, an unsatisfactory return to the own-ers’ labor, or having to forego goals thatyou consider important. By describingthese shortcomings, you are setting forthideas to help assess whether the alterna-tives are better than their current practices.

ConclusionThe purpose of this step is to deter-

mine whether the current farm operationwill meet your future needs based on yourassumptions and expectations about thefuture, and your statements about yourinterests and goals. The test involvesdeveloping projections of future perform-ance for several time periods into thefuture.If the current farm appears to be satis-

factory for the future, you may still wantto assess whether the efficiency of theoperation can be improved or the func-tional plans enhanced. If the current farmappears inadequate for the future, youwill want to consider describing theshortcomings, and identify and evaluatealternatives.

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STATE 2011 PREMIUMS* 2010 PREMIUMS* % CHANGE

Nebraska 155,647 103,594 50.25Iowa 104,554 79,351 31.76Minnesota 79,942 59,562 34.22North Dakota 76,296 73,708 3.51Illinois 68,955 55,120 25.10Kansas 62,523 58,844 6.25South Dakota 56,539 37,726 49.87Texas 44,052 63,370 -30.48Montana 31,610 22,358 41.38Indiana 18,125 13,988 29.58Missouri 16,303 11,811 38.03Idaho 14,926 10,553 41.44Colorado 14,696 11,065 32.82Wisconsin 14,199 11,409 24.45Washington 12,255 9,977 22.83Arkansas 11,519 7,488 53.83Ohio 8,971 7,033 27.56North Carolina 8,888 9,056 -1.86Oklahoma 6,725 9,944 -32.37Michigan 6,105 5,345 14.22Kentucky 4,320 3,438 25.65Oregon 3,940 2,481 58.81Arizona 3,667 2,255 62.62Wyoming 2,466 1,723 43.12New Mexico 2,148 1,884 14.01Tennessee 2,028 1,424 42.42Virginia 1,958 1,700 15.18Georgia 1,846 1,246 48.15California 1,477 1,274 15.93Mississippi 921 537 71.51Alabama 781 508 53.74Florida 459 330 39.09Louisiana 317 90 252.22South Carolina 294 293 0.34New York 152 98 55.10Utah 133 54 146.30Pennsylvania 108 98 10.20New Jersey 53 54 -1.85Delaware 47 15 213.33Maryland 36 8 350.00Nevada 15 17 -11.76Massachusetts 2 1 100.00West Virginia 1 0 2,595.83Connecticut 0 0 0.00Main 0 0 0.00New Hampshire 0 0 0.00Rhode Island 0 0 0.00Vermont 0 0 0.00Totals 839,995 680,831 23.38

STATE RANKINGS

Premiums for Crop-Hail

*Rounded to ThousandsData Source: NCIS 6-B Adjusted Verified Totals as of 01/04/2012.

© National Crop Insurance Services 01/2012.32 FEBRUARY 2012

STATE 2011 PREMIUMS* 2010 PREMIUMS* % CHANGE

Texas 1,054,424 627,040 68.16North Dakota 1,051,068 664,597 58.15Iowa 1,028,534 592,418 73.62Illinois 924,711 566,681 63.18Minnesota 838,900 524,836 59.84Kansas 794,127 543,693 46.06Nebraska 757,846 465,885 62.67South Dakota 721,206 482,371 49.51Indiana 512,647 305,438 67.84Missouri 401,342 250,228 60.39Ohio 376,586 222,547 69.22Wisconsin 293,740 188,429 55.89California 239,962 219,251 9.45North Carolina 213,483 155,385 37.39Colorado 211,893 148,211 42.97Montana 211,691 137,416 54.05Michigan 208,968 135,253 54.50Oklahoma 202,750 132,614 52.89Georgia 194,924 122,792 58.74Kentucky 153,681 89,921 70.91Mississippi 152,845 108,391 41.01Arkansas 150,477 110,384 36.32Washington 147,339 105,316 39.90Tennessee 121,478 76,523 58.75Florida 112,514 100,248 12.24Louisiana 101,716 77,249 31.67Alabama 83,957 52,267 60.63Idaho 83,399 62,123 34.25South Carolina 76,710 52,313 46.64Virginia 74,153 47,006 57.75Pennsylvania 66,976 45,175 48.26Maryland 45,707 28,379 61.06Oregon 43,999 34,658 26.95New York 35,912 28,022 28.16Arizona 32,818 14,464 126.89New Mecico 24,579 17,146 43.35Delaware 17,522 11,026 58.92Wyoming 17,080 13,774 24.00New Jersey 8,952 5,888 52.04Maine 8,562 7,525 13.78Connecticut 5,004 4,758 5.17Utah 4,091 3,261 25.45Nevada 3,171 2,530 25.34Massachusetts 2,980 3,404 -12.46West Virginia 2,723 2,134 27.60Vermont 2,365 1,741 35.84Hawaii 1,279 1,580 -19.05New Hampshire 478 385 24.16Rhode Island 95 76 25.00Alaska 86 50 72.00Totals 11,821,452 7,592,801 55.69

