On Overview of AGR-Lite

On Overview of AGR-LiteOn Overview of AGR-Lite

Dr. Laurence M. CraneNational Crop Insurance Services

Dr. Laurence M. CraneNational Crop Insurance Services

Funding was provided to National Crop Insurance Services (NCIS) through a competitively awarded Cooperative Agreement from the

USDA Risk Management Agency.

What and where is AGR-Lite?

What and where is AGR-Lite?

• A whole farm gross revenue insurance that:o Covers crop commodities, animals,

and animal products.o Protects against a loss of production,

quality and market price.o Note: Most USDA government

payments are excluded.

• A whole farm gross revenue insurance that:o Covers crop commodities, animals,

and animal products.o Protects against a loss of production,

quality and market price.o Note: Most USDA government

payments are excluded.

How does AGR-Lite work?

How does AGR-Lite work?

• AGR-Lite provides an individualized revenue guarantee based on the producer’s 5-year farm average revenue from 1040 Schedule F (or similar forms) and the Annual Farm Report for the current year.

• AGR-Lite provides an individualized revenue guarantee based on the producer’s 5-year farm average revenue from 1040 Schedule F (or similar forms) and the Annual Farm Report for the current year.

Why might I need AGR-Lite?


• Is a stand alone policy• Can be used as umbrella over selected

individual crop coverages• Works for producers of organic, high

value varieties, dairy, aquaculture and livestock.

• Recognizes local market prices that may be higher than national prices.

• Covers nursery, greenhouse, milk, wool, honey, aquaculture, etc.

• Protects against low prices.

• Is a stand alone policy• Can be used as umbrella over selected

individual crop coverages• Works for producers of organic, high

value varieties, dairy, aquaculture and livestock.

• Recognizes local market prices that may be higher than national prices.

• Covers nursery, greenhouse, milk, wool, honey, aquaculture, etc.

• Protects against low prices.



• Protects direct marketed production at realistic prices.

• It gives individual protection based on your yield, quality and price history.

• Low yields and poor quality are adjusted based on the market value.

• Covers otherwise uninsurable crops.• Record keeping is simple.• Premium is usually lower than other

insurance plans; premium discounts result when used along with MPCI.

• Protects direct marketed production at realistic prices.

• It gives individual protection based on your yield, quality and price history.

• Low yields and poor quality are adjusted based on the market value.

• Covers otherwise uninsurable crops.• Record keeping is simple.• Premium is usually lower than other

insurance plans; premium discounts result when used along with MPCI.

What is covered by AGR-Lite?

What is covered by AGR-Lite?

• Natural disasters including unavoidable damage from insects, disease, wildlife

• Failure of irrigation water supply, fire, earthquake, volcanic eruption

• Market fluctuation

Do I qualify for AGR-Lite? Do I qualify for AGR-Lite?

1. I am a U.S. citizen or a legal resident. 2. I file a calendar year or fiscal year tax

return which includes agricultural commodities.

3. I have IRS tax forms for the previous 5 years that were filed for the same entity.

4. The adjusted gross income for my operation for the current year is projected at less than $2,051,282.

5. No more than 50% of my total revenue comes from commodities purchased for resale as shown on the Annual Farm Report.

6. No more than 83.35% of my total revenue comes from potatoes.

Does AGR-Lite fit my operation?

Does AGR-Lite fit my operation?

• Have no more than $2,051,282 in approved gross income;

• Farm crops or animals or both;• Are looking for a viable individualized revenue

protection option as part of a risk management plan;

• Need crop insurance to help secure a loan; • Guarantee a fixed amount of guaranteed

income; • Farm crops not insured by traditional crop

insurance products; and/or,• Produce high value crops and desire

protection based on such values.

• Have no more than $2,051,282 in approved gross income;

• Farm crops or animals or both;• Are looking for a viable individualized revenue

protection option as part of a risk management plan;

• Need crop insurance to help secure a loan; • Guarantee a fixed amount of guaranteed

income; • Farm crops not insured by traditional crop

insurance products; and/or,• Produce high value crops and desire

protection based on such values.

