Agroinsurance

Africa - How Banks Can Help Turn Around Agriculture

Zimbabwe is an agricultural-based economy and hence support to the sector is of paramount importance. The current scenario of illiquidity affecting agricultural financing can be resolved if there is concerted effort among various stakeholders (Government, farmers, input suppliers, banks, insurance companies, etc) through frank discussions and proper planning.Instead of importing maize and wheat, we can be the net exporters of the two crops, hence generating foreign currency for the country.We have had various initiatives supportive of the agriculture sector and one aspect that is evident is that these initiatives have been unco-ordinated, hence failing to give a clear picture of the real situation on the ground.This is despite the fact that these various initiatives are important for the development of the sector.As a starting point, there is need for the Government, banks and farming organisations to ensure that in June/July of each year, plans for the next agricultural season are in place and avoid the last-minute rush looking for resources. This would ensure the availability of realistic estimates and assessment of financing available from governments, donors and the private sector within short-, medium- and long-term time frames.In the 2013/2014 agricultural season, banks have set aside US$620 million to support the sector.This amount is 20 percent of total deposits estimated at about US$3,7 billion. This was a significant increase from the US$549 million that banks pledged last year.The banks support to ancillary sectors such as fertiliser and seed producers and various agricultural marketing organisations is a good move given that the success of the agricultural financing is in the provision of lifeblood in the whole value chain.Though this is significant amount, the worrisome thing is the dominance of tobacco financing because of the order in the sector and competitiveness of the crop.The continuous support by the banking sector is contingent on the ability of banks to mobilise resources domestically and offshore for lending to productive sectors of the economy including agriculture.A culture of saving, therefore, has to be encouraged if agriculture is to be fully funded by banks and the farmers themselves should be the first to make deposits with the banks.The farmers instead of only being capacity developed in the technical aspects of farming should be endowed with the skills of financial management so as to be able to understand farming as a business rather than a hobby. The Government support to agriculture though the fiscus is also important. There is need for the National Budget to adhere to the international and regional commitments, specifically the Maputo Declaration.At the Second Ordinary Assembly of the African Union in July 2003 in Maputo, African Heads of State and Government endorsed the "Maputo Declaration on Agriculture and Food Security in Africa".The declaration contained several important decisions regarding agriculture, but prominent among them was the "commitment to the allocation of at least 10 percent of national budgetary resources to agriculture and rural development policy implementation within five years".If the Government is to commit approximately 10 percent of the estimated US4,4 billion of the 2014 Budget, this would go a long way in complementing the banking sector resources.Supportive of these actions, there is urgent need for the country to develop "bank friendly" legislation which will both boost agricultural productivity and financing.Legislation required should ensure:Enforcing the repayment of loans and advances availed to the farmers by the financial system and other financiers.An effective stop order system to ensure creditors are paid upfront when the farmers are paid and any loophole around side marketing are eliminatedCreation of agricultural revolving loan and savings fund to address various challenges that face agriculture. This would act as a buffer for the farmers where they can borrow if they cannot get assistance from the banks or the Government.The banks could be the custodian of the funds though managed through a committee system.Strengthening the marketing structures of the agricultural sector.This would ensure that there is a well-functioning pricing framework for the agricultural commodities.More importantly would be the need for the determination of producer prices before the farming season begins so that decisions are made whether to venture into those products or notStrengthening the agricultural value chain so that financial and technical support assists all agents involved in agricultural production.Also associated with this is the need to strengthen agro-dealer networks throughout the countryStrengthening the security of tenure on agricultural land so that the component of bankability of leases is resolved and all title holders can easily approach financial institutions for assistance.In line with the Zim Asset there is need to fast track the Warehouse Receipt Act and Warehouse Receipt System to be operationalised to ensure that the farmers are able to use the receipts for securing the loans from the banks.Source - http://allafrica.com/

