Agroinsurance

Africa - Characterizing Regional Suitability for Index Based Livestock Insurance

Chris Mills is a PhD student in Economics at Princeton University and a recent graduate in Economics and Computer Science at Cornell Pastoral populations of Sub-Saharan Africa are particularly vulnerable to environmental shocks, which contribute to livestock mortality and therefore losses in both wealth and productive assets. Although conventional insurance mechanisms covering individual losses are generally not cost effective (page 2) in low-income pastoral communities that engage in extensive grazing, index insurance for livestock offers a promising alternative. Unlike traditional loss-based insurance, index based insurance uses an external indicator to approximate losses on an aggregate level over a particular area. Index insurance is also less susceptible to moral hazard because payout is independent of an insured client’s individual behavior, and less susceptible to adverse selection because the index is created from external variables unrelated to individual-specific risk. These advantages motivate the design behind the International Livestock Research Institute’s novel index based livestock insurance (IBLI) product. Despite its potential benefits, index insurance does not necessarily imply full — indeed any — risk coverage. Because the IBLI product is designed to cover covariate risk – risks shared by a group of people living in a particular region — individual gains or losses that deviate from the index are not compensated. An insured client, for example, might not lose any livestock during a regional drought and still be paid an indemnity. Alternatively, one could lose a significant portion of his or her herd (from disease, for instance) without receiving an indemnity. In some places, therefore, index insurance may increase the level of an insured agent’s income risk, making the IBLI product a gamble instead of a source of income smoothing. The fine line between an insurance product that covers risk and a product that produces risk motivates the need to characterize regions most suitable for index insurance. These most suitable regions exhibit high covariate risk from drought, high potential demand for a livestock insurance product, and lie in countries with. My recent paper with Nathan Jensen, Chris Barrett, and Andrew Mude offers a cursory analysis of regions where IBLI can pack the most benefit, characterizing regions where (1) extensive grazing pastoralists reside, (2) pastoralists are exposed to high covariate risk, (3) livestock supply is high (indicative of potential demand for insurance), and (4) insurance infrastructure is present. Our analysis involves identifying a climatic target area by isolating arid, semi-arid, and dry sub-humid zones, then removing cropping areas to focus on regions more suited for extensive grazing pastoralists that are likely to face a high proportion of covariate risk from drought to total risk. We then estimated potential demand for IBLI using geospatial data on camels, cattle, sheep, and goats generated by ILRI’s Tim Robinson, estimated using machine learning techniques applied to subnational livestock figures. The critical insight in our methodology is that we only aggregate livestock that fall within the target area, so that livestock holding counts are in theory more reflective of extensive grazing pastoral holdings and thus of intended clients for IBLI. Finally, we determine existing capacity for a new insurance product based on country-level insurance industry data. Countries with well-developed, thick insurance markets are more likely to be able to support the successful introduction of an index based livestock insurance product than those with underdeveloped, thin markets. We generate a snapshot of insurance infrastructure using data on non-life insurance and insurance company assets from the U.S. Federal Reserve Bank of St. Louis, and supplement our findings with microinsurance reports form the MunichRe Foundation. [caption id="attachment_1113" align="aligncenter" width="529"] Classification of Countries by TLUs Supply and Insurance Infrastructure: We first isolated areas where (1) extensive grazing pastoralists reside and (2) populations are exposed to high covariate risk from herd mortality. We then focused on (3) areas of high livestock supply (indicative of potential demand for insurance) and (4) areas with existing insurance infrastructure.[/caption] The combination of our climate, livestock supply, and insurance market (institutional) data offers a multidimensional perspective on which regions are well suited for a livestock index insurance product, such as shown in the figure above. Our preliminary characterization results provide a prioritization of areas in which to implement IBLI. Particularly salient is the presence of high-priority areas outside Kenya, Ethiopia, and Somalia. The southern administrative units of Niger, Mali, and even as far east as Mauritania all appear strong candidates for index insurance. There also appear to be potential high-priority regions south of the Zambezi River in Zimbabwe, Botswana, and South Africa. These findings motivate the collection of other region-specific data that could lend insight to sources of basis risk, and the pursuit of potential strategic partnerships within high-priority areas. Our findings will help to direct future IBLI efforts and program funding to areas where index insurance has the best chance to offer value to pastoralists. Source - http://www.econthatmatters.com

