Agroinsurance

USA - 7 considerations for choosing the best crop insurance in 2016

During the next few weeks, many farm operators will be finalizing crop insurance decisions for the 2016 crop year. March 15 is the deadline to purchase crop insurance for the 2016 crop year. Profit margins for crop production this year are the tightest they have been for several years, which makes the 2016 crop insurance decisions even more critical. Producers have several crop insurance policy options to choose from, including yield protection policies and revenue protection policies, as well as several other group insurance policy options. There are also decisions with using enterprise units versus optional units, and whether or not to take advantage of the trend adjusted APH yields for 2016. In recent years, a high percentage of crop insurance policies for corn and soybeans in the Upper Midwest have been revenue protection policies, because of the combination of yield and price protection. As of Feb. 8, the 2016 estimated crop prices in the Upper Midwest for yield protection and revenue protection policies was $3.92 per bushel for corn, $8.90 per bushel for soybeans, and $5.18 per bushel for spring wheat. 2016 YP prices and RP base prices will be finalized on March 1. Here are some considerations when making crop insurance choices for 2016. Crop insurance premium reductions for 2016. 2016 Crop insurance premiums for most coverage levels of corn and soybeans in the Midwest should be the same, or slightly lower, than comparable 2015 premium levels, due to lower insurance guarantees for 2016, as well as RMA premium adjustments that are based on updated crop insurance actuarial data for several years. There are a wide variety of crop insurance policies and coverage levels available. Make sure you are comparing “apples to apples” when comparing crop insurance premium costs for various options or types of crop insurance policies, and recognize the limitations of the various crop insurance products. View crop insurance decisions from a risk management perspective. Given the tight profit margins for crop production in 2016, some producers may have a tendency to reduce their crop insurance coverage, in order to save a few dollars per acre. However, a producer must first consider: “How much financial risk can I handle if there are greatly reduced crop yields due to potential drought and weather problems in 2016, and/or lower than expected crop prices?” Revenue protection crop insurance policies serve as an excellent risk management tool for these situations, and 2016 may not be the year to reduce insurance coverage. In most instances, use the trend adjusted endorsement for 2016. Many producers in the Upper Midwest have been able to significantly enhance their insurance protection in recent years by utilizing the TA-APH option, with only slightly higher premium costs. Using the TA-APH endorsement is a very good crop insurance strategy for most eligible corn, soybeans, and wheat producers. Using enterprise units is generally favorable, but know the limitations. Enterprise units, which combine all acres of a crop in a given county into one crop insurance unit, are generally favorable to optional units, which allow producers to insure crops separately in each township section. Enterprise units usually have significantly lower premium costs compared to optional units for comparable revenue protection policies. However, enterprise units are based on larger coverage areas, and do not necessarily cover losses from isolated storms or crop damage that affect individual farm units, so additional insurance, such as hail insurance, may be required to insure against these type of losses. Take a good look at the 85% coverage levels, especially when using enterprise units with revenue protection insurance policies. Most Midwest corn and soybean producers have been utilizing a minimum of 80% revenue protection coverage with enterprise units in recent years. 2016 may be the time to consider upgrading to the 85% coverage level. In many cases, the 85% coverage level offers considerably more protection, with a modest increase in premium costs. Many producers will be able to guarantee near $600-650 per acre for corn, and near $350-400 per acre for soybeans at the 85% coverage level for 2016, when also utilizing trend-adjusted APH yields. Where to get more information on 2016 crop insurance alternatives. A reputable crop insurance agent is the best source of information to find out more details of the various coverage plans, to learn more about the TA-APH yield endorsement, to get premium quotes, and to help finalize 2016 crop insurance decisions. Source - cornandsoybeandigest.com

India - Technology could reduce high post harvest losses

During the three-day Agri & Dairy Tech Andhra-2016, which was held in India from Thursday 4 February to Saturday 6, Kenes Exhibitions general manager Prema Zilberman discussed India's post harvest losses. According to Zilberman the reduction of post harvest losses is yet another way to make agriculture profitable. Kenes Exhibitions is the organiser or Agritech Israel and Agritech Peru. Speaking to The Hindu on the sidelines of the conference, Ms Zilberman said that while the post harvest losses in the West were between 12 per cent and 30 per cent of the production, the post harvest losses in India were closer to 60 per cent. With improved post harvest technology, the losses could be drastically reduced in horticulture crops. But, post harvest management for horticulture begins right from the sapling stage. For mango, the amount of water given to the trees, the length of the stem and the way the fruit is ripened constitute post harvest management, she said. Peru was another country where Mango was a big crop, but grows in a different season. When the mango season is in its peak in India, there will be no fruit in Peru and vice-versa. So. it was possible for the farmers to exchange the produce, Ms. Zilberman said. There was also high regard for Indian technology in countries like Peru because it was comparatively inexpensive, she said. Drip irrigation Experiments were being conducted for the cultivation of field crops with drip irrigation, she said. The Kenes Exhibition was helping cultivators in South America, Europe, Spain and Italy. In India it had conducted exhibitions and conferences in Ahmedabad, Hyderabad and it was going to conduct an exhibition-cum-conference in Vijayawada every year from here onwards, she said. Source - freshplaza.com