USA - Disease-resistant peas developed

New garden- and dry-pea breeding lines developed by U.S. Department of Agriculture (USDA) scientists and their collaborators may offer growers added insurance against Aphanomyces root rot, a disease that can cause crop yield losses of 20 to 100 percent.The mold-like pathogen that causes the disease, Aphanomyces euteiches, infects the roots and underground stems of susceptible pea plants and other legumes, rotting them and causing stunted growth, lesions, wilted leaves and other symptoms. Fungicides are not an option, so growers must either avoid planting in fields with a history of the disease or switch to growing non-host crops until pathogen numbers drop to acceptable levels.However, avoidance and crop rotation may not always be economically feasible. Furthermore, breeding peas for resistance to Aphanomyces has proven difficult because multiple genes are involved, according to Rebecca McGee, a plant geneticist with USDA's Agricultural Research Service (ARS), USDA's principal intramural scientific research agency.The resistance genes also are associated with undesirable traits, which cultivated varieties can inherit when crossed with wild germplasm sources, adds McGee, at the ARS Grain Legume Genetics Physiology Research Unit in Pullman, Wash.As an alternative, McGee, ARS geneticist Clare Coyne and other colleagues sought to develop pea germplasm lines that naturally tolerate the pathogen, but do not suffer the same ill effects as susceptible plants, particularly not significant yield losses. Coyne is with the ARS Plant Germplasm Introduction and Testing Research Unit, also in Pullman.The pea lines are descendants of an inbred population of plants derived from an ARS cross made in 1993 between the cultivar Dark Skin Perfection and germplasm line 90-2131. Besides their tolerance of Aphanomyces root rot, the lines were chosen for their acceptable agronomic characteristics.Incorporating the tolerance trait into elite varieties could prove especially beneficial to growers in Pacific Northwest and North Central states, where Aphanomyces outbreaks threaten the valued role that peas and other legumes play in cereal-based crop rotation systems.Source - http://www.agriview.com/

South America's weather eyed

Corn harvest is nearing completion, with most of the U.S. ahead of average pace on corn harvest as well as most other crops.Corn harvest is now 95% complete vs. 91% normally, with sorghum 97% harvested vs. 91% normally, and sunflowers 80% harvested vs. 93% normally. Most crops will not have another report issued as they are over 95% harvested now, with the final report yesterday for the year. Cotton is 78% harvested vs. 83% normally. So, the harvest is going well for most all U.S. crops.The winter wheat crop is also in much better condition than last year, as the nearly normal 2013 year has replaced the drought year of 2012, and winter wheat therefore is getting a good start in the 2013 fall. Winter wheat is 93% emerged vs. 89% average, with ratings 62% G/E vs. 63% last week.So, winter wheat is in much better condition than last year at this time (only 33% G/E). We have a pretty good start to the winter wheat crop in 2013/14.Attention is turning toward South American (SAM) weather, as the growing season in SAM will determine the crop size there. More soybeans are likely to be planted on more acres this year, as the soybean/corn price ratio approaches all time record-high levels (nearly 3.10). That is attracting acreage away from corn and toward soybeans, as the ratio is much higher than the typical ratio of 2.30; with the typical range of 2.0 to 2.6, the ratio higher than 3.0 is extreme in attracting acreage away from corn and toward soybeans. Even projections for U.S. acreage next spring call for much higher soybean acreage and much lower corn acreage, responding to the extreme price ratio that we are now seeing.So far, weather in SAM remains uneventful, with fairly widespread precip amounts covering most of both Argentina and Brazil. Temperatures are mostly normal to below-normal, leaving little stress to the just planted crop in most areas (or to the crop just being planted). Overall, it looks like a good start to the 2013/14 SAM growing season.Demand for soybeans remains strong, with China continuing to purchase soybeans from the U.S. at a torrid pace. They also are buying corn, with the price attractive for importing corn from the U.S. as well. But the U.S. has ample supplies of corn, as opposed to the relatively tight supplies of soybeans. And so we see the extreme price ratio between corn and soybeans in current months.The question is, how long can this extreme ratio exist before we get the type of acreage shifts necessary to correct it back to its normal range?Pro Ag remains bearish, but less so in corn as we've taken off 75% of hedges at $4.25 Dec, $4.26 Dec, and $4.11 Dec (25% each) taking from $2.11 to $2.37 profits in these hedges (huge profits). Final Pro Ag downside price targets had been $4.25 Dec corn (which was hit repeatedly the past month), $11-$11.10 Jan. soybeans, and $6 CBOT wheat. With continued weakness in corn, let's take off another 25% of hedges at $4.01 Dec corn or better. Source - http://www.agriculture.com/