India - State notifies Fasal Bima Yojana

The government has issued notification for implementation of Pradhan Mantri Fasal Bima Yojana (PMFBY) during Rabi 2016-17 season. The notification issued by the cooperation department said all farmers growing the six notified crops – paddy, groundnut, mustard, potato, blackgram and greengram – under notified areas for them will be included in the scheme. Besides, farmers availing seasonal agricultural operations (SAO) loans from financial institutions for the notified crops will come under the scheme compulsorily. Paddy farmers of 1250 GPs of all districts excluding Boudh, Kandhamal, Jharsuguda and Mayurbhanj will be covered under PMFBY during Rabi season-2016-17. Groundnut farmers of 125 blocks of 18 districts, mustard crop farmers of 95 blocks in 11 districts and potato farmers of 22 districts will also be included in the scheme. All necessary scheme information will be uploaded on the crop insurance portal within seven days, officials said. The insurance covers loss of standing crops, sowing risk, post-harvesting damage and other localised risks. Crop damage due to drought, flood, erratic rain, heavy rain, earthquake and diseases are also covered. The premium rate in respect of paddy, groundnut, mustard, blackgram and greengram will be 1.5 per cent and for potato it will be 5 per cent. Centre and state will bear the remaining share equally. The state has made budgetary provision of `300 crore for the scheme this financial year. Source - http://www.orissapost.com

India - Crop loss funds end up in students' accounts

Around Rs 32,000 meant to compensate farmers, who have incurred crop loss, found its way into the bank accounts of students in Vijayapura. The mistake came to light during the tri-monthly meeting of the Karnataka development progress committee on Tuesday. When Sindagi MLA Ramesh Bhusanur queried the status of compensation paid to the farmers, an agriculture department official said: "The amount was credited to 22 students of Mulsavalagi village in Sindagi taluk." District minister MB Patil was understandably miffed with the mix-up. He asked the sub-division assistant commissioner to probe if the funds were being misappropriated and submit a report. Bhusanur said the issue had come to his notice one- and-a-half months ago. "Sindagi MLA has raised concerns over the possibility of funds for crop loss having been misappropriated. I will go through the records and see what has transpired." joint director of the agricultural department, Vijayapura, Manjunath said. Source - http://timesofindia.indiatimes.com

Canada - Crop Insurance Pays On Claims for 2016

The Saskatchewan Crop Insurance Corporation reminds producers the sooner they submit their production declaration and file their claim, the sooner SCIC can assess the claim and issue a payment. Producers are reminded the deadline to complete their production declaration and file a claim is November 15. Post-harvest claims are filed when a producer’s actual crop yield and/or quality does not meet their coverage level. To date the Crop Insurance program has paid 887 post-harvest claims providing $43 million in support. The five-year average (2011-2015) for post- harvest claims is 7,520 paid providing $170 million in payments. Even if a producer is not in a claim position it is important to complete their production declaration. This information helps producers build their individual coverage as it reflects their growing experience over the past ten years and impacts a producer’s overall coverage. Ease of filing from a home computer or a mobile device can be realized online with CropConnect. Through CropConnect producers can file all their production and register a claim. Producers can also complete their form, mailed to them in September, and return it to their local Crop Insurance office by mail, fax, walk-in or phone. If producers are not finished harvest as of November 15, they should request an extension of insurance. Source - http://www.saskcropinsurance.com/

India - Kisan Credit Card Programme: Expanded Access To Credit Or Expansion Of Credit?