South Africa - Fruit industry damaged by fire, drought

The future is looking bleak for South Africa's agriculture sector; damage by fires and drought to the Western Cape's wine and fruit industries is estimated at R720 million, yet MEC of Economic Opportunities Alan Winde believes the impact on the entire agriculture sector could run into the billions. Beverley Schäfer, the chairwoman of the Western Cape Legislature’s standing committee on economic opportunities, tourism and agriculture, said the province’s wine and fruit industries have suffered losses far greater than anticipated. The standing committee was being briefed on the impact of drought and fires on agriculture in the province, with the industries reporting losses amounting to R720m. Schäfer added the impact of the fires extended beyond the damage to vineyards and orchards. The drop in production and rise in production cost – added to the damage caused by fires and drought – were expected to result in further losses for the sector, which employs 300,000 people nationally and contributes 3.5 percent to the national GDP. Fruit grower trade body Hortgro advised the committee that the R720m loss would have a devastating humanitarian impact as the most vulnerable would see food prices soar. The committee was told that despite the grave losses suffered, there would not be an immediate threat to jobs. Winde painted a grim picture, saying following the finalisation of a recent departmental assessment, the total loss to the industry would be between 5 and 10 percent of normal production output. “Our agricultural industry is worth around R50 billion and we are looking at around R2bn to R4bn of what the impact could ultimately be on the industry,” he said. Stressing that the figures were merely an estimate, Winde said some farms could yield smaller crops. Winde said each of the 90 agricultural commodities in the province, from grain to citrus, would be affected. Winde said the fire damage was localised to the Stellenbosch region. “About R240 000 per hectare was lost and it would take years to get it back to standard.” Source - freshplaza.com

USA - How Crop Insurance Stacks Up to Other Insurance Products

The concept of minimizing risk and financial loss by purchasing insurance is not a new or radical one. People have been doing it for centuries to guard against the financial pain that results from an accident or loss. Americans are most familiar with health, auto, home, and life insurance, because most Americans have experience with these policies. And most Americans understand basic insurance concepts and terms. For example, working through an agent to purchase a policy that is backed, or underwritten, by a private company; paying a bill, or premium, for that protection that is calculated based on your unique condition; shouldering some form of a loss, or deductible, before insurance kicks in; and receiving reimbursement, or an indemnity, only after the loss is verified by a trained claims adjuster. Despite what the critics would have you believe, crop insurance operates similarly to these other types of insurance, and it is based on the the same philosophies and business principles. Agents help customers choose the appropriate policy for their needs, and then a company underwrites it. There are 12,000 crop insurance agents who helped farmers purchase 1.2 million policies from 18 insurance companies in 2015. Premiums are paid every year for coverage. For farmers, that means cumulatively paying more than $4 billion out of pocket each year. A deductible must be met before an indemnity is paid to help restore the condition that existed prior to the loss. On average, farmers must lose roughly 30 percent of the value of their crop before their insurance takes over. Claims must be verified and adjusted before they are paid out. With crop insurance, that job falls to roughly 5,000 claims adjusters tasked with understanding crop conditions on more than 298 million acres nationally. Of course, the parallels are not perfect because agriculture is a unique kind of business that suffers unique kinds of losses. Unlike other insurance lines, agricultural losses tend to be geographically targeted and severe. There is no chance that every car in a city will be simultaneously totaled, or that every person in a state will need medical help at the same time, or that every home in town will need a new foundation on the same day. But a single flood, storm, or drought can cause a catastrophic loss for every farming operation in a county or region, and that makes it much harder to insure. In addition, the likelihood of a hurricane hitting Florida farmland or a drought wilting Texas crops is statistically much greater than triggering a disability or life insurance claim. Because of this higher risk, the concentration of losses, and the likelihood for wide-scale disaster, crop insurance policies would be cost prohibitive and very limited without some government incentive. Thus, America has a crop insurance system based on a public-private partnership between private insurance providers and the U.S. Department of Agriculture – a system that after decades of refinements and investments has ascended to become the cornerstone of modern-day farm policy. Source - cropinsuranceinamerica.org