STATE RANKINGS

Premiums for MPCI

*Rounded to ThousandsData Source: RMA Summary of Business as of 01/02/2012.Prepared by © National Crop Insurance Services 01/2012. CROP INSURANCE TODAY 33

Approved Insurance Providers (AIPs) andtheir network of federally approved cropinsurance adjusters? As of January 23, 2012,a record $9.1 billion in indemnity paymentshave been made to U.S. farmers. (The pre-vious indemnity payment record was $8.67billion paid in 2008.) Many believe totalindemnities will track with total premium,resulting in a program loss ratio (totalindemnities divided by total premium) of100 percent. The program has not experi-enced a loss ratio of 100 percent since 2002(1.39 loss ratio).Is there more to this app? Well, for

indemnities at $9 billion and counting to bepaid on 349,702 policies covering approxi-mately 72 million acres on over 77 crops in50 states over a period of 16 months, therewould need to be extremely reliable high-speed data processing systems for both theUSDA/RMA and the AIPs. Moreover, therewould need to be a risk sharing mechanismbetween the public and private sector tomanage a risk of $113.3 billion in total cropprotection nationwide. This risk sharingmechanism includes the participation of theprivate reinsurance sector that provides avital source of capital to the industry,enabling the AIPs to write not only $11.8billion in premium, but also over $800 mil-lion in premium in privately delivered crop-hail coverage, which translates to another

$36.8 billion in crop insurance liability. Thisraises the total liability to over $150 billionin crop insurance protection.So, how important is this particular app?

The ability to pay insured losses on a timelybasis at coverage levels that recoup themajority of the cost of production for mostmajor field crops mitigates the economicnecessity and political demands for largescale disaster payments at a time whenFederal coffers are exhausted. Equallyimportant are timely and effectual indemni-ties that allow the agricultural productionsector to finance the 2012 crop. Keep inmind that we have been experiencingextremely tight supply and demand balancesfor our major agricultural commodities forthe past several years. THE CAPABILITY OFU.S. AGRICULTURE TO SUSTAIN OVER $11BILLION IN INSURED LOSSES IN 2011 ANDSEAMLESSLY FINANCE ITSELF FOR THE2012 SEASON SHOULD NOT BE TAKENFOR GRANTED. Sounds like this crop insur-ance program might be a pretty cool app.Is the app perfect? Certainly not. We

would be remiss if we did not consider therole or future of next generation apps. In theparlance, we do need to routinely “upgrade”our app from time to time. What about nextgeneration apps? The FCIC Board, in con-junction with the staff at RMA, continuallyevaluates new product proposals submittedby third party stakeholders. Since 2002 at

least 23 new products have been submittedand approved through this process. RMA isalso currently implementing and reviewingnew features associated with its actuarialprocedures. Although concerns have beenexpressed over this process, the critical issueis that RMA and the industry are striving toensure that actuarially sound premiums areestablished to ensure the financial stability ofthe program and provide benefit for thefarmer. Additionally, RMA and the industryare engaged in several initiatives to improvethe delivery system.Well, I think we have pretty much

exhausted the metaphor here, and I surehope I have made my point. Admittedly,my tone can be viewed as somewhat acer-bic and mildly cynical, but before we pro-ceed into the next rendition of the Farm Billdebate, and we evaluate a Pandora’s Box ofalternative agricultural policy choices, let’skeep in mind that there is an “app” thatperforms quite well, all things considered.Not only does the crop insurance app dowhat it is supposed to do, it has an existinginstitutional framework that can adapt andgrow in order to perform the necessaryupgrades required to meet the future riskmanagement needs of U.S. agriculture. Andto the crop insurance industry and the staffof the RMA - keep APP the good work.Lastly, welcome to the first 2012 issue of

Crop Insurance TODAY. This issue containsan in-depth look at the cost of the Federalcrop insurance program. Sometimes datacan be misunderstood or misrepresented asto the true costs to taxpayers, and so FrankSchnapp and Keith Collins help explainhow the numbers all work together andwhat they really mean. The magazine alsohighlights various industry activities thatoccurred during the final quarter of 2011.With this issue, we are introducing a

new digital version of the magazine, whichwill allow you to read articles online,search for key words, directly link to web-sites listed in resource documentation andprovides “one click” access for the advertis-ers. And very soon, the magazine will alsohave its own “app.” This app will be iPadand Droid friendly and will provide youdirect access to the digital publication fromyour tablet device. Stay tuned to the onlineversion of the magazine for more informa-tion about when the app is available fordownload!

34 FEBRUARY 2012

Continued from President’s Message

$.20 each,plus shipping.

For orders over 500, please callfor discounted price.

Call800-951-6247

and ask for Donna

36 FEBRUARY 2012

The new digital Crop Insurance TODAY® magazine is

now online. TODAY® is now fully functional as an online,

interactive publication as well as print. This new digital

feature will enable NCIS to touch our subscribers with

timely industry information and updates. Visit www.ag-risk.org

or www.cropinsuranceinamerica.com to view TODAY® online.