The Kisan Credit Card (KCC) programme was introduced in India in 1998 and continues amidst much fanfare even today. Policymakers over the last decade and a half seem to have taken a liking to this programme, and it has been widely recognised as a massive reform in agricultural lending in the country. However, there is little empirical evidence on the success of the programme and its effects on intended beneficiaries, that is, farmers and rural households. In this column, I discuss findings from my empirical evaluation of the KCC programme (Chatterjee 2016). The study provides the first micro-evidence from the KCC programme that uses data from both before and after the programme, and complements a large literature, as summarised by Karlan and Morduch (2009), on the impacts of providing credit access in the developing world. Kisan Credit Cards: Background The programme was first announced in the budget speech of the then Finance Minister of India in 1998, and took as a result of the combined endeavours of the government, Reserve Bank of India (RBI), and National Bank for Agriculture and Rural Development (NABARD). Within a year of inception, close to four million KCCs were issued. A couple of years into the programme, KCCs constituted around 71 per cent of the total production credit, and around Rs 50 billion worth of loans had been disbursed (Planning Commission of India, 2002). The programme has undergone several changes, and the current structure is completely different from that in its debut year. Initially, it was just meant to be a credit line with a bank where farmers had to visit a bank branch to withdraw cash and use it at their discretion; hence, the term ‘credit card’ was a misnomer in some sense. Eventually, it graduated into a full-fledged credit card with features such as ATM withdrawal and the ability to swipe at the point-of-sale. The idea was to give out these cards to farmers all over the country with the objectives of providing easier access to credit via simpler eligibility norms, more flexible credit via looser monitoring criteria and cheaper credit via lower interest rates. Apparently, the policy aimed to ease credit constraints for poor farmers as well as expand credit resources for the already unconstrained. In a NABARD report, Samantara (2010)points out how prior to KCC, the multi-agency approach of borrowing and lending in agriculture led to farmers getting caught up in the rungs of bureaucracy. In the only other evaluation of KCC that I know of, Areendam Chandain, in his 2012 International Growth Centre (IGC) working paper, analyses post-1998 data and finds no evidence of any impact of this policy on state- or district-level agricultural productivity. The key thing to note is that KCCs are formal bank loans, as is the nature of any credit card debt. Banks can exercise discretion vis-à-vis the variety of KCC product they offer. We should therefore regard KCC loans as a differentiated product (see Chatterjee 2016 for details). Usually, as long as farmers have title to about an acre of irrigated land, they are eligible for loans up to Rs 50,000 without collateral; the credit lines can be much higher with collaterals. The cards are usually valid for three years with the possibility of renewal upon successful repayment of loans. Repayment cycles usually align with crop cycles (one year for most crops; 18 months for sugarcane). Being essentially a credit card, this new form of crop loan for farmers do not have a formal monitoring procedure and banks are happy to renew the cards as long as there is no default. So, while these cards were possibly intended to relax constraints on borrowing for poor farmers to enable them to enhance agricultural productivity by making requisite investments, in practice, they may alter their consumption expenditures only. In line with these apprehensions, recent media reports suggest high rates of default on KCCs, and the fact that these are becoming a major source of non-performing assets (NPAs) for banks. Impact on production and technology adoption in agriculture I exploit certain institutional features of the implementation of the programme to estimate the effects of potential exposure to KCC on a host of outcomes, including rice production and technology adoption (Chatterjee 2016). I compare average outcomes before and after the implementation of the programme; in districts with a high concentration of bank branches as of 1998 (cumulative up to the policy year) to the ones with low concentration of bank branches, and in states that were politically aligned at the time versus those that were not. The idea is that the interaction of these three factors captures the intensity of exposure to the programme. Using district-level data from 1986-2011, I find that rice production increased by almost 88,000 tonnes more (close to 33 per cent of average production in the economy) in areas with potentially high exposure to KCC relative to those with low exposure. It is possible that some of the inputs that accelerate production were not being used due to credit constraints, and KCC relaxed those constraints. As supportive evidence for this, I find that area cropped under high-yielding variety (HYV) of seeds increased substantially more in areas exposed to the programme. Figure 1. Estimated year-specific difference-in-differences in rice production (Somdeep Chatterjee) One concern that may arise is that the effects picked up by the interaction of the three variables described above are not necessarily that of KCC but represent already existing differences across the districts. Figure 1 plots these interactions using the first year of the data span, 1986, as a reference year. I find that prior to the policy year represented by the vertical line, these differences are statistically not differentiable from zero but become positive and significant from 1998 onwards. This provides confidence in the analysis, suggesting that the interactions are picking up KCC effects and not something else. Impact on borrowing patterns I supplement the above findings by using data from the India Human Development Survey (IHDS)-I (2004-05) to analyse how the KCC affected borrowing patterns. I find that households in high-exposure areas are not any different from those in low-exposure areas in terms of their likelihood to borrow, total amount of borrowing or choice of creditor (banks/others). This suggests that KCCs did not lead to new access to credit. I also find that the number of loans decreased by over one loan per household in the last five years (Table 1, Panel A). Combining the results above with those presented in Panel B of Table 1, shows that households exposed to KCCs get fewer but larger loans. This suggests that while it is unlikely that KCC led to relaxation of credit constraints, it is plausible that already unconstrained households having access to credit now substitute other sources of borrowing with this cheaper alternative; they borrow in bulk with total number of loans reducing and loan sizes increasing. Table 1. Effects on borrowing patterns (Data source: IHDS-I database, 2004-05) (Somdeep Chatterjee) Concluding thoughts I find that increased exposure to KCCs seems to have led to large increases in agricultural production and technology adoption. To investigate this further, I use household data to check if borrowing patterns changed in response to KCC exposure. I find that with exposure to KCCs, households are not more likely to borrow, they do not have higher outstanding debts and they are not more likely to have banks as their preferred creditor. This indicates that the large effects seen in agriculture may not be driven by the relaxation of credit constraints and expanded access to credit due to KCC but through some other channel. One such channel could be an expansion of credit. Along these lines, I also find that the above effects are magnified for households already having access to credit from banks, providing further evidence in favour of ‘expansion’ of credit and against ‘access’ to credit. The welfare implications of this policy remain ambiguous and depend on whether ‘access’ to credit should be prioritised over ‘expansion’ of credit. Irrespective of the channel, the programme led to large increases in agricultural production, and hence overall improvement in the economy of the sector. This leads us to speculate about another possible channel - an increase in risk tolerance of the farmers. If farmers view KCCs as insurance against income shocks, they may increase investments and as a result, have higher output, even though this increase in investment does not show up as an increase in the likelihood of borrowing. It is just that farmers are now less compelled to save up for shocks as KCCs can help smooth out consumption, if required. Source - http://swarajyamag.com