USA - Insuring Sunflower in 2016

Who needs crop insurance? Would you ever think of going without crop insurance to help cover your risk? I don’t think so, because one bad year could have devastating financial consequences. You are not alone; crop insurance is purchased by most agricultural producers, to protect themselves against either the loss of their crops due to natural disasters, or the loss of revenue due to declines in the prices of agricultural commodities. Having crop insurance probably allows you to sleep better at night knowing you have some protection from the factors outside of your control like volatile markets and Mother Nature. Crop insurance for sunflower is available in 306 counties across the Dakotas, Minnesota, Texas, Oklahoma, Kansas, Nebraska, Montana, Wyoming and Colorado. (One new county was added for 2016: Nebraska’s Nuckolls County.) If crop insurance for sunflower is not available in your county, have your crop insurance agent check into obtaining a written agreement at the USDA Risk Management Agency (RMA) regional office that covers your state. RMA has 10 regional offices in various locations across the country that you may contact for details specific to your area using this link: www.rma.usda.gov. A written agreement is a document designed to provide crop insurance for insurable crops when coverage or rates are unavailable in a particular county. When insuring sunflower, you have three choices: Yield Protection, Revenue Protection or Revenue Protection with Harvest Price Exclusion. The “Basic Provisions” are the same for all crops and all policies, making paperwork much simpler to digest. Revenue and yield policies have the same (minimum) starting price, and are based on December soyoil prices traded on the Chicago Board of Trade during February and October. If you are interested in following spring and fall price information for all crops covered by crop insurance use this link:prodwebnlb.rma.usda.gov then click on ‘Your Price’ or ‘Many Prices.’ It will allow you to see how prices are tracking. What’s New for 2016? Well, there are a few things of which you should be aware. First, 2016 crop insurance guarantees will likely be about the same as last year. This suggests that crop insurance guarantees will once again be lower per acre and downside revenue risk will be greater in 2016 as compared to just a few years ago. In some cases, revenue guarantees for crop insurance products will be below total costs of production, depending on your individual circumstances. Here are some things you should consider when sitting down with your local crop insurance agent to make decisions on how to insure this year’s crop. Updated Transitional Yields (T-yields) RMA reviewed T-yields for sunflower for the 2016 crop year. T-yields, on average, have increased. County policy data show T-yields for oils still tend to be higher, on average, than confection T-yields. However, confection T-yields are increasing and have reduced the gap between oil and confection T-yields. The specific county changes can be found on the RMA Information Browser. Supplemental Coverage Option (SCO) The Supplemental Coverage Option (SCO) will be available to sunflower producers in most counties for the first time in 2016. SCO is an area-based policy endorsement that can be purchased to supplement an underlying crop insurance policy. It covers a portion of losses not covered by the underlying policy. SCO will be available on a county-wide level or on the basis of a larger area in counties that lack sufficient data. SCO indemnities will be triggered if losses in the area exceed 14% of expected levels, with SCO coverage not to exceed the difference between 86% and the coverage level selected by the producer for the underlying policy. This link has an interactive map that allows you to see which counties have SCO for 2016. Trend-Adjusted APH This is not something new for 2016, but it is something you may want to consider if you farm in a county that offers this option. Many producers felt the 10-year average Actual Production History (APH) yields used to determine their crop insurance guarantees did not accurately reflect their current yield potential, due to improved crop genetics and cultural practices that have been introduced in recent years. Moreover, farms with the maximum 10 years of yield history were penalized compared to farms with fewer years. “With this in mind the National Sunflower Association urged RMA to include Trend-Adjusted APH for sunflower to address this concern,” states Art Ridl, Dickinson, N.D., sunflower producer and NSA president. “No new counties were added for 2016. However, the NSA plans to continue to work with RMA to get all counties in all states that have sunflower crop insurance coverage to offer Trend-Adjusted APH in future years.” So how does Trend-Adjusted APH work? Basically, a trend adjustment factor is estimated for each crop and county. This factor is equal to the estimated annual increase in yield and is based on county average yields, as determined by the USDA National Agricultural Statistics Service (NASS) each year. Each yield reported in the individual insurance unit’s APH history is adjusted upward by the trend adjustment factor, times the number of years that have passed since the yield was recorded. Trend-Adjusted APH will give you some options when buying crop insurance in 2016. If the same percent guarantee is chosen, the dollar value of coverage will be increased and the premium you pay will be slightly higher. As an alternative, you can elect a lower percent guarantee for approximately the same dollars of coverage. The total premium would be the same as before, but your share of the premium would be smaller because the percent subsidy from the USDA is higher for lower-percent guarantee levels. The Trend-Adjusted APH is available for either yield protection or revenue protection policies, at all levels of guarantee except catastrophic (CAT) coverage (50% yield guarantee). The Trend-Adjusted APH election must be made by the insured producer by the sales closing date each year, which is March 15 for sunflower in the eligible counties. Counties that are eligible for Trend-Adjusted APH are shown in the table on the next page. Actual Production History Yield Exclusion (YE) Under this program, yields can be excluded from your APH when the county average yield for that crop year is at least 50% below the 10 previous consecutive crop years' average yield. The YE allows eligible producers who have been hit with severe weather, including drought to receive a higher approved yield on their insurance policies through the federal crop insurance program. “APH yield exclusion is extremely important because of the effect drought has had on the High Plains region,” says Leon Zimbelman, Keenesburg, Colo., sunflower producer and NSA board member. “The APH exclusion is something all sunflower producers in every state should check out with their crop insurance agent to see if it can benefit their operation and enhance risk coverage,” he adds. For 2016, YE is available in 245 counties that have at least one year eligible to be excluded. Click here for an interactive map showing which counties have YE. Whole-Farm Revenue Protection (WFRP) Sunflower producers may also choose to insure the revenue for all commodities on the farm, both crops and livestock, under one Whole-Farm Revenue Protection (WFRP) insurance policy. WFRP is available in all counties across the U.S. and offers coverage levels from 50 to 85%. This policy provides replant coverage for annual crops and can be purchased along with a Revenue or Yield policy. WFRP offers premium rate discounts for diversified farms, and whole-farm premium subsidy is provided for farms that meet the diversification requirements of two or more commodities. Information about WFRP can be found at: www.rma.usda.gov/policies. The National Sunflower Association offers maps of final planting dates for the Dakotas, Minnesota, Texas, Oklahoma, Kansas, Nebraska, Montana, Wyoming and Colorado. The maps can be found on the NSA website:www.sunflowernsa.com. Go to the “growers” link, then “Crop Insurance Planting Maps.” The final planting date as listed on these maps is the last day that you can plant the crop and still get full coverage. After this date, the coverage is reduced by 1% per day. The actual final date that RMA allows the crop to be planted with reduced coverage is anywhere from 20 to 25 days after the date listed on the NSA maps, depending on the county. When formulating your crop insurance plan for 2016 you’ll have to crunch the numbers to see what the best risk management plan for your operation is, given current prices. The best advice is to sit down with your local crop insurance agent. Your agent can describe the different insurance products available, as well as the policy rates and terms. He or she will help you choose the best coverage for your crop based on your particular farm operation and your risk management and budgetary needs.