Diversify Our Risk

I don’t have the stomach for risk like some. Being the sixth generation, the thought of having the farm go down on my watch is always present in my mind.I try to know the cost of production, whether it’s growing a ton of corn silage or producing 100 lb. of milk. Then we do our best to make sure we’re producing feed cheaper than we can buy it, and we don’t keep cows that aren’t paying their way.Diversification is also one of my risk-management plans. Our digester enterprise has helped us cash-flow the dairy in very bad dairy years. It’s the same for the crop crew: We will go out and work for other dairies if we are done with our own work in chopping or manure handling.I farm some heavy, wet land. It can be a challenge to break even by growing corn on it in some years, like this one, with an inch of rain every four to seven days. So we try to keep a six-month supply of corn silage and haylage. We also grow enough corn to put 100 to 300 acres in high-moisture shelled corn, so if we need to, we can chop all the corn and make sure we don’t buy corn silage.We also farm more acres than a normal 1,100-cow dairy. This is helpful in nutrient management of the off-farm byproducts we bring into the digester. I also buy Crop Revenue Insurance for my entire corn and wheat crops. This is good for fields I can’t get planted or if we have Vomotoxin in the wheat or any other weather-related event that can keep the crop from reaching its full potential.On the feed side, we also work with a consultant firm to watch markets and forward-contract feed when we think it is a good move.On the milk side, I like to use the LGM (Livestock Gross Margin) insurance program, when available and subsidized. We also work with a consulting firm that helps us decide when it’s the right time to buy or sell futures.I look at the money we spend as insurance so that we don’t go back to cash-flow troubles like we had in 2009. It is money out the door, but we should maintain at least break-even or better income and not go backwards. To do this, knowing your break-even milk price and your local basis on milk is important so you try to maintain a floor on the milk price above your mailbox price. I would rather spend $100,000 and break even than go backward $500,000. I have not sold milk directly on contract for a set price; I use the consultants and futures to manage this.The milk plant we have invested in is also part of our risk-management plan. With having a plant only six miles from home, it will drop our hauling and production costs, making us more competitive—not to mention, when the plant starts, to return earnings to the owners, offering more diversification.Source - http://www.agweb.com/

USDA Crop Report

For the week ending November 24, 2013, temperatures dropped below normal throughout most of the State by week’s end, as a wintery mix of precipitation swept across most of Kansas on Thursday, according to USDA’s National Agricultural Statistics Service.Precipitation amounts were limited to less than a half inch, except in southeast Kansas where some totals were closer to an inch. Most of northwest Kansas stayed dry last week.The hard freeze did help dry down remaining crops before the winter storm halted harvest progress. Cattle producers have been busy fencing and moving some cattle to crop residue.There were 4.7 days suitable for fieldwork. Topsoil moisture supplies rated 8 percent very short, 22 short, 66 adequate, and 4 surplus. Subsoil moisture supplies were 16 percent very short, 27 short, 55 adequate, and 2 surplus.This is the last weekly Crop Progress and Condition report for the 2013 growing season. For December through March, USDA will issue monthly reports. The first monthly report (December) will be issued December 30. Weekly reports will begin April 7th.Field Crops Report: Winter wheat condition rated 1 percent very poor, 3 poor, 33 fair, 56 good, and 7 excellent. Corn harvest was 98 percent complete, behind 100 last year, but near 96 average.Sorghum harvested was 97 percent, near 99 last year but ahead of 91 average.Soybeans harvested was 95 percent, behind 100 last year but near 96 average.Cotton harvested was 55 percent, well behind 83 last year but near 58 average.Sunflowers harvested was 94 percent, near 96 last year but ahead of 87 average.Livestock, Pasture and Range Report: Stock water supplies rated 11 percent very short, 16 short, 70 adequate, and 3 surplus.Source - http://www.mcphersonsentinel.com/