CropInsTODAY

There’s an app for that!Smartphone mobile and tablet applications coming soon!

38 FEBRUARY 2012

INSURABLE CROPSLocations&Plans

The following pages contain a list of all federally subsidized insurable crops, what states they are insurable in, under what plan(s)of insurance, and the number of counties where they are insurable. Please note this information is current as of January 11, 2012.Changes are constantly occurring in the crop insurance program and you should contact your crop insurance agent for the mostup-to-date information.The numbers in the matrix refer to specific insurances plans by the plan number as identified by the Risk Management Agency

(RMA). A number containing a dash indicates that the crop is not insurable in every county in the state. The number following thedash represents the number of counties in that state the crop is insurable under the plan of insurance indicated by the number beforethe dash. For example, the code 01-16 means that specific crop is insurable under the Yield Protection (YP) plan of insurance in six-teen counties in the state. If the number does not contain a dash, it is insurable in every county in the state. A number including (P)indicates a pilot program.

2012 CROP INSURANCE CHARTS

01 = YP-Yield Protection

02 = RP-Revenue Protection

03 = RPHPE-Revenue Protection with Harvest

Price Exclusion

04 = GRP-Group Risk Plan

05 = GRIP-HRO-Group Risk Income Protection-

Harvest Revenue Option

06 = GRIP-Group Risk Income Protection

13 = RI-Rainfall Index

14 = VI-Vegetation Index

40 = TDO-Tree Based Dollar Amount of Insurance

41 = PRV-Pecan Revenue

43 = AQDOL-Aquaculture Dollar

46 = ARC-Avocado Revenue Coverage

47 = ARH-Actual Revenue History

50 = DO-Dollar Amount of Insurance

51 = FD-Fixed Dollar

55 = YDO-Yield Based Dollar Amount of Insurance

61 = AGR-L-Adjusted Gross Revenue - Lite

63 = AGR-Adjusted Gross Revenue

81 = LRP-Livestock Risk Protection

82 = LGM-Livestock Gross Margin

90 = APH-Actual Production History

CV-ComprehensiveTree Value

QE-Quarantine Endorsement

PY-Personal T Yield

PO-Price Endorsement Option

NS-Stage Removal

HF-Hail & Fire Protection

STATE

Alabam

aAlaska

Arizona

Arkansas

California

Colorado

Connecticut

Delaw

are

Florida

Georgia

Haw

aii

Idaho

Illinois

Indiana

Iowa

Kansas

Kentucky

Louisiana

Maine

Maryland

Massachusetts

Michigan

Minnesota

Mississippi

Missouri

Montana

Nebraska

Nevada

New

Ham

pshire

New

Jersey

New

Mexico

New

York

NorthCarolina

NorthDakota

Ohio

Oklahoma

Oregon

Pennsylvania

RhodeIsland

SouthCarolina

SouthDakota

Tennessee

Texas

Utah

Vermont

Virginia

Washington

WestVirginia

Wisconsin

Wyoming

ADJUSTED

GRO

SSREVENUE

ALFALFA

SEED

ALMONDS

APICULTU

REAP

PLES

APRICO

TSAV

OCA

DO

BANAN

ABA

RLEY

BEAN

SBLUE

BERRIES

AGR

(P)63-8

(P)63

(P)63

(P)63-6

(P)63-3

(P)63

(P)63-21

(P)63

(P)63-9

(P)63

(P)63

(P)63-16

(P)63-11

(P)63-14

(P)63

(P)63

(P)63-40

(P)63-11

AGR-Lite

61 61 61 61-63

61 61 61 61 61 61 61 61 61 61,23

61 61 61 61 61 61-20

61 61-52

61 61 61-66

61 61 61 61 61 61 61 61 61 61

Fresh

90-13

90-4

90-5

90-7

Processing

90-13

Avocado

(P)90-6Q

E

(P)90-1

Trees

(P)40-1CV

Banana

(P)90

Tree

(P)40

Dry

90-2

90-17

90-24

90-12

90-2

90-12

90-28

90-40

90-11

90-25

90-4