India - Farmers need insurance from govt policies

The Prime Minister’s Crop Insurance Scheme (PMCIS) was announced with much fanfare as the panacea for all risks faced by the farmers. Ironically, on the same day news came that in the year 2015 over 3,228 farmers had committed suicide in BJP-ruled Maharashtra. The phenomenon of farmer suicides has continued unabated for over two decades when the neo-liberal economic policies have been in operation. The ruling classes in a denial mode however, has sought to underplay the unprecedented human tragedy and linked farmers’ misfortunes to the weather gods. What the Prime Minister is proposing is to insure the farmers from vagaries of nature. What is actually required is to insure farmers from the adversities created by deliberate government policies... Uncontrolled increase in input prices coupled with fall in prices of agricultural commodities is a regular phenomenon. Minimum support prices are unremunerative and far below actual costs of production. Farmers do not even get this price as there is no effective procurement. The absence of effective support system to address such risks has acted as a disincentive to farmers and there is need for immediate confidence-building measures to overcome such a scenario. The efficacy of the PMCIS to address risks of farmers also needs to be analysed as effectively, insurance has the potential to build confidence among the cultivating peasantry. Exclusive The first and foremost was the need for a universal comprehensive crop and income insurance scheme covering both income and yield risk for all farmers including tenant farmers and sharecroppers as well as for all crops. The PMCIS continues with the system of covering loanee farmers only on a mandatory basis. Non-loanee farmers as well as tenant farmers and sharecroppers are likely to remain excluded from its ambit as is the case at present. The socially and economically oppressed Dalit and Adivasis will also largely be excluded from the scheme. Most of them living in precarious situation with meagre incomes from cultivation will find it difficult to pay the premium. To be truly inclusive the Central and state governments must subsidise the entire premium for the poor, small and marginal farmers, tenant farmers, share-croppers as well as all Adivasis and Dalits farmers… The Centre and state should share these expenses in 70:30 ratio as many states are unable to bear this huge expense. North Eastern states and states like Odisha, Jharkhand, Chhattisgarh and Bihar must be fully subsidised by the Central government. Only such decisive moves will help to incentivise the farmers and make agriculture viable. ‘All-risk agricultural insurance’ which can absorb the shock of crop failure by providing a cushion that assures the farmers of adequate protection against crop losses as well as fall in incomes due to market volatilities is what was required. This is indispensable in the context of climate change and other exigencies as well as volatile prices of farm produce under a trade liberalised economy. A separate price stabilisation fund to address the issue of fall in prices of agricultural commodities due to trade liberalisation must be instituted with adequate funds. The PMCIS fails to come up with a comprehensive resolution of these issues. At present there are restrictions on crops that can be insured in a district though the crop is traditionally grown in the district for the last several years. Any new scheme for being effective should be applicable to all districts and expanded to cover all crops (including food crops, horticultural and plantation crops) and all farmers including tenant farmers/share-croppers. Unit of assessment The underlining principle should have been that even in case there is crop loss in a farm the farmer should be able to get compensation. At present, assessment is being done at block, taluk or mandal level. This is leading to denial of reimbursement of losses to genuine farmers who have lost their crops. The unit for insurance should be provided on the basis of data on yield and weather collected at the level of the village with the losses on individual farms taken into account. Only then the calculation of the threshold yield and indemnity levels can be sensitive to local conditions and address losses suffered by individual farmers. For ensuring this the government should immediately establish systems of village-level collection of data on crop yields, weather conditions and price situation. It is also notable that even in such a situation and undervaluation of losses as well as undue delays in settlement of claims the coverage and indemnity payments are biased towards a few regions and crops. According to the Situation Assessment Survey and National Sample Survey Organisation the share of households not insuring their crop are in some crops up to 100 percent and in most crops over 95. The extension of risk period under crop insurance till the produce reaches the storage within reasonable time after crop harvest must be ensured. At present this covers only up to crop cutting and possibilities of later risks in the interim period between the harvest and transport to storage facilities are not effectively taken into account. In case of post–harvest losses the harvested crop bundled and heaped at a place outside the field before threshing will not be covered in the scheme. Coverage is available only up to a maximum period of 14 days from harvesting for those crops which are kept in ‘cut & spread’ condition to dry in the field after harvesting, against specific perils of cyclone/ cyclonic rains, unseasonal rains throughout the country. This could act as a loophole to deny farmers genuine claims from damages caused post-harvest by rains or other causes. Gross undervaluation In calculating the threshold yield for purpose of settling insurance claims the present scheme proposes to take the rolling averages of past seven years, rather than the potential yield in a normal year. Semi-arid and dry-land agriculture as well as flood-prone areas and drought-prone areas will show a low average leading to gross undervaluation of losses and thereby denying the farmers their due. In areas that are frequently hit by drought and floods, yields of the affected years should be eliminated and only yield for normal years should be taken into consideration to fix the threshold level for loss assessment. Removal of two calamity years alone will not suffice as erratic climate in many regions leads to losses and low yields every season. Since actuarial premia are likely to be high for regions with low and erratic rainfall, a special budgetary subsidy must be ensured to address problems of these regions. Indemnity levels, threshold yields and other yardsticks must be amended to safeguard the interests of peasants in arid and semi-arid zones. The calculation of actual yields as well as costs must be done in a transparent manner and calculations of scale of finance must be based on latest information and arrived scientifically by also involving experts and farmers’ representatives. Minimum support prices must also be calculated according to the Swaminathan Commission recommendation of at least 50 per cent above the cost of production (C2+50%). This may be particularly useful to ensure farmers are given correct insurance in years registering fall in yields. Source - thehansindia.com