USA - Farm subsidies need to return to their roots

Subsidizing agriculture in the United States is a nearly century-long tradition, tracing its origins to the 1920s. Hardships brought on the Midwestern United States during this era, such as the Great Depression and the drought conditions of the Dust Bowl, were alleviated after legislation was passed that mandated indefinite price subsidies for farmers. These subsidies continue today, with nearly $13.9 billion of U.S. farmer's net income expected to come from the federal government in 2016 alone. Most western nations subsidize agriculture to some extent. It's a convenient way to ease the burden on farmers during tough economic times and ensure that their production continues to meet demand. Unfortunately, the farmers benefiting from subsidies, and especially the crops they grow, have deviated from the original intent of providing welfare for the struggling farm family, into welfare for the corporate farm. In 2011, The Washington Post reported that three-quarters of farm subsidies were distributed to only the wealthiest 10 percent of farm owners, a point reiterated in the Democratic Party presidential primaries by Sen. Bernie Sanders. Originally intended to provide assistance to farm families and help their businesses remain viable in the long-run, this safety mechanism has been gradually co-opted by the wealthiest and most profitable farms. Recently, reforms have been attempted, but even they fall short. In 2014, Congress passed a new farm bill, which shifted subsidies from paying farmers directly and instead focused on subsidizing crop insurance. Now, a formidable share of government payments goes to farm insurers, supposedly to leverage the risk farmers face with volatile crops. However, this too is misleading. According to Vincent Smith, an agricultural researcher out of Montana State University, "Each year, only about 1 in every 200 farms closes its gates because of foreclosure or bankruptcy while 1 in 7 businesses on Main Street has to shut its doors." The overall point being, that farming in 2016 isn't as risky as lobbyists and corporate farms lead the public to believe. This overwhelming dependency on the government to float farmers is a perversion of the original intentions of farm subsidies, that is to alleviate risk, not eliminate it altogether. But all of this is to say nothing of the ineffective crop receiving one of the largest shares of U.S. subsidies: corn. It's easy to see why corn is so popular. Its versatility and high yield during good seasons makes it a reliable investment. Most of this corn is used for biofuels or to feed livestock, both of which have garnered criticism in recent years over their contribution to environmental degradation. Only a fraction of corn production is actually for human consumption, and the corn that goes to feed livestock loses significant calories and proteins along the way, thereby making it an extremely inefficient, and unhealthy, way to feed the population. A simple solution, and one commonly voiced, is to provide more subsidies for local rather than factory farms, as well as promote the harvesting of healthier crops, such as whole grains, fruits and vegetables. Jonathan Foley, Director of the California Academy of Sciences, explained that such a program would prioritize locally grown crops and lessen the environmental impact of the current system, all while providing a boon to rural economies across the United States. In truth, this was the original purpose of these subsidies: a safety net for the family farms that fill the breadbasket of America with nutritious, fair-trade products. All that is being asked for, it seems, is a return to our roots. Source - http://www.dbknews.com