90-13

(P)90-36PY

90-2

90-13

90-18

90-1

90-6

90-3

90-7

Fresh

Market

90-9

90-4

90-2

Processing

90-2

90-2

90-4

90-2

90-10

90-9

90-15

90-3

90-1

90-18

90-1

90-9

90-15

90-4

90-5

90-2

90-7

90-42

90-1

90-4

90-5

90-12

90-8

90-5

90-8

90-4

90-6

90-7

90-1

90-6

01-4,02-4,03-4

01-5,02-5,03-5

01-33,02-33,03-33

01-32,02-32,03-32

01,02,03

01-4,02-4,03-4

01-43,02-43,03-43

01-1,02-1,03-1

01-1,02-1,03-1

01-7,02-7,03-7

01-75,02-75,03-75

01-8,02-8,03-8

01,02,03

01-18,02-18,03-18

01-29,02-29,03-29

01-74,02-74,03-74

01-7,02-7,03-7

01-55,02-55,03-55

01-18,02-18,03-18

01-12,02-12,03-12

01-7,02-7,03-7

01-4,02-4,03-4

01-15,02-15,03-15

01-57,02-57,03-57

(P)01PY,(P)02PY,(P)03PY

01-1,02-1,03-1

01-24,02-24,03-24

01-30,02-30,03-30

01-54,02-54,03-54

01-6,02-6,03-6

01,02,03

01-2,02-2,03-2

01-43,02-43,03-43

01-25,02-25,03-25

01-1,02-1,03-1

01-62,02-62,03-62

01-38,02-38,03-38

01-1,02-1,03-1

01-60,02-60,03-60

01-18,02-18,03-18

(P)90-2

(P)90-2

(P)90-1

(P)90-2

(P)90-1

(P)90-2

(P)90-2

13 14 13 1313-48,14-15

13 13 14 13 13-23

13

13-114

13 14 14 14 13 13 13 13 14 13 13 14 13 14 13-98

13 14

90-16

90-2

90-1

90-25

90-3 90 90-6

90-5

90-5

90-9

90-11

90-8

90-12

90-24

90-2

90-9 90 90-12

90-3

90-25

90-18

90-12

90-16

90-45

90-4

90-4

90-2

90-2

90-8

90-27

90-14

90-14

90-14

CROP INSURANCE TODAY® 39

STATE

Alabam

aAlaska

Arizona

Arkansas

California

Colorado

Connecticut

Delaw

are

Florida

Georgia

Haw

aii

Idaho

Illinois

Indiana

Iowa

Kansas

Kentucky

Louisiana

Maine

Maryland

Massachusetts

Michigan

Minnesota

Mississippi

Missouri

Montana

Nebraska

Nevada

New

Ham

pshire

New

Jersey

New

Mexico

New

York

NorthCarolina

NorthDakota

Ohio

Oklahoma

Oregon

Pennsylvania

RhodeIsland

SouthCarolina

SouthDakota

Tennessee

Texas

Utah

Vermont

Virginia

Washington

WestVirginia

Wisconsin

Wyoming

BUCK

WHE

ATCA

BBAG

ECA

MELINA

CANOLA

CARA

MBO

LATREES

CHERRIES

CHILE

PEPPERS

CITRUS

GRA

PEFRUIT

CITRUS

FRESH

NEC

TARINES

LEMON

90-8

90-12

90-3

(P)40-1

(P)47-9

(P)47-5

(P)47-2

(P)47-1

(P)47-7

(P)47-1

(P)47-10

(P)51-1

(P)51-2

I-VIII

50-29

AllO

ther

Citru

sTrees

(P)40-28CV

AllO

ther

Grapefruit

90-3

Grapefru

it

90-3

(P)90-8Q

E

RioRed,StarRuby

&Ruby

Red

90-3

Trees

(P)40-28CV

(P)40-3

Trees

(P)40-4

Lemons

90-3

(P)90-12QE

90-8

90-4

90-5

90-7

90-1

90-6

90-5

90-1

90-2

90-3

90-1

90-2

90-3

90-1

90-1

90-1

90-2

90-1

01-1,02-1,03-1

01-12,02-12,03-12

01-26,02-26,03-26

01-23,02-23,03-23

01-18,02-18,03-18

(P)01PY,(P)02PY,(P)03PY

01-10,02-10,03-10

01-7,02-7,03-7

01-13,02-13,03-13

90-41

90-11

40 FEBRUARY 2012

STATE

Alabam

aAlaska

Arizona

Arkansas

California

Colorado

Connecticut

Delaw

are

Florida

Georgia

Haw

aii

Idaho

Illinois

Indiana

Iowa

Kansas

Kentucky

Louisiana

Maine

Maryland

Massachusetts

Michigan

Minnesota

Mississippi

Missouri

Montana

Nebraska

Nevada

New

Ham

pshire

New

Jersey

New

Mexico

New

York

NorthCarolina

NorthDakota

Ohio

Oklahoma

Oregon

Pennsylvania

RhodeIsland

SouthCarolina

SouthDakota

Tennessee

Texas

Utah

Vermont

Virginia

Washington

WestVirginia

Wisconsin

Wyoming

LIMETREES

MAN

DAR

INS

MAN

GOTREES

ORA

NGES

CITRUS

(continuedfro

mprevious

page)