Philippines - 1,098 dry spell-affected farmers file notices of loss

A TOTAL of 1,098 farmers in Negros Occidental affected by the dry spell have filed notices of loss with the Philippine Crop Insurance Corp. (PCIC) to avail of crop indemnity claims. Records of the Office of the Provincial Agriculturist (OPA) showed that affected farmers cover a total damaged area of about 1,374 hectares in 18 local government units (LGUs) in the province. They are part of the 5,295 farmers and fisherfolk in 21 LGUs currently affected by the dry spell that caused damage to 4,551.70 hectares of rice, corn, high-value crops, and tilapia farms amounting to P155.03 million. Pontevedra has the highest number of farmers who filed notices of loss, 307. It is followed by Kabankalan with 205; Cauayan, 127; and Hinoba-an, 100 farmers. Ninety-two farmers in Candoni also filed notices of loss; Hinigaran, 50; Murcia, 44; La Castellana, 43; Moises Padilla, 40; Bago City, 30; Ilog, 26; San Carlos City, 19; Pulupandan, five; San Enrique, three; cities of Himamaylan, Sipalay, and La Carlota, two each; and Isabela, one. Provincial Senior Agriculturist Dina Genzola said these farmers are enrolled in the Negros First Universal Crop Insurance Program (NFUCIP) of the provincial government, which provides claims worth P17,000 per hectare of farm affected by calamities. Genzola said the lists of farmers who filed their notices of loss were submitted to OPA by agriculturists and NFUCIP facilitators from different districts. OPA will then process and submit these to PCIC for assessment and validation. “The PCIC has already added adjusters to speed up the conduct of validation and computation of claims,” she said, adding that it has already assessed and validated about 500 insured farmers who are expected to receive their respective claims within 15 to 30 days. Genzola added that the amount of indemnity will be based on the value of agriculture inputs thus, damaged rice crops for instance in the maturity stage may have higher claims than seedlings stage. The enrollment premium per cropping season for NFUCIP is P840. Of which, only P340 is the counterpart of the farmer-enrollees while the remaining P500 is shouldered by the Provincial Government as loan. Enrollees should apply for insurance before planting, Genzola said, adding that farms covered by the program are those planted for not less than 25 days. “We continue to encourage local farmers to avail of the insurance program of the province to allay possible adverse effects of calamities like El Niño to crops,” she noted. Source - sunstar.com.ph

India - Punjab seeks inclusive crop insurance scheme

The Pradhan Mantri Fasal Bima Yojana, hailed as one of the most farmer-friendly crop insurance schemes of independent India, has run into rough weather in Punjab. The state is at loggerheads with the Centre over the efficacy of the crop insurance scheme. "The new scheme provides an indemnity level of 90 per cent. In Punjab, the average loss of major crops, wheat and paddy, is between two per cent and three per cent. So our farmers will not benefit from this scheme. In a written submission to the Union ministry of agriculture, the state has sought the indemnity level be raised to 95 per cent," Punjab's Agriculture Minister Tota Singh said. "The scheme proposes the average crop size over the previous 10 years as the benchmark for indemnity; we have requested the Centre to consider only the previous year's crop as a parameter. The new crop insurance is aligned to the needs of rainfed states. Punjab is never declared drought-hit and farmers are provided assistance in the form of free power to exploit groundwater to save crops. Last year, we spent an additional Rs 1,400 crore on power subsidy to agriculture to save the kharif paddy. Our annual average power subsidy to agriculture is an estimated Rs 5,000 crore, which helps us maintain the nation's food security," Singh added. The harvest lying in the field is covered by weather insurance. In Punjab, due to mechanical harvesting and efficient transport, the harvest reaches the market in 48 hours. The state wants that the insurance scheme should also cover the produce lying in market yards, waiting to be bought by agencies. Punjab also wants the insurance premium to be scaled down to one per cent. Farmers in the state have huge debts and many cannot afford the insurance premium. Punjab Chief Minister Parkash Singh Badal wrote to Prime Minister Narendra Modi on January 25, asking him to include the state's demands in the insurance scheme. A reply is awaited. Source - business-standard.com