How does the number of crops grown affect my coverage and cost?

How does the number of crops grown affect my coverage and cost?

More crops = lower premium rates

• Premium rates are linked to the number of commodities that you produce on your farm.

• The more diversified your farm, the more the liability is dispersed over the different commodities that you produce.

• Therefore, diversified farming operations have lower risk and therefore lower premium.

More crops = lower premium rates

• Premium rates are linked to the number of commodities that you produce on your farm.

• The more diversified your farm, the more the liability is dispersed over the different commodities that you produce.

• Therefore, diversified farming operations have lower risk and therefore lower premium.

What if one or more of my crops are insurable with regular crop insurance?

What if one or more of my crops are insurable with regular crop insurance?• You may choose to insure your crops under one or

both types of coverage.

For example, if insured under MPCI and AGR-Lite: – The AGR-Lite premium will be reduced to

eliminate paying premiums twice for overlapping protection.

– Income generated from MPCI is considered revenue to count for AGR-Lite.

– You may not have both AGR and AGR-Lite coverage.

• You may choose to insure your crops under one or both types of coverage.

For example, if insured under MPCI and AGR-Lite: – The AGR-Lite premium will be reduced to

eliminate paying premiums twice for overlapping protection.

– Income generated from MPCI is considered revenue to count for AGR-Lite.

– You may not have both AGR and AGR-Lite coverage.

What coverage level is right for me?

What coverage level is right for me?

• Ask yourself:– For what coverage levels do you

qualify?

– How much can you afford to lose?

– What makes best financial sense?

• Ask yourself:– For what coverage levels do you

qualify?

– How much can you afford to lose?

– What makes best financial sense?

What part of my income is allowed by AGR-Lite?

What part of my income is allowed by AGR-Lite?

• Income that is allowed by AGR-Lite is found on the Schedule F form. (Lines 3, 4, 5b, 7a, 7c, and 10)

• Income that is allowed by AGR-Lite is found on the Schedule F form. (Lines 3, 4, 5b, 7a, 7c, and 10)

How do I calculate my approved Adjusted Gross Revenue?


• To estimate your allowable income, refer to Schedule F of your Federal income tax records. Your allowable income for the year is equal to the sum of the qualifying amounts found on lines 3, 4, 5b, 7a, 7c, and 10 of the Schedule F form.

• To estimate your allowable income, refer to Schedule F of your Federal income tax records. Your allowable income for the year is equal to the sum of the qualifying amounts found on lines 3, 4, 5b, 7a, 7c, and 10 of the Schedule F form.



Calculate the allowable income for each year in your five-year history. For the 2008 insurance year, use your Schedule F forms from the insurance years 2002 through 2006.

Calculate the allowable income for each year in your five-year history. For the 2008 insurance year, use your Schedule F forms from the insurance years 2002 through 2006.

Schedule F 2002 2003 2004 2005 2006

Line 3

Line 4

Line 5b

Line 7a

Line 7c

Line 10 + + + + +

Total $ - $ - $ - $ - $ -


How do I calculate my approved Adjusted Gross Revenue?AGR-Lite uses a producer’s 5-year historical farm

average revenue reported on the IRS 1040 Schedule F and an Annual Farm Report as a basis to provide a level of guaranteed revenue for the insurance period.

AGR-Lite uses a producer’s 5-year historical farm average revenue reported on the IRS 1040 Schedule F and an Annual Farm Report as a basis to provide a level of guaranteed revenue for the insurance period.

.


How do I calculate my approved Adjusted Gross Revenue?AGR-Lite uses a producer’s 5-year historical farm

average revenue reported on the IRS 1040 Schedule F and an Annual Farm Report as a basis to provide a level of guaranteed revenue for the insurance period.