TANGELOS

TANGERINE

TREES

CLAM

SCO

FFEE

(P)40-3

Navel

90-3

(P)47-4Q

E,(P)90-9Q

E

Sweet&

Valencia

90-3

(P)90-10QE

Trees

(P)40-28CV

(P)40-3

Minneola

90-3

(P)90-7Q

E

Orlando

90-3

(P)90-2Q

E

(P)43-4

(P)43-5

(P)43-2

(P)43-2

Coffee

(P)90

40-3

90-3

(P)90-8Q

E

Early,M

idseason

&Late

90-3

(P)40-1

Tree

(P)40CV

CROP INSURANCE TODAY 41

STATE

Alabam

aAlaska

Arizona

Arkansas

California

Colorado

Connecticut

Delaw

are

Florida

Georgia

Haw

aii

Idaho

Illinois

Indiana

Iowa

Kansas

Kentucky

Louisiana

Maine

Maryland

Massachusetts

Michigan

Minnesota

Mississippi

Missouri

Montana

Nebraska

Nevada

New

Ham

pshire

New

Jersey

New

Mexico

New

York

NorthCarolina

NorthDakota

Ohio

Oklahoma

Oregon

Pennsylvania

RhodeIsland

SouthCarolina

SouthDakota

Tennessee

Texas

Utah

Vermont

Virginia

Washington

WestVirginia

Wisconsin

Wyoming

CORN

COTTON

CRAN

BERRIES

FIGS

FLAX

FORA

GE

Corn

01-64,02-64,03-64

01-4,02-4,03-4

01-46,02-46,03-46

01-19,02-19,03-19

01-26,02-26,03-26

01,02,03

01,02,03

01-28,02-28,03-28

01-140,02-140,03-140

01-19,02-19,03-19

01,02,03,04-95,05-95,06-95

01,02,03,04-84,05-84,06-84

01,02,03,04,05,06

01,02,03

01-104,02-104,03-104,04-34,05-34,06-34

01-35,02-35,03-35

01,02,03

01-23,02-23,03-23

01-12,02-12,03-12

01-76,02-76,03-76,04-38,05-38,06-38

01-86,02-86,03-86,04-60,05-60,06-60

01-74,02-74,03-74

01-102,02-102,03-102,04-62,05-62,06-62

01-24,02-24,03-24

01-91,02-91,03-91,04-41,05-41,06-41

01,02,03

01-16,02-16,03-16

01-20,02-20,03-20

01-52,02-52,03-52

01,02,03

(P)01PY,(P)02PY,(P)03PY

01,02,03,04-65,05-65,06-65

01-61,02-61,03-61

01-18,02-18,03-18

01-66,02-66,03-66

01,02,03

01,02,03

01,02,03,04-27,05-27,06-27

01-88,02-88,03-88,04-6,05-6,06-6

01-141,02-141,03-141

01-18,02-18,03-18

01,02,03

01-97,02-97,03-97

01-27,02-27,03-27

01,02,03

01,02,03,04-58,05-58,06-58

01-11,02-11,03-11

Sweet

90 90-12

90-10

90-11

90-5

90-38

90-11

90-12

90-12

90-13

90-40

Cotton

01-63,02-63,03-63

01-9,02-9,03-9

01-25,02-25,03-25,04-4,05-4,06-4

01-12,02-12,03-12

01-25,02-25,03-25

01-100,02-100,03-100,-04-12,05-12,06-12

01-27,02-27,03-27

01-23,02-23,03-23,04-5,05-5,06-5

01-62,02-62,03-62,04-4,05-4,06-4

01-7,02-7,03-7,04-4,05-4,06-4

01-11,02-11,03-11

01-58,02-58,03-58,04-6,05-6,06-6

01-38,02-38,03-38

01-42,02-42,03-42

01-24,02-24,03-24,04-5,05-5,06-5

01-173,02-173,03-173,04-30,05-30,06-30

01-15,02-15,03-15

ExtraLong

Staple

90-7

90-5

90-3

90-16

90-4

90-3

90-26

90-4

(P)90PY

90

Production

90-5

90-6

90-25

90-2

04-2,90-2

90-86

90-2

90-10

90-22

04-39,90-86

90 90-9 90 90-1

90-16

90-8 90 90-2

04-28,90-66

90 90-17

04-62,90

90

90-6

90-2

90-2

90-3

90-2

90-15

FreshMarket

50-1

50-4 50 50-11

50-3 50 50-9

50-11

50 50-16

50-54

50-66

50 50 50-2

Hybird

Seed

55-47

55-39

55-64

55-8

55-10

55-5

55-35

55-6

55-1

55-4

55-11

Seeding

50-9

50-86

50-2

50-10

50-8

50-86

50 50-8

50-4

50-1

50-16

50-8 50 50-66

50 50-17

50-1 50 50

42 FEBRUARY 2012

STATE

Alabam

aAlaska

Arizona

Arkansas

California

Colorado

Connecticut

Delaw

are

Florida

Georgia

Haw

aii

Idaho

Illinois

Indiana

Iowa

Kansas

Kentucky

Louisiana

Maine

Maryland

Massachusetts

Michigan

Minnesota

Mississippi

Missouri

Montana

Nebraska

Nevada

New

Ham

pshire

New

Jersey

New

Mexico

New

York

NorthCarolina

NorthDakota

Ohio

Oklahoma

Oregon

Pennsylvania

RhodeIsland

SouthCarolina

SouthDakota

Tennessee

Texas

Utah

Vermont

Virginia

Washington

WestVirginia

Wisconsin

Wyoming

GRA

PES

GRA

SSSEED

CATTLE

LIVESTOCK

SWINE

LAMB

MAC

ADAM

IANUT

S/TREES

MINT

NUR

SERY

MUS

TARD

MILLET

OATS

OLIVES

ONIONS

PAPAYA

Grapes

90-2

90-31

90-1

90-6

90-4

90-2

90-1

90-12

90-1

90-3

90-15

90-1

90-8

90-18

TableGrapes

90-9

Feeder

81 81 81 81 81 81 81 81 81 81 81 81 81 81 81 81 81 81 81 81 81 81 81 81 81 81 81 81 81 81 81 81 81 81 81 81 81