USA - Conversion of grassland to crops relatively small

A study commissioned by a farm group says conversion of grassland to crops such as corn is “relatively small” in states such as South Dakota, not the alarming trend that some scientists and environmental groups see.That was one of the topics when the South Dakota Farm Bureau held its 96th annual meeting at the Ramkota Convention Center in Pierre on Nov. 22-23.Among the speakers was David Miller, the research and commodity services director for the Iowa Farm Bureau. Miller presented results from a recent report that challenge the assertion that South Dakota has experienced alarming levels of grassland conversion in recent years.The Farm Bureau’s findings confirm the results of previous studies including one by professors at South Dakota State University, which showed grassland conversion has increased since 2006. But the Farm Bureau report suggests the increase is relatively small, Miller said.The study comes from Iowa-based research company Decision Innovation Solutions. It focused on converted grassland from 2007 and 2012 across the Dakotas, Iowa, Minnesota, Michigan, Illinois and Indiana. Of the approximately 8.5 million acres, 3 percent of the area studied experienced conversion.In South Dakota, 2.1 million acres or 4 percent of the total area in the state shifted from grassy habitat to non-grassy habitat during the period studied.Four counties including Tripp and McPherson have experienced what Miller referred to as high movement, with more than 75,000 acres being converted. The report further indicated 11 counties have seen 50,000 to 75,000 acres converted, 23 counties have seen 25,000 to 50,000 acres converted, and 27 counties have seen fewer than 25,000. Lincoln was the only county that experienced a net gain in grassland acreage.Focusing specifically on South Dakota grassland, Miller said, less than 1 percent of the state’s 28 million acres were converted each year from native prairie to cropland during the period studied. The majority of grassland converted to cropland was towards corn with 682,000 acres. 451,000 acres were converted to small grains and 414,000 to soybeans, according to the report.Although Miller acknowledged that South Dakota is losing approximately 200,000 acres of grassland a year, he contends it is quite negligible when considering the 48 million acres of land in the entire state. “For a land conversion that is under 1 percent, I don’t know if I would use the word ‘rampant,’” he said.But those who are monitoring grassland conversion for environmental groups disagree about the impact. The yearly loss is alarming, according to Craig Cox, Environmental Working Group senior vice president for agriculture and natural resources. “It depends on your perspective,” he said. “The grasslands and wetlands that are being lost in South Dakota are some of the most important in North America.”Cox pointed toward the decreased pheasant population this year as reason for concern. “It shows a substantial loss of habitat in South Dakota,” he concluded. The South Dakota Game, Fish and Parks reported statewide averages of 1.52 pheasants per mile in its 2013 pheasant brood survey, while in 2012 there were 4.19. Game officials say habitat loss is a factor that but they also cite effects of the 2012 drought and a wet, cold spring in 2013 as reasons for the decline in pheasant numbers.Miller believes the decrease in pheasants is more likely due to an environmental shift. “A less than 1 percent shift in grassland caused this?” he asked. “I don’t think so.” In any one-year change, weather such as flooding or blizzards was more likely to impact this year’s decrease in pheasant population, Miller suggested.He added that the conversion of more than 324,000 acres in South Dakota into wooded habitat further indicates that not all grassland conversion goes towards production. “If the concern is wildlife habitat, then this is clearly not a negative,” said Miller.A study performed by SDSU assistant research professor Christopher Wright suggested the conversion of land from livestock production to corn and soybean cultivation has reached a “tipping point” due to such factors as increased commodity prices, subsidized crop insurance and technological advancements.The Farm Bureau report noted that although increased crop prices certainly were a factor in grassland conversion, there were a number of other factors including the environment.The fact that the western part of South Dakota has seen the most movement in grassland conversion correlates to recent environmental changes, according to Miller. “As it gets wetter and warmer you will get more cropping,” he concluded.But beyond the various factors behind grassland conversion, Miller explained the Farm Bureau report sought to address reporting flaws in previous studies. Previous reports relied exclusively on data from the Cropland Data Layer prepared by the National Agricultural Statistics Service or NASS.But one problem with CDL data, Miller argued, was that prior to 2010, different satellites were used than those today. The old satellites misidentified certain classifications of grasslands, which led to the results being skewed, he said. To ensure their study had a relatively small error rate, the Farm Bureau report included farm and rancher land surveys.Despite the differences in methodology, the Farm Bureau report suggests that grassland conversion is finally being accepted as an important issue, according to Wright.Although it remains to be seen what happens in the future for agricultural and conservation groups regarding grassland conversion, Wright remains hopeful. “I’m optimistic that we can find a balance between all the different interests.”Source - http://www.capjournal.com/