USA - 6 ways to boost farm income

As a farm manager for some 30 years, Jerry Moss, Baylis, Ill., has been there, done that. Here he offers up a cheat sheet of ideas for boosting return on investment, and saving money without compromising income. Own your own storage to expedite harvest. Lines at elevators can get long, and their night or weekend hours can be limited. Few farmers sell crops at harvest, with most owning bins or paying for storage. “The ROI or IRR [internal rate of return] for the grain bin investment is one of the highest in row crop agriculture,” says Moss. “It is estimated that over 60% of corn farmers could increase their net income with additional on-farm storage, not as a marketing tool but to capture a better basis and time value. With today’s higher yields, we generally recommend capacity to store 200 bushels per acre.” [caption id="" align="aligncenter" width="458"] Say no to high cash rent, says farm manager Jerry Moss. "There is no correlation between high-end renters and superior marketing skills."[/caption] Add tech without breaking the bank. Since new tech can be added to most equipment up to 20 years old, newer machinery is not necessary to achieve maximum economic yields, especially when top-end used equipment is discounted 30% to 40%. A client recently bought two current John Deere 680 combines for $175,000 each at auction, says Moss. They sold for $450,000 new and had about 70% of their viable economic life remaining. Take advantage of federally subsidized risk protection. Highly subsidized crop insurance is one of the best financial advantages in farming. Take full advantage of this government reimbursement. “If we assume that the insurance premium is realistically representative of the crop risk failure for our state or area, then it becomes painfully obvious to buy the best coverage available, meaning the lowest deductible for the product we choose,” says Moss. “For example, if Uncle Sam is going to pay 50% of your auto policy, you would probably zero the deductible and add the new car replacement provision. Surprisingly, too many farmers and university budgets try to cut costs in this area and dramatically increase financial risk.” Hire the expertise you need. After-tax dollars increase wealth, yet a number of top-notch farmers will not hire the experts to cut the tax burden and critique their cash flow. This is seen by the financially stressed segment of operators who bought too much equipment on credit to avoid taxes, and now can’t cash-flow the payments, says Moss. Consultants and continuing education can give you some good ideas and more than pay for fees and your time at a meeting, seminar or school. “We highly recommend the use of independent agronomic, marketing and financial consultants,” he says. “This business is simply too complex and too many dollars at risk to not take out some brainpower insurance.” Say no to high cash rent. Even farmers who are low-cost producers in all areas, from agronomic inputs to machinery, can get caught up in wanting to be the big player in the region. As a result, they often pay $50 to $100 more per acre in cash rent than neighbors. “Too many farmers and landlords assume the high-end renters have found a secret way to cash-flow the impossible, because they would not bid that high to lose money,” says Moss. “In fact, there is no correlation between high-end renters and superior marketing skills.” Use the whole marketing calendar. It makes no sense to only sell the last three months of the marketing year before the new crop harvest. Instead, use a two-year marketing window for each crop and learn to pull the trigger when prices rise above breakeven costs. Source - http://farmfutures.com

Australia - Rabbit virus to save $200 million annual loss

The next step in rabbit control is on the way as several areas have passed as trial sites for a new strain of the rabbit calicivirus, RHDV1 K5. Land owners in Cambrai, Lameroo, Meningie and Sedan will be participating in the trial of the new strain next Autumn. Rabbits are a huge problem, causing about $200 million worth of loss across Australia each year. Biosecurity SA Research Officer Greg Mutze said rabbits cause two types of damage, environmental and agricultural. “Rabbits are sever pests to native vegetation,” he said. They eat away at vegetation they find palatable and leave the non-palatable. Mr Mutze said they have cause a huge amount of destruction to shea-oak trees in the Coorong and native orchids. He said they cause a large amount of damage to farmers’ crops. “If they’re living on a road side, next to a crop, they’re eating the crop which causes a huge economic loss for the farmer.” They also create a reduction in pastoral potential for livestock. “It’s been a very big problem that’s hard to detect,” he said. The first calicivirus was introduced in 1995 which was extremely effective in dry areas. However, since 2003, the rabbit population has been showing a gradual recovery which has sparked the introduction of the new strain. “It was chosen because we think it may be more effective in cooler, wetter areas than the first one,” he said. “What we are hoping, is that when the K5 is released, there will be more benefit in those cooler environments. “We don’t think it’s going to cause the massive reduction in numbers that the original strain caused,” Mr Mutze said. He said this was due to the overall lower population now compared with when the original virus was released and that the when the original was release, the entire population was susceptible to the virus however now, some may be immune. Mr Mutze said they are hoping for the strain to spread naturally and for there to be very little ongoing cost. He also said people should not worry about the spread to other species as it has been extensively tested and has never shown harm to any other animals. Member for Barker Tony Pasin said he welcomed the support from local residents trialling the virus to protect the local industry. Source - http://www.murrayvalleystandard.com.au