81 81 81 81 81 81 81 81 81 81 81 81 81 81 81 81 81 81 81 81 81 81 81 81 81 81 81 81

81,82

81,82

81,82

81,82

81,82

82 82 81,82

81,82

81,82

81,82

81,82

81,82

81,82

81,82

81,82

82 82 82 81,82

81,82

81,82

81,82

81,82

81,82

81,82

82 82 81,82

82 81,82

81,82

81,82

81,82

81,82

82 82 81,82

81,82

81,82

81,82

81,82

82 81,82

81,82

81,82

81,82

81,82

50-3,90-3

90-15

90-10

90-13

(P)90-2PY

90-26

90-2

90-4

90-5

90-2

90-10

90-6

90-4

90-21

90-1

90-13

90-19

90-15

90-11

90-81

90-41

90-29

90-4 90 90-92

90-10

90 90-6

90-66

90-86

90-1

90-15

90-52

90-82

90-2

90-4

90-46

90-82

(P)90PY

90-37

90-51

90-25

90-66

90-37

90 90-1

90-114

90-14

90-13

90-24

90-27

90 90-17

90-12

90-2

90-9

90-14

90-4

90-2

90-15

90-3

90-3

(P)90-12NS

90-6

90-14

90-3

90-6

Papaya

(P)90

Tree

(P)40CV

90-13

90-6

(P)90-18PY

90-1

90-7

(P)50PO

50-5

50-7

(P)50PO

50-44

50(P)50PO

50(P)50PO

(P)50PO

50 50 50-45

5016 50 50

(P)50PO

(P)50PO

50(P)50PO

(P)50PO

50-31

50(P)50PO

50 50 50 50-5 50

(P)50PO

50(P)50PO

(P)50PO

50 50-40

50(P)50PO

(P)50PO

50(P)50PO

50(P)50PO

50 50-10

50(P)50-102PO

(P)50PO

50 50 50

Cattle

82 82 82 82 82 82 82 82 82 82 82 82 82 82 82 82 82 82 82 82

Dairy

82 82 82 82 82 82 82 82 82 82 82 82 82 82 82 82 82 82 82 82 82 82 82 82 82 82 82 82 82 82 82 82 82 82 82 82 82 82 82 82 82 82 82 82 82 82 82 82

(P)90-4

(P)90-2

Fed

81 81 81 81 81 81 81 81 81 81 81 81 81 81 81 81 81 81 81 81 81 81 81 81 81 81 81 81 81 81 81 81 81 81 81 81 81