India - After dry winter, hailstorm to wreak havoc over Rabi crop in Punjab

At the time when India is already moving towards the major fall in the wheat output, expected hailstorm has further dampened the leftover hopes of the farmers in Punjab. India is the world's second-biggest wheat producer, with Punjab being one of the largest contributor. Farmers are already under distress due to the weather vagaries, as wheat production is expected to be low for the second consecutive year in 2016 due to an unusual warm winter in central and northern India this season. A fresh Western Disturbance over Jammu and Kashmir has induced a cyclonic circulation over Central Pakistan and adjoining Punjab and Haryana. Under its influence, scattered light to moderate rain and thundershowers are likely over plains of Punjab and Haryana. Isolated parts of Punjab may also receive hailstorm due to formation of convective clouds. According to Skymet Weather, we generally see the formation of convective clouds during this season. Whenever convective clouds with the cloud top of 6 to 8 kilometers form, they are capable of giving hailstorm. While rains will be beneficial in increasing the moisture level in soil, hailstorm can damage the crop up to great extent. The standing wheat plantations can fall flat on the ground, thereafter which they will not grow further. This is the second straight year when India will accumulate lower wheat output after the series of bumper harvests since 2007. In 2015, untimely rains and hailstorm during harvesting season had reduced the output to 88.94 million tonnes from 91.50 million tonnes a year. Thousands of farmers had committed suicide in wake of the huge loss. Source - skymetweather.com

USA - S.C. farmers face wide insurance gap on flood losses

South Carolina farmers facing steep losses from last year’s flood must await government action on financial assistance as the new Farm Bill and private crop insurance are not built to handle such a disaster, according to presenters at an event sponsored by the Clemson University Cooperative Extension Service. “While politics may be distasteful for some, it is essential to survival,” S.C. Farm Bureau President Harry Ott said at the S.C. Cotton Growers annual meeting sponsored by Clemson Extension and the S.C. Cotton Board. The 2014 Farm Bill eliminated direct, guaranteed payments and disaster assistance to farmers, which placed a heavy burden on private insurance coverage. Ott said that early estimates show insurance covering about one-third of the $370 million in crop losses stemming from October’s historic flood. Clemson University agricultural economist Nathan Smith agreed, saying that costly insurance premiums prompt farmers to opt for higher deductibles, which reduces claims payments. Additionally, coverage is capped at 85 percent of a farmer’s planted acreage, and most farmers can only afford policies that cover between 65 and 75 percent, Smith said. Any claims payments farmers do receive are based on market prices, which tend to be lower than the prices local growers actually would receive if they had crops to sell to local merchandisers and processors. “When you factor all of that in, yeah, insurance is only going to cover about one-third to half of the loss,” Smith said. The 2014 Farm Bill may not be much help either. “It is not meant to handle the magnitude of the disaster we just had,” Smith said. The 2014 Farm Bill replaced direct, guaranteed payments with the Agriculture Risk Coverage (ARC) or Price Loss Coverage (PLC) programs. While ARC and PLC may provide some revenue protection, payments are variable and uncertain and cotton is no longer covered under the program. Payments to farmers, for example, are based on average county revenue, which will be extremely low this year because of the drought and flood. Additionally, those payments are capped at 10 percent of county revenue, so payments to farmers will be low compared to the magnitude of individual losses, Smith said. “The Farm Bill puts reliance on private insurance,” he said. Farmers are likely experiencing issues with filing claims, meanwhile. In some cases, farmers are required to harvest crops to receive a claim based on crop appraisal, said Jeanne Lindsey, a senior risk management associate with the U.S. Department of Agriculture’s Risk Management Agency. “I understand that was an issue for some producers because the ground was so wet they couldn’t even get in there to harvest,” Lindsey told attendees of the cotton meeting. South Carolina cotton production dropped 72 percent last year, while peanut production was down 35 percent, according to initial estimated from the U.S. Department of Agriculture’s National Agricultural Statistics Service. Of 278,000 acres of cotton planted last year in South Carolina, just 124,000 acres were harvested and the per-acre yield was down 36 percent from 2014, federal data shows. Direct crop losses from the flood amount to $329 million, according to analysis by the USDA, the Farm Service Agency and the S.C. Department of Agriculture. Farmers suffered another $46 million in losses because wet conditions prohibited them from planting winter wheat, vegetables and fruit. Typically, insurance provides a buffer for farmers who have some crop to sell but less than a normal operating year, Ott said. “But now many farmers have no crops to sell,” he said. “Insurance can’t fill that hole.” He said government assistance is needed to keep some farmers in business. Congress approved $300 million in disaster assistance for which South Carolina farmers could receive a share, Ott said, but state government must approve the release of that federal funding. Additionally, the S.C. Farm Bureau is working with state lawmakers to allocate some state assistance to farmers, but lawmakers have not yet approved it, Ott said. In addition to presentations from Ott, Smith and Lindsey, growers heard about the latest in insect management from Clemson entomologist Jeremy Greene of the Edisto Research and Education Center and an overview of new cotton variety performance testing conducted by Mike Jones, the state cotton specialist and researcher at Clemson’s Pee Dee Research and Education Center. Source - newsstand.clemson.edu