Canada - 2017 excess moisture insurance deadline Nov. 30

The deadline to make changes to 2017 excess moisture insurance (EMI) coverage is Nov. 30. That’s also the deadline for new farmers who haven’t had crop insurance before to get higher EMI coverage rather than just the basic. Excessively wet fields this fall increase the possibility that some won’t get seeded before the Manitoba Agricultural Services Corporation’s (MASC) spring-seeding deadline. “We are getting lots of phone calls and inquiries about maximizing (EMI) coverage knowing that their fields have standing water in them already,” said MASC’s acting manager of claim services David Koroscil. Farmers enrolled in AgriInsurance automatically get $50 an acre EMI coverage if fields are too wet to seed before MASC’s spring-seeding deadline. There’s a five per cent deductible on acres insured. However, for an additional charge farmers can get $75- and $100-an-acre coverage. Farmers who haven’t had an EMI claim for a while sometimes reduce their coverage to pay less premium, Koroscil said. But some farmers will boost their coverage if they suspect they are more likely to be in a claim position. Farmers will also buy down their deductible. Every year a farmer has an EMI claim the deductible increases five per cent. But it also drops by the same amount following years without a claim. “EMI is on total eligible acres,” Koroscil said. “Basically all your eligible cropland is included with the exception of fall rye or winter wheat because you already have a crop in the ground and we are insuring that crop. And forages are not in it. So if you had 1,000 acres of crop… the deductible is five per cent of the 1,000 acres (or 50 acres).” All farmers enrolled in crop insurance pay 52 cents an acre for the basic $50-an-acre EMI coverage, MASC’s website says. The farmer’s 52 cents is 40 per cent of the total basic premium cost. Source - http://www.manitobacooperator.ca

India - A few takers for crop insurance scheme

Daunting task lies ahead for Agriculture department officials implementing the Pradhan Mantri Fasal Bima Yojana (PMFBY), a crop insurance scheme started this fiscal, as farmers in the district have not shown any interest for insurance in earlier years due to specific reasons. Of the 1,38,393 farmers enumerated in the district, only much less than 5,000 persons have joined the PMFBY in the district till now. As per the guidelines of the Centre, the farmers, who opt for crop loans from banks and cooperative credit societies, should be brought under the insurance coverage. Whereas, the scheme is optional for the ‘non-loanee’ farmers, who were the majority in the district. Farmers have reasons not to opt for the previous insurance schemes. “The settlement procedures were not attractive in those schemes.” “Even if the damages were accepted, either the farmers have to wait for years to get the amount or get their claims rejected on trivial technical reasons, both of which acted as deterrent factors,” pointed out S. R. Madhusoothanan, a progressive farmer and district secretary of All India Kissan Sabha. However, Joint Director of Agriculture S. Renganathan sounded optimistic that large number of farmers could be attracted to the scheme as it had some added additional advantages vis-à-vis previous schemes. “Crop damages in this scheme are not going to be assessed at ‘firka’ level rather at ‘revenue village’ level itself. Moreover, the settlement period has been pegged at 60 days and insurance coverage will be given not only for crop destruction but also for disrupted sowing due to adverse conditions,” he said. Source - http://www.thehindu.com