CROP INSURANCE TODAY 43

STATE

Alabam

aAlaska

Arizona

Arkansas

California

Colorado

Connecticut

Delaw

are

Florida

Georgia

Haw

aii

Idaho

Illinois

Indiana

Iowa

Kansas

Kentucky

Louisiana

Maine

Maryland

Massachusetts

Michigan

Minnesota

Mississippi

Missouri

Montana

Nebraska

Nevada

New

Ham

pshire

New

Jersey

New

Mexico

New

York

NorthCarolina

NorthDakota

Ohio

Oklahoma

Oregon

Pennsylvania

RhodeIsland

SouthCarolina

SouthDakota

Tennessee

Texas

Utah

Vermont

Virginia

Washington

WestVirginia

Wisconsin

Wyoming

PASTUR

ERA

NGELAN

DFO

RAGE

PEAC

HES

PEAN

UTS

PEAR

SPEAS

PECA

NS

PEPPERS

PISTAC

HIOS

PLUM

SPO

PCORN

POTATO

ES

(P)13

(P)14

(P)13

(P)13

(P)13-48,(P)14-15

(P)13

(P)13

(P)14

(P)13

(P)13-23

(P)13

(P)13-114

(P)13

(P)14

(P)14

(P)14

(P)13

(P)13

(P)13

(P)13

(P)14

(P)13

(P)13

(P)14

(P)13

(P)14

(P)13-98

(P)13

(P)14

90-32

90-2

90-24

90-77

90-1

90-18

90-3

90-28

90-38

90-27

90-85

90-10

90-9

90-7

90-1

90-12

Dry

90-18

90-1

90-27

(P)90PY

90-3

90-27

90-11

Green

90 90-20

90-8

90-4

90-1

90-7

90-1

90-34

90-17

90-3

90-10

90-16

90-42

(P)90-2H

F

(P)90-21HF

(P)90-1H

F

90-10

90-4

90-5

90-4

01-1,02-1,03-1

01-5,02-5,03-5

01-16,02-16,03-16

01-46,02-46,03-46

01-39,02-39,03-39

01-4,02-4,03-4

01-3,02-3,03-3

01-2,02-2,03-2

01-17,02-17,03-17

01-61,02-61,03-61

01-22,02-22,03-22

01-5,02-5,03-5

90-3

90-3

90-2

90-5

90-9

90-1

90-2

90-11

90-26

90-1

90-3

90-4

90-5

90-3

90-2

90-33

90-28

90-2

90-8

90-12

90-1

90-6

90-5

90-15

90-10

90-25

90-1

90-3

90-14

90-13

90-2

90-5

90-20

90-2

90-13

90-17

90-2

41-24

41-5

41-1

41-83

41-2

41-6

41-6

41-16

50-13

Peaches

90-7

90-15

90-3

90-2

90-16

90-4

90-2

90-5

90-7

90-4

90-9

90-12

90-2

90-1

90-8

90-6

90-22

90-4

90-30

90-1

90-14

90-10

90-21

90-1

90-20

90-6

FreshFreestone

90-8

90-4

90-5

90-1

90-7

ProcessingCling

90-10

Processing

Freestone

90-8

44 FEBRUARY 2012

STATE

Alabam

aAlaska

Arizona

Arkansas

California

Colorado

Connecticut

Delaw

are

Florida

Georgia

Haw

aii

Idaho

Illinois

Indiana

Iowa

Kansas

Kentucky

Louisiana

Maine

Maryland

Massachusetts

Michigan

Minnesota

Mississippi

Missouri

Montana

Nebraska

Nevada

New

Ham

pshire

New

Jersey

New

Mexico

New

York

NorthCarolina

NorthDakota

Ohio

Oklahoma

Oregon

Pennsylvania

RhodeIsland

SouthCarolina

SouthDakota

Tennessee

Texas

Utah

Vermont

Virginia

Washington

WestVirginia

Wisconsin

Wyoming

PRUN

ESPU

MPK

INS

RAISINS

RICE

RYE

SAFFLO

WER

SESA

ME

SORG

HUM

SOYBEA

NS

90-14

90-11

90-3

(P)90-21PY

90-6

90-3

90-13

90-2

90-14

90-10

90-23

(P)90-21PY

90-10

90-5

(P)90-11

(P)90-18

GrainSorghum

01-37,02-37,03-37

01-2,02-2,03-2

01-37,02-37,03-37

01-5,02-5,03-5

01-18,02-18,03-18

01-2,02-2,03-2

01-5,02-5,03-5

01-82,02-82,03-82

01-46,02-46,03-46

01-10,02-10,03-10

01-21,02-21,03-21

01,02,03,04-27,05-27,06-27

01-16,02-16,03-16

01-25,02-25,03-25

01-13,02-13,03-13

01-30,02-30,03-30

01-92,02-92,03-92

01-74,02-74,03-74

01-2,02-2,03-2

01-10,02-10,03-10

01-17,02-17,03-17

01-81,02-81,03-81

(P)01-1PY,(P)02-1PY,(P)03-1PY

01-1,02-1,03-1

01-71,02-71,03-71

01-57,02-57,03-57

01-22,02-22,03-22

01-59,02-59,03-59

01-25,02-25,03-25

01-202,02-202,03-202,04-18,05-18,06-18

01-79,02-79,03-79

01-1,02-1,03-1

01-58,02-58,03-58

01-47,02-47,03-47

01-7,02-7,03-7

01,02,03

01-20,02-20,03-20

01-124,02-124,03-124

01,02,03,04-97,05-97,06-97

01,02,03,04-85,05-85,06-85

01,02,03,04,05,06

01,02,03

01-81,02-81,03-81,04-25,05-25,06-25

01-46,02-46,03-46

01-22,02-22,03-22

01-58,02-58,03-58,04-36,05-36,06-36

01-84,02-84,03-84,04-56,05-56,06-56

01-74,02-74,03-74

01-92,02-92,03-92,04-73,05-73,06-73

01-79,02-79,03-79,04-41,05-41,06-41

01-14,02-14,03-14

01-38,02-38,03-38

01-89,02-89,03-89,04-27,05-27,06-27

(P)01-37PY,(P)02-37PY,(P)03-37PY