USA - Kansas Crop Report

The latest government snapshot of the Kansas winter wheat crop looks mostly good as cold weather sets in across the state. The National Agricultural Statistics Service reported Monday that 7 percent of the wheat was in excellent condition. Fifty-six percent was in good condition and 33 percent was rated fair, with just 4 percent in poor to very poor shape. The agency says a hard freeze helped dry crops that are still in the field before a wintry storm halted harvesting. The update says 98 percent of the corn crop, about 97 percent of the sorghum and 95 percent of the soybeans have been cut. Sunflower harvest is 94 percent complete.Source - http://www.kwbe.com/

USA - Cold, wet weather delays completion of Iowa corn harvest

Cold and wet weather persisted across Iowa during the week that ended on Sunday, delaying completion of the year’s corn harvest.The U.S. Department of Agriculture’s National Agricultural Statistics Service on Monday reported corn harvest for grain or seed is almost finished at 97 percent harvested, 4 percent ahead of normal.Grain movement from farm to elevator was rated 31 percent moderate to heavy. Ninety-four percent of Iowa reported adequate or surplus off-farm grain storage availability and 85 percent reported adequate or surplus on-farm grain storage availability.The statewide average precipitation was 0.37 inches or just a little less than the weekly normal of 0.44 inches.Topsoil moisture levels were rated 8 percent very short, 23 percent short, 66 percent adequate and 3 percent surplus. Subsoil moisture levels were rated 20 percent very short, 35 percent short, 44 percent adequate and 1 percent surplus.Pasture condition was rated 22 percent very poor, 30 percent poor, 31 percent fair, 16 percent good and 1 percent excellent.Hay supplies were considered 17 percent short, 77 percent adequate, and 6 percent surplus across Iowa, with 91 percent rated in fair to good condition.At Dyersville Sales, 481 tons of hay was sold on Wednesday with the top price of $290 per ton on third crop of western big square bales. Round bales topped at $185 per ton on third crop of grass.Temperatures plunged on Thursday and continued to fall through Sunday morning. Daytime highs were only in the teens over most of the northwest half of the state on Saturday. Minimum temperatures dipped to zero on Friday morning at Sheldon and on Saturday morning at Sibley.Statewide there were 4.5 days suitable for fieldwork. Beyond harvesting corn, farmers were busy finishing fall tillage and baling corn stalks.Source - http://thegazette.com/