USA - Caution advised on high rental rates

Many crop producers in the upper Midwest, but not all producers, are coming off one of their best crop production years ever in 2016, as far as corn and soybean yields are concerned. In addition, many farm operators in the same region that are enrolled in the Ag Risk Coverage (ARC-CO) farm program option recently received an ARC-CO payment on their 2015 corn crop; however, the payments were highly variable, and some producers did not receive any ARC-CO 2015 payment. These two factors are leading some farm operators to be overly optimistic about crop income expectations for 2017, and resulting in some landlords being unwilling to reduce high cash rental rates for the 2017 crop year. Many farm operators in several portions of Minnesota, Iowa, and South Dakota had 2016 corn and soybean yields that were 10-20 percent above their 10-year crop insurance actual production history (APH) yields. To use these high yield levels as a planning tool for 2017 is just as big of a mistake as using the lower crop yields from a few years ago for planning purposes. It is best to use the updated 10-year APH yields, or other verifiable historical yield data, to make yield projections. It is also important to remember that the ARC-CO farm program payments that farm operators recently received were for yield losses and price reductions from the 2015 corn crop. The farm program payments in the current Farm Bill are not guaranteed from year-to-year, as they were for nearly two decades prior to the current farm program. Based on the likelihood of higher than normal average corn and soybean yield levels in most Counties in the upper Midwest for 2016, along with lower “benchmark” corn and soybean prices for 2016, the likelihood of receiving significant ARC-CO payments for the 2016 crop year will be less, compared to the 2014 and 2015 crop years. Any 2016 ARC-CO payments will not be made until October, 2017. Cash corn and soybean prices dropped in 2015, and have remained fairly low since that time, with some improvement in soybean prices occurring in 2016. The projected forward prices for the Fall of 2017 are similar to current price levels, and there is some concern that prices could drop even lower next year. Cash corn prices in Southern Minnesota are currently near $3 per bushel, and cash soybean prices are near $9 per bushel, with even lower prices in Western Minnesota and the Dakota’s. Comparable new crop prices for the Fall of 2017 are similar to the current cash corn and soybean prices. Many of the current cash rental rates were established when projected corn prices prior to planting were above $4 per bushel, and soybean prices were above $10 per bushel. Average crop input expenses for corn and soybean production in southern Minnesota, excluding land costs, rose about 20-30 percent from 2011 to 2013. Fertilizer and fuel costs declined somewhat in in the past couple of years, while most other input costs were about steady from previous years. Some experts are projecting total cash expenses for corn production to decrease slightly for the 2017 crop year; however, production costs are highly variable from farm-to-farm, depending on fertility level, availability of livestock manure, and farm operator efficiency. The tight cash flow margins in crop production for the 2017 crop year are causing some concern for farm operators, as they negotiate land rental rates for the next year. The very tight, or even negative profit margins for next year’s crop, are also a concern for ag lenders, as they begin to re-finance crop producers for the 2017 crop year. Some farm operators will need to do some serious evaluation before agreeing to pay very high land rental rates for 2017, which could potentially lead to some large financial losses for their farm operation. Revenue protection (RP) crop insurance policies have been a very good risk management tool for crop producers on rental land in recent years. The RP policies protect against reduced crop revenues, due to a combination of lower than expected yields and dropping grain prices. RP insurance policy guarantees are based on the Chicago Board of Trade (CBOT) futures prices for December corn and November soybeans in the month of February. Based on current CBOT price levels, the RP base price for the 2017 crop year for corn would be nearly the same as the 2016 base price of $3.86 per bushel, and compares to $4.15 per bushel in 2015, $4.62 per bushel in 2014, and $5.65 per bushel in 2013. The current base price estimate for 2017 soybeans would be about $9.85 per bushel, compared to $8.85 per bushel in 2016, $9.73 per bushel in 2014, and $11.36 per bushel in 2014. A farm operator that usually carries an 80 percent RP crop insurance policy on corn, and has a 190 bushel per acre APH corn yield, would have had a revenue guarantee of $858.80 per acre in 2013, $702.24 in 2014, and $630.80 in 2015, compared to an estimated guarantee of only about $586.72 per acre for 2016 and 2017. If higher land rental rates for 2017 are still at 2013 and 2014 levels, a crop producer is incurring considerable more financial risk for 2017, compared to the risk levels of a few years ago. An alternative for farm operators and landlords to consider for 2017 may be to enter into a “flexible cash rent agreement”, which sets a reasonable “base rental rate” that is based on average crop yields, typical production costs, and projected 2017 prices. A “flexible lease” would have provisions to increase the final annual rental rate in the event of exceptional crop yields and/or higher than anticipated crop prices in 2017. These final cash rent adjustments should be based on actual crop yields and/or crop market prices in the Fall of 2017, with any rental rate adjustments occurring on the final land rental payment for the year. If the “base rental rate” is set higher than realistic breakeven levels for the farm operator, the flexible lease will not be very effective to address the added financial risk. Source - http://cornandsoybeandigest.com

India - Farmers throng crop seminar

Hundreds of farmers attended a crop seminar titled ‘Amar Pothar, Amar Kotha’ which was organised by the Doordarshan Kendra here in collaboration with the Union Ministry of Agriculture and the Department of Agriculture, Assam, at Dalgaon Seed Farm in Darrang on Saturday. The farmers participated in the interaction programme with the agricultural scientists and agricultural officers, said a statement issued today. The seminar was telecast live by the Doordarshan Kendra Guwahati in DD-1 and DD-13 (North East) channels. Debendra Nath Basumatari, Additional Director General (North Eastern Zone and East Zone) of Doordarshan inaugurated the programme. Bhagaban Bharali, District Agriculture Officer of Darrang, Mowsam Hazarika, Assistant Director of Agriculture (Horticulture and Crop Insurance), Ramesh Medhi, General Manager of Assam Seed Corporation, Dr Pabitra Bordoloi, Programme Coordinator of Krishi Vigyan Kendra, Darrang, participated in the seminar along with other officials and scientists of the Agriculture, Veterinary and Fishery departments. Source - http://www.assamtribune.com