01-85,02-85,03-85,04-57,05-57,06-57

01-63,02-63,03-63

01-1,02-1,03-1

01-51,02-51,03-51

01,02,03,04-10,05-10,06-10

01-48,02-48,03-48,04-20,05-20,06-20

01-76,02-76,03-76,04-13,05-13,06-13

01-82,02-82,03-82

01-3,02-3,03-3

01-86,02-86,03-86

01-1,02-1,03-1

01-10,02-10,03-10

01-63,02-63,03-63,04-45,05-45,06-45

Hybrid

SorghumSeed

55-2

55-2

55-19

Silage

(P)90-2

(P)90-37

50-7

Rice

01-37,02-37,03-37

01-13,02-13,03-13

01-3,02-3,03-3

01-2,02-2,03-2

01-30,02-30,03-30

01-17,02-17,03-17

01-7,02-7,03-7

01-1,02-1,03-1

01-1,02-1,03-1

01-23,02-23,03-23

Cultivated

Wild

Rice

90-5

90-6

CROP INSURANCE TODAY 45

STATE

Alabam

aAlaska

Arizona

Arkansas

California

Colorado

Connecticut

Delaw

are

Florida

Georgia

Haw

aii

Idaho

Illinois

Indiana

Iowa

Kansas

Kentucky

Louisiana

Maine

Maryland

Massachusetts

Michigan

Minnesota

Mississippi

Missouri

Montana

Nebraska

Nevada

New

Ham

pshire

New

Jersey

New

Mexico

New

York

NorthCarolina

NorthDakota

Ohio

Oklahoma

Oregon

Pennsylvania

RhodeIsland

SouthCarolina

SouthDakota

Tennessee

Texas

Utah

Vermont

Virginia

Washington

WestVirginia

Wisconsin

Wyoming

STRA

W-

BERRIES

SUGAR

BEETS

SUGAR

CANE

SUNFLOWERS

SWEET

POTATO

ES

TOBA

CCO

TOMATOES

WALNUT

SWHE

AT

(P)47-6

90-8

(P)90-10NS

(P)90-16NS

(P)90-16NS

(P)90-33NS

(P)90-12NS

(P)90-14NS

(P)90-9N

S

(P)90-2N

S

(P)90-5N

S

(P)90-7N

S

Burley

90-17

90-108

90-5

90-25

90-11

90-57

90-23

90-7

Cigar

Binder

90-2

90-3

90-11

Cigar

Filler

90-3

Cigar

Wrapper

90-2

90-3

DarkAir&

FireCured

90-22

90-9

90-19

Flue

Cured

90-8

90-37

90-63

90-13

90-25

Maryland

90-5

90-1

Tomatoes

90-17

90-2

90-11

90-7

90-2

90-5

90-6

90-11

90-16

90-1

90-26

01-59,02-59,03-59

01-2,02-2,03-2

01-11,02-11,03-11

01-45,02-45,03-45,04-18,05-18,06-18

01-35,02-35,3-35

01-40,02-40,03-40,04-13,05-13,06-13

01,02,03

01-20,02-20,03-20

01-128,02-128,03-128

01-42,02-42,03-42

01,02,03,04-29,05-29,06-29

01-91,02-91,03-91,04-5,05-5,06-5

01-51,02-51,03-51

01,02,03,04-88,05-88,06-88

01-67,02-67,03-67,04-5,05-5,06-5

01-36,02-36,03-36

01,02,03

01-23,02-23,03-23,04-4,05-4,06-4

01-65,02-65,03-65,04-16,05-16,06-16

01-83,02-83,03-83,04-20,05-20,06-20

01-64,02-64,03-64,04-4,05-4,06-4

01-96,02-96,03-96,04-35,05-35,06-35

01-54,02-54,03-54,04-28,05-28,06-28

01-83,02-83,03-83,04-29,05-29,06-29

01-12,02-12,03-12

01-10,02-10,03-10

01-15,02-15,03-15

01-27,02-27,03-27

01-82,02-82,03-82,04-8,05-8,06-8

(P)01PY,(P)02PY,(P)03PY,04-49,05-49,06-49

01-76,02-76,03-76,04-28,05-28,06-28

01,02,03,04-20,05-20,06-20

01-30,02-30,03-30

01-57,02-57,03-57

01-45,02-45,03-45

01,02,03,04-34,05-34,06-34

01-65,02-65,03-65,04-4,05-4,06-4

01-206,02-206,03-206,04-50,05-50,06-50

01-23,02-23,03-23

01-2,02-2,03-2

01-78,02-78,03-78

01-29,02-29,03-29

01-21,02-21,03-21

01-54,02-54,03-54

01-16,02-16,03-16

Fresh

Market

90-2

90-5

90-7

50-16,90-4

90-5

90-4

90-4

90-3

90-7

90-2

01-17,02-17,03-17

01-70,02-70,03-70

01-34,02-34,03-34

01-13,02-13,03-13

01-30,02-30,03-30

(P)01PY,(P)02PY,(P)03PY

01-2,02-2,03-2

01-52,02-52,03-52

01-29,02-29,03-29

01-2,02-2,03-2

90-4

04-21,90-24

90-3

90-9

46 FEBRUARY 2012

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ICES

At Great American, we know it’s not enough to just access policy data from the field. We’re in touch with what agents really need: the ability to actually conduct business on-site, from start to finish. With our iPAD® app, our agents can write, sign and submit forms right where they’re standing — even if that’s in the middle of the soybeans.

Touch-screen technology in the field. One more way Great American puts its strength and expertise right where it counts: in your hands and at your fingertips.

Great American’s iPAD application draws data from our popular GreatAg policy administration system.

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