Canada - Price Insurance Works[:ru]C

In the spring of 2015, 1,018 calf price insurance policies were purchased in Saskatchewan through the Western Livestock Price Insurance Program (WLPIP). This resulted in approximately 120,000 calves or 15 per cent of the provincial marketable calf crop being covered through the program. The total coverage provided was $186 million. At the time the coverage was purchased markets were at record highs. Producers were locking in price insurance protection from $226 per hundred weight (CWT) to $286 per CWT. Some producers selected higher coverage levels for a higher premium, while others selected lower coverage levels at a lower premium cost. Producers were evaluating the market, their risk protection needs and finding the right fit for their operation with the price insurance options. In September and October the cattle market came off from its record highs earlier in the year. This decline in prices put producers, who had purchased the calf price insurance into a claim position. During October, November and December producers who had purchased calf price insurance in the spring were receiving benefits as the market prices were lower than the prices the producers purchased coverage on. WLPIP provided over $4 million in benefits to Saskatchewan producers who purchased calf price insurance in the spring. Example: On May 28, 2015, a producer had 100 calves they planned on marketing in mid-October each weighing an average of 600 pounds. Insured weight = (number of head X expected sale weight) / 100 = (100 calves X 600 pounds) / 100 = 600 cwt The premium table on May 28, 2015 offered insurance coverage for mid-October at $282/cwt or $2.82 per pound. The coverage cost $2.80/cwt. Premium Cost = 600 X $2.80 = $1,680.00.00 The producer has a floor price of $2.82 per pound. In October, during the final four weeks of the policy, the producer reviews the settlement prices. Week 1 of claim window – September 28, 2015 – Settlement Price – 294.54 (above coverage) Week 2 of claim window – October 5, 2015 – Settlement Price – 280.82 (below coverage) Week 3 of claim window – October 12, 2015 – Settlement Price - $269.83 (below coverage and can make a claim) Week 4 of claim window – October 19, 2015 – Settlement Price - $274.98 (below coverage and claim automatically settles) During the second and third week of the claim window the producer could have submitted a claim for a portion or all of their insured weight. In week four, if the producer had any of the insured weight remaining it would have automatically settled. For this example the producer let the claim automatically settle in the final week for all of the insured weight: Claim = (Insured Weight X Selected Coverage Price) - (Insured weight X Settlement Price) = (600 X $282.00) - (600 X $274.98) = $169,200.00- $164,988.00 = $4,212.00 This producer would have automatically received a payment from WLPIP for $4,212.00 Where do your settlement values come from? When a producer purchases price insurance for their cattle they have a forecasted price based on a number of factors including the futures market, currency exchange and basis. The producer also selects the time frame for when their insurance will provide coverage, which is anywhere from 12 to 36 weeks. Claims are made during the final four weeks of the insurance policy. Producers compare their insured price to the settlement price offered by the program. If the settlement price is lower the producer is in a benefit position. This settlement price is based on the actual sales data from Western Canadian auction marts. Depending on the area the policy was purchased for, either Saskatchewan/Manitoba or Alberta, the settlement price reflects the market sales in those regions. WLPIP accesses market data from 42 auction marts across the western provinces including the internet auctions of TEAM and DLMS. This data provides a true reflection of the current prices producers are receiving for their livestock. This is the most comprehensive collection of cattle market data in Western Canada. WLPIP is on sound financial footing. The claims producers had this past fall did not exceed the premium collected during the two years the program has been operating. WLPIP has been designed to be actuarially sound; over time claims will equal premiums collected. If claims should surpass the premium collected, there is deficit backing from the federal government and reinsurance is a part of the program to cover sizable payments. What’s Next? The opportunity to purchase price insurance for feeder cattle, fed cattle or hogs is available year-round. Calf price insurance has a deadline to purchase, as it is designed to protect against price declines on calves born in the spring and marketed in the fall. Calf price insurance became available for purchase on February 2, 2016. The deadline to purchase calf price insurance is May 31, 2016. Price insurance is purchased through an online process. If a producer does not have an online account and is interested in purchasing calf price insurance before the May 31 deadline, they need to contact their local Crop Insurance office to start the application process. SCIC can also provide more information on how livestock price insurance works, the sign-up process and how to purchase policies. Source - saskcropinsurance.com