Europe - Winter crops in good shape despite rains

Wheat sowing in France, the EU's top producer and exporter of the cereal, has slowed sharply and analysts say farmers may not be able to complete all planned sowings.Winter cereal and oilseed crops in the European Union are generally in good condition, despite heavy rain in some regions that has hampered sowing, the EU's crop monitoring unit said."Winter wheat experienced some sowing delays in France, but these were compensated by rapid early development and conditions were particularly favourable for sowing in eastern European and the southern Mediterranean region," the MARS unit said in a monthly report issued on Monday.Wheat sowing in France, the EU's top producer and exporter of the cereal, has slowed sharply and analysts say farmers may not be able to complete all planned sowings.Sowing of durum wheat had also been delayed by wet weather in France and also Italy, MARS said. Winter barley was generally healthy after favourable conditions for sowing that was drawing to a close, it said. In oilseeds, sowing of winter rapeseed benefited from good conditions in top producers France, Germany, Poland and Britain."The subsequent weather conditions suggest that rapeseed crops are now well established and developed, and are ready to withstand the winter," MARS said.Regarding this year's maize harvest, which has been slowed by the recent rain in western regions, MARS left its EU-wide yield estimate little changed at 6.90 tonnes per hectare compared with 6.88 tonne in its October report. This is up from 6.05 tonnes in 2012.Source - http://agri.eu/

India - Rules leave farmers at a loss

The crop insurance scheme, introduced by the Central government to protect the interests of farmers, has seemingly failed to do so, with farmers not in a position to get the insurance coverage even though they have paid premiums.According to official reports, only two mandals in the district — Nandiwada and Vijayawada rural — were selected for crop insurance scheme last year. Farmers in these two mandals received `74 lakh under the scheme.However, nearly 50 per cent of the farmers in the district had lost their crops due to Cyclone Nilam but the scheme was applicable in only two of the 50 mandals of the district.Besides, as per the norms, every village is to be treated as a single unit and officials asked to conduct four tests in the entire village.After the tests, the government would declare the entire village eligible for crop insurance, if two of the four tests proved that the crop had suffered damage. If not, the officials are bound to declare the entire village ineligible for crop insurance.While a majority of the farmers lost their crops due to Nilam cyclone, they were unable to avail the insurance scheme due to these rules.However, the bankers have been deducting the insurance premium, calculated at four-and-a-half per cent at the time of releasing the loans.Farmers complained that they failed to get the insurance money even though they had paid the premium.“If a cyclone or heavy rains hit the crop fields, only a few mandals are covered under the scheme, even though all farmers have to pay the premium,” A. Venkatappa Reddy, a farmer said.In this backdrop, a majority of the farmers are reluctant to pay the insurance premium, making it hard for the government to implement the scheme effectively.AP Rytaanga Samakya president Y. Nagendranath said that if the scheme was implemented effectively, the entire farming community would benefit. Source - http://www.deccanchronicle.com/

India - Odisha rushes disaster management team to 10 districts

With the very severe cyclonic storm Lehar moving towards the Andhra Pradesh coast, the Odisha government today rushed disaster management personnel to ten districts to tackle flash floods in the event of heavy rain and took measures to protect standing crops. "According to IMD prediction, cyclone Lehar will not have much impact on the state. However, we have to remain prepared for the flash flood due to possible heavy rain in southern districts due to cyclone Lehar," said Development Commissioner I Srinivas after attending a review meeting by Chief Minister Naveen Patnaik. Srinivas said the Chief Minister has directed to rush personnel of Odisha Disaster Rapid Action Force (ODRAF) to ten districts. The districts which could experience heavy rainfall during land fall of cyclone Lehar are Ganjam, Gajapati, Koraput, Malkangiri, Rayagada, Nabarangpur, Balangir and Sonepur, Puri and Khurda. "Besides, the district collectors have also been asked to take steps to protect the standing crop in the field as they may be affected due to heavy rainfall," the Development Commissioner said, adding that the state government was fully prepared to face the situation. Meanwhile, a bulletin issued by the IMD said that the very severe cyclonic storm Lehar over southeast Bay of Bengal moved westwards with a speed of 15 kmph during past six hours and lay centred at 1130 hours IST today over southeast Bay of Bengal near latitude 12.50 N and longitude 89.50 E, about 900 km Southeast of Gopalpur. "The system would intensify further and move west-northwestwards and cross Andhra Pradesh coast between Machilipatnam and Kalingapatnam near Kakinada around 28th November noon," it said, adding that Distant Warning Signal Number Two (DW-II) has been kept hoisted at Paradip and Gopalpur ports in Odisha. Fishermen who are in the deep sea are advised to return to the coast immediately. Sea condition will be rough to very rough after 12 hours, it said.Source - http://www.business-standard.com/