AGR-Lite uses a producer’s 5-year historical farm average revenue reported on the IRS 1040 Schedule F and an Annual Farm Report as a basis to provide a level of guaranteed revenue for the insurance period.

.

How much will it cost me?How much will it cost me?

• Premium is subsidized by the government:– 48% subsidy at the 80% level.– 55% subsidy at the 75% level.– 59% subsidy at the 65% level.

• Visit RMA’s premium calculation web page at www.rma.usda.gov

• Premium is subsidized by the government:– 48% subsidy at the 80% level.– 55% subsidy at the 75% level.– 59% subsidy at the 65% level.

• Visit RMA’s premium calculation web page at www.rma.usda.gov

How do I get coverage and who can help me?

How do I get coverage and who can help me?

• Visit a crop insurance agent.• Discuss coverage options with

and get help from an agent.• Complete and submit an

application to an agent.

• Visit a crop insurance agent.• Discuss coverage options with

and get help from an agent.• Complete and submit an

application to an agent.

What should I take with me when I meet with a crop insurance agent?

What should I take with me when I meet with a crop insurance agent?

• IRS 1040 Schedule F forms, schedule C or other tax forms that reflect sales and expenses for agricultural commodities for the previous 5 years.

• Proposed plan of operation for the upcoming insurance year.

• If you choose 75% or 80% coverage, a commodity profile report for previous 2 years.

• If applicable, beginning inventories, accounts receivable, or prepaid purchases.

• IRS 1040 Schedule F forms, schedule C or other tax forms that reflect sales and expenses for agricultural commodities for the previous 5 years.

• Proposed plan of operation for the upcoming insurance year.

• If you choose 75% or 80% coverage, a commodity profile report for previous 2 years.

• If applicable, beginning inventories, accounts receivable, or prepaid purchases.

Finding An AgentFinding An Agent

• Ask other growers for recommendation.• Check with insurance agency where you

purchase other types of insurance.• Go to Crop Insurance Company Websites• Check with farm organizations you have a

relationship with.• Use the USDA Risk Management Agency’s

Web site’s “Agent Locator.”

www.rma.usda.gov

• Ask other growers for recommendation.• Check with insurance agency where you

purchase other types of insurance.• Go to Crop Insurance Company Websites• Check with farm organizations you have a

relationship with.• Use the USDA Risk Management Agency’s

Web site’s “Agent Locator.”

www.rma.usda.gov

Crop Insurance ProvidersIn Rhode Island in 2008Crop Insurance ProvidersIn Rhode Island in 2008

1. ARMtech Insurance Services800-335-0120

www.armt.com

2. Rain and Hail L.L.C.800-776-4045

www.rainhail.com

3. Rural Community Insurance Services800-451-3836www.rcis.com

1. ARMtech Insurance Services800-335-0120

www.armt.com

2. Rain and Hail L.L.C.800-776-4045

www.rainhail.com

3. Rural Community Insurance Services800-451-3836www.rcis.com

Crops Insurable in Rhode IslandCrops Insurable in Rhode Island

COUNTY

ADJUSTED GROSS

REVENUE*

APPLES

CORN

CRANBERRIES NURSERY PEACHES POTATOES AGR AGR-

Lite Corn Fresh Market

Bristol (P)63 61 90,44 50 50

Kent (P)63 61 86 90,44 50 90 50

Newport (P)63 61 86 90,44 50 90 50 90

Providence (P)63 61 86 90,44 50 90 50 86

Washington (P)63 61 86 90,44 50 50 90

90 (APH) Actual Production History44 (CRC) Crop Revenue Coverage50 (DO) Dollar Amount of Insurance86 (GYC) Grower Yield Certification61 (AGR-L) Adjusted Gross Revenue Light63 (AGR) Adjusted Gross Revenue (P) Pilot program

*AGR is a plan of insurance and not a crop. Under AGR many crops (including livestock) are insurable that are not insurable under any other plan of insurance.

Documents

On Overview of AGR-Lite