India - Natural catastrophe premiums to go up as claims rise

Premiums for general insurance products under the natural catastrophe segment could rise with an increase in the number of incidents, such as floods and earthquakes, that hit parts of India in the past two years. Insurance companies' senior executives met recently to discuss this issue and decided that with the rise in claims, premiums could see an upward revision of about 10-20% from the next fiscal. Insurance companies have taken a hit of Rs 4,800 crore due to claims arising from the recent floods that hit Chennai and other parts of Tamil Nadu. Public sector insurers, including United India Insurance, have taken the largest hit. "With the rise in claims, it is imperative that premiums also see a proportionate rise," said a senior general insurance executive. Insurance companies suffered losses due to the earthquake with epicenter in Nepal that also affected parts of North India. Similarly, North-East India was also hit by an earthquake few days ago, though claims have not been very high. In 2013, floods and landslides in Uttarakhand led to losses of Rs 3,000 crore for insurance companies. Most of it was related to projects as well as motor insurance due to the destruction caused by inundated roads. However, in India and globally, insured losses in natural catastrophes are much lower than the economic losses. This is because insurance penetration is not very high. India's top 10 cities have $179.8 billion (Rs 11.9 lakh crore) GDP at risk, according to the Lloyd's City Risk Index 2015-2025. This index presents an analysis of economic output at risk (GDP at risk) in 301 major cities from 18 man-made and natural threats over a 10-year period. Catastrophes caused by natural events, such as extreme weather, pandemics and plant epidemics account for just over half ($98.1 billion) of GDP at risk in the 10 cities. Mumbai has the largest total GDP at risk with a $47.38 billion (Rs 3.13 lakh crore) risk exposure. Almost one quarter of the city's potential losses are related to pandemic risk, followed by terrorism at 16.77%, market crash at 12.94% and flood at 12.89%. In 2014, Cyclone HudHud hit Andhra Pradesh and Odisha that led to losses of almost 4,000 crore. According to senior public-sector insurance executives, the largest claims had come from Visakhapatnam (Vizag), where there was severe damage to commercial units and the naval base, as well as the airport. Similarly, the crop insurance business also took a hit of Rs 2,000 crore owing to destruction of crop-fields, especially in the coastal areas of Odisha. Global economic losses from natural catastrophes in 2015 stood at $123 billion - 30%. below the 15-year average of $175 billion. There were 14 multi-billion dollar economic loss events around the world, with the costliest being forest fires that burned out of control in Indonesia. Recently, Insurance Regulatory and Development Authority of India (IRDAI) chairman T S Vijayan said that there is a need for price correction in general insurance space, especially in the nat cat segment. He had said that the premiums should be commensurate with the claims. In November, heavy rains lashed Chennai and several other districts in Tamil Nadu causing heavy damage to life and property. More than 200 lives were lost as per estimated as floods lashed the city for days and people were stranded in submerged buildings without food or water. Corporate all-risk policies, which include production interruption coverage, had seen an influx of claims since several factories and offices were submerged for more than three days. In terms of numbers, motor insurance topped the list of claims, as several cars and motorcycles parked on the streets got damaged in the deluge. A natural catastrophe pool would have reduced losses and help insurers share the claims from big incidents. However, this pool is yet to be set up due to some the industry is yet to form a consensus on the structure of the pool and pricing. Source - business-standard.com

USA - Emergency loans available from FSA

“Farmers in Cherokee County, who suffered crop or livestock losses due to Severe Storms, Tornadoes, Straight-Line Wind and Flooding occurring 12/23/16 through 1/9/16, may now apply for Farm Service Agency (FSA) emergency loans,” FSA Farm Loan Manager Jason R. Love said. Cherokee County became eligible under existing legislation which provides that farmers in counties bordering on those which have been designated for disaster assistance, may also qualify for such assistance. Applications for assistance will be accepted by FSA until 9/21/16. “Loans covering physical and/or production losses are scheduled for repayment as rapidly as feasible, consistent with the applicant’s reasonable ability to pay,” said Love. The current interest rate is 3.625 percent but is subject to monthly changes until the loan is approved. FSA’s Farm Loan Programs staff is committed to new and existing customers, FSA customer goals and our rural communities. FSA’s service extends beyond the typical loan, offering FSA customers ongoing consultation, advice and creative ways to make your farm business thrive. At the Farm Service Agency, we want to be your lender of first opportunity to overcome these adverse weather conditions and rebuild your operation to get back on track. FSA’s loan staff can refer customers to other public and commercial financing sources that can serve as a blend with FSA’s farm loan programs. FSA loans covering physical losses may be used to replace installations, equipment, livestock, or buildings (including homes), lost through this disaster. FSA loans covering production losses may be used to buy feed, seed, fertilizer, livestock, or to make payments on real estate and chattel debts. “Funds can also be used for other essential operating and living expenses,” Love said. To be eligible for an emergency disaster loan, an applicant must be operating a family size farm or ranch, must be unable to get credit elsewhere, and must have suffered a qualifying physical and/or production loss from the disaster. Farmers who suffered at least a 30 percent reduction to at least one cropping enterprise, may have a qualifying production loss. Emergency disaster production loss loans cover 100 percent of qualifying losses. Source - sekvoice.com

Taiwan - Updated figures on ag losses

As reported last week, Taiwan has been hit by a cold front which is causing huge losses in the agricultural industry. Updated statistics released by the Council of Agriculture (COA) Friday 29 January showed that the estimated agricultural losses last week have now topped NT$2.4 billion (US$71.64 million). Tai Yu-yen secretary general of the COA, said the updated estimate of agricultural losses reached a new high since December 1999, in terms of damage caused by cold weather. Last week's cold wave, the most serious in a decade, engulfed Taiwan over the weekend 22-24 January. While new lows were not set in every area, all 28 weather stations around Taiwan recorded their lowest temperatures of this winter over the past weekend. As of 11 a.m. Friday, the COA data showed, Tainan City had suffered the heaviest agricultural losses in Taiwan. The damage in Tainan has been estimated at NT$1.19 billion, accounting for 48 percent of the country's total. Kaohsiung City came in second with agricultural losses hitting NT$821 million, making up about 33 percent of the national total, followed by Chiayi County, which recorded NT$128 million in agricultural losses. Yulin County rounded out the top four with NT$76.51 million in farm damage, the statistics showed. The COA said that estimated crop losses totaled NT$276 million resulting from the cold weather as of Friday morning. A total of 5,024 hectares of crops were damaged, with grapes hit the hardest, followed by pears, tomatoes, tangerines and strawberries. Source - freshplaza.com