Farmers eligible for disaster assistance

Livingston County is one of five counties that have been declared eligible for Farm Service Agency disaster emergency loan assistance.The aid is related to execessive rain and related flooding, high winds and hail that has occurred since May 1.Family farmers who have suffered a loss of at least 30 percent of their production due to excessive rain and related flooding, high winds and hail may be eligible for FSA loans.Proceeds from crop insurance and any FSA programs are taken into account when determining eligibility for production losses.Losses must be supported with documented records. Under the FSA Emergency Loan Programs, farmer may be eligible for production loss loans of up to 100 percent of their maximum principal balance outstanding of $500,000 whichever is less. Farmers must be unable to obtain credit from private commercial lenders. The interest rate on Emergency Loans is 2.875 percent.Other eligible counties include Monroe, Ontario, Seneca and Wayne.Source - http://thelcn.com/

India - Weather insurance segment may see 100% loss ratios due to cyclones

Weather insurance may see 100% loss ratios this year, owing to the Cyclone Phailin that hit the coast of Orissa and Andhra Pradesh in the first half of October 2013. This cyclone had caused extensive damage to crops including paddy and seasonal vegetables. Insurance companies said that the crop damages would lead to an increase in the loss ratios of the companies.Cyclone Phailin, which hit Odisha and Andhra Pradesh on October 12, did not cause huge loss of lives but it led to severe destruction of 'kuchcha houses' (houses/huts which are made of mud or hay) and public property, apart from paddy crops. The aftermath of the cylone, which caused massive floods in areas of Bihar and Orissa were detrimental to crop health.K G Krishnamoorthy Rao, MD & CEO, Future Generali India Insurance said that while due to good monsoon, the Weather-based Crop Insurance Scheme (WBCIS) had performed well in the initial periods of the year, the cyclone could result in losses since they have exposure to affected areas.The after-effects have lead to more destruction of crops, which could spike up the losses, added another official.Weather-based insurance schemes by general insurance companies provide for insurance cover for crops that have been destructed because of floods and natural calamities. These companies work with farmers on a district-by-district basis.On a regular occasion, losses in WBCIS range from 60-65%. However, senior insurance officials explained that the losses could increase not just because of Phailin but also cyclone Helen that has caused heavy damage to paddy crops in several districts of Andhra Pradesh. In some regions of the coast, a senior private general insurance executive said, losses could go well up to 200%.Sanjay Datta, head-underwriting and claims at ICICI Lombard General Insurance explained that while monsoons had been benign to the industry this year, excess rainfall in some regions and the instances of cyclone have caused crop damage, thereby leading to some losses for insurers.Agricultural insurance is acquiring a big dimension, especially with bottom of pyramid farmers. It is a defined product and is statistically analysed with data from sources like Indian Meteorological Department. The entire process of managing the policy during claims is simple and is also easy to understand. WBCIS is intended to provide insurance protection to the cultivator against adverse weather incidence, such as deficit & excess rainfall, frost, heat (temperature), relative humidity, etc., which are deemed to adversely impact the crop during its cultivation period.In WBCIS, the claim amounts will be settled on the basis of data taken from reference weather stations mentioned in the scheme and managed by an independent third party organisation. Though Crop Insurance specifically indemnifies the cultivator against shortfall in crop yield, Weather based Crop Insurance is based on the fact that weather conditions affect crop production even when a cultivator has taken all care to ensure good harvest.Insurance companies have begun to pay claims for the losses received. The total number of claims for the industry, according to early estimates, could be in the range of Rs 80 crore to Rs 120 crore.Though Cyclone Helen has weakened, it has been followed by massive rainfall in and around the coastal areas of Andhra Pradesh, thereby mounting losses. According to forecasts, Andhra Pradesh may also be hit by a severe cyclone named Lehar in the new few days.Source - http://www.business-standard.com/