USA - Rabo AgriFinance adds experienced lender to staff

Rabo AgriFinance announces the hiring of Mike Kane as a Senior Relationship Manager in central South Dakota. Rabo AgriFinance is a provider of capital and financial solutions to leading U.S. agricultural producers and agribusinesses. Kane will work closely with area farmers and ranchers to provide capital needs to purchase and operate their enterprises and ensure their long-term success. Kane brings to Rabo AgriFinance over 13 years of agricultural lending experience, with a strong background in both the grain and cattle sectors. Team leader, Mike Huber, said of Kane, "Mike has a lot to offer as a relationship manager at Rabo AgriFinance. He has a wide range of lending experiences with large ag operations in central S.D. and knows what they need and want." Kane joins the Rabo AgriFinance team as a part of the company’s network of relationship managers, crop insurance, and risk management specialists who understand the unique needs of the Northern Plains. In his new role as Senior Relationship Manager, Kane will work primarily with producers within the Aberdeen, Huron, Pierre and Mobridge general areas. “The understanding of the agricultural environment that Rabo AgriFinance has is unprecedented,” Kane said. “Knowing that everything in agriculture is cyclical and seeing things on a long-term basis is a huge asset.” Rabo AgriFinance has the ability and expertise to handle various operations and credit needs. A global team of analysts provides a competitive edge with insights into industry trends, and a comprehensive portfolio of services which includes the right resources for producers to prepare for and take advantage of market opportunities. Whether it’s financial lending, crop insurance or risk management support, Rabo AgriFinance experts guide customers on paths toward greater success. Source - http://www.farmforum.net

Philippines - DAR, PCIC offer crop insurance to Agusan del Norte farmers

The Department of Agrarian Reform (DAR), in partnership with the Philippine Crop Insurance Corp. (PCIC), is offering farmers in Agusan del Norte low-cost crop-insurance packages for protection against disastrous typhoons and drought. The DAR recently met with farmers belonging to nine different agrarian-reform beneficiaries (ARBs) organizations in the province as part of an orientation and training program on the Risk Mitigation and Management for Agricultural Investment and Crop Insurance Education. DAR-PCIC Point Person Luningning Buque-Ycoy said in a statement the activity aims to make farmers understand the crop insurance program of the government and encourage them to insure their crops to avoid losses brought by natural calamities, pest and diseases, and climate change. “The agricultural insurance is anchored on the DAR’s Agrarian Production Credit Program and this program empowers eligible ARBs to avail [themselves of] the package of credit assistance coupled with agricultural insurance,” Ycoy added. PCIC Resource Person Ernesto Chaves said providing agricultural insurance to the farmers will mitigate the possibility of farm losses associated with extreme weather events, such as drought or typhoons and other calamities. Lucita C. Onde of Duque ARB Cooperative said, “The crop insurance is a great opportunity for many farmers to secure our crops and give us peace of mind.” Crop protection is one of the DAR’s mandate in the implementation of the Comprehensive Agrarian Reform Program to mitigate the risk involved in agricultural production. Source - http://www.businessmirror.com.ph

USA - The current crop insurance landscape

The USDA projects record corn and soybean yields for 2016, but our regional crop yields look good but variable across Indiana, Ohio, Kentucky and Tennessee. “Though not widespread, we’ve seen pockets of drought and flooding that reduced yields and grain quality,” said Jason Alexander, Vice President-Crop Insurance, Farm Credit Mid-America. “Some hard-hit farms are posting corn yields at just 75 to 100 bushels per acre or less and they won’t be the only ones submitting crop loss insurance claims this year.” For some farmers, low grain prices will be the biggest challenge that triggers a claim. So, what are some questions farmers should be asking themselves right now about crop insurance? There are plenty of crop insurance questions to answer. For example, what if your yield is at or somewhat above your guarantee but the corn price is low? What is your coverage level? Is your policy on enterprise units or optional units? Did you choose 80 percent or 85 percent coverage? These details and others can make a big difference in determining if you should be getting an insurance payment and, if so, how much. “Nationwide, corn crop prices are looking like they will be well below the spring guarantee corn price of $3.86,” Alexander said. “If corn is in the $3.00 to $3.35 range and that will likely trigger many revenue-based crop insurance claims.” In these market conditions, it’s a good idea to stay in contact with your insurance specialist to evaluate potential claims and their impact on your farm’s bottom line. Source - http://ocj.com