USA - Should Congress just put funding toward crop insurance?

In his recent analysis of crop insurance guarantees, University of Illinois Farm Management Specialist Gary Schnitkey makes the observation that the significantly lower guarantees expected for the 2014 crop demonstrates the inappropriate nature for crop insurance to be the lone safety net for agriculture. Crop insurance can provide support from planting to harvest, but once the fall guarantee is set on a revenue protection policy, there is no more that crop insurance can do to provide financial support. Consequently, the type of safety net and the level of funding that Congress will appropriate become increasingly important as commodity prices continue to spiral downward.The four top leaders of the House and Senate Agriculture Committees have become their own self-appointed Conference Committee to resolve the differences between the House and Senate’s versions of a new Farm Bill. While food and nutrition programs have received the most attention because of the lightning rod nature of funding those programs, little public attention has been given to the farm policy debate within the small group of negotiators. While they represent their respective houses of Congress, they are trying to find middle ground on resurrecting target prices, using specific prices or year to year averages, and how much money to allocate toward a single season crop insurance program versus year to year support programs.Ohio State University agricultural economist Carl Zulauf looked back at commodity support programs in past farm bills and said countercyclical programs in the 1996 Farm Bill were 5.6 times the level of spending on crop insurance and 2.8 times crop insurance outlays in the 2002 Farm Bill. He said, “Countercyclical programs are designed to provide assistance against multiple-year declines in price or revenue.” Since the 2008 Farm Bill, annual spending has only averaged a half billion dollars on countercyclical programs, but over $4 billion on crop insurance, which he says is a function of the large increase in commodity prices.“This increase has not only reduced spending on countercyclical programs as market price rose above the policy target prices but also increased spending on insurance as the value of insured crops rose.”Zulauf says the direct payment program from the last several Farm Bills has been in conjunction with the recent period of farm prosperity, and those supports were twice the level of the supports during the period of prosperity in the 1970s. Source - http://www.cattlenetwork.com/

USDA designates all 14 counties in Vermont natural disaster areas

The U.S. Department of Agriculture has designated Vermont counties as natural disaster areas making all qualified farm operators in the designated areas eligible for low interest emergency loans from USDA’s Farm Service Agency, provided eligibility requirements are met.“As we head into the long Vermont winter, this declaration will help assure that farmers facing feed shortages are able to apply for much-needed relief,” said Chuck Ross, Vermont Secretary of Agriculture. “I’d like to thank our congressional delegation, and Governor Shumlin, for their support in obtaining this declaration on behalf of Vermont farmers. And I’d like to commend farmers for being proactive and reporting their losses. By doing so, they’ve helped to insure we were able to secure this important resource.”Farmers in eligible counties have eight months from the date of the declaration to apply for loans to help cover part of their actual losses caused by excessive rains and flooding that began May 5, 2013, and continuing throughout the cropping season.Robert Paquin, USDA Farm Service Agency State Executive Director said ,“Secretary Vilsack and President Obama are committed to ensuring that agriculture remains a bright spot in our nation’s economy by assisting America’s farmers and rural communities through difficult times. also telling Vermont producers that USDA stands with them and their communities when severe weather and natural disasters threaten to disrupt your livelihood.”Source - http://www.burlingtonfreepress.com/