On Overview of AGRLite

1
On Overview of AGR-Lite
Funding was provided to National Crop Insurance
Services (NCIS) through a competitively awarded
Cooperative Agreement from the USDA Risk
Management Agency.

• Dr. Laurence M. Crane
• National Crop Insurance Services

2
What and where is AGR-Lite?

• A whole farm gross revenue insurance that
• Covers crop commodities, animals, and animal
  products.
• Protects against a loss of production, quality
  and market price.
• Note Most USDA government payments are excluded.

3
How does AGR-Lite work?

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

4
Why might I need AGR-Lite?

• Is a stand alone policy
• Can be used as umbrella over selected individual
  crop coverages
• Works for producers of organic, high value
  varieties, dairy, aquaculture and livestock.
• Recognizes local market prices that may be higher
  than national prices.
• Covers nursery, greenhouse, milk, wool, honey,
  aquaculture, etc.
• Protects against low prices.

5
Why might I need AGR-Lite?

• Protects direct marketed production at realistic
  prices.
• It gives individual protection based on your
  yield, quality and price history.
• Low yields and poor quality are adjusted based on
  the market value.
• Covers otherwise uninsurable crops.
• Record keeping is simple.
• Premium is usually lower than other insurance
  plans premium discounts result when used along
  with MPCI.

6
What is covered by AGR-Lite?

• Natural disasters including unavoidable damage
  from insects, disease, wildlife
• Failure of irrigation water supply, fire,
  earthquake, volcanic eruption
• Market fluctuation

7
Do I qualify for AGR-Lite?

• o       1. I am a U.S. citizen or a legal
  resident.
• o       2. I file a calendar year or fiscal year
  tax return which includes agricultural
  commodities.
• o       3. I have IRS tax forms for the previous
  5 years that were filed for the same entity.
• o       4. The adjusted gross income for my
  operation for the current year is projected at
  less than 2,051,282.
• o       5. No more than 50 of my total revenue
  comes from commodities purchased for resale as
  shown on the Annual Farm Report.
• o       6. No more than 83.35 of my total
  revenue comes from potatoes.

8
Does AGR-Lite fit my operation?

• Have no more than 2,051,282 in approved gross
  income
• Farm crops or animals or both
• Are looking for a viable individualized revenue
  protection option as part of a risk management
  plan
• Need crop insurance to help secure a loan
• Guarantee a fixed amount of guaranteed income
• Farm crops not insured by traditional crop
  insurance products and/or,
• Produce high value crops and desire protection
  based on such values.

9
How does the number of crops grown affect my
coverage and cost?

• More crops lower premium rates
• Premium rates are linked to the number of
  commodities that you produce on your farm.
• The more diversified your farm, the more the
  liability is dispersed over the different
  commodities that you produce.
• Therefore, diversified farming operations have
  lower risk and therefore lower premium.

10
What if one or more of my crops are insurable
with regular crop insurance?

• You may choose to insure your crops under one or
  both types of coverage.
• For example, if insured under MPCI and AGR-Lite
• The AGR-Lite premium will be reduced to eliminate
  paying premiums twice for overlapping protection.
  
• Income generated from MPCI is considered revenue
  to count for AGR-Lite.
• You may not have both AGR and AGR-Lite coverage.

11
What coverage level is right for me?

• Ask yourself
• For what coverage levels do you qualify?
• How much can you afford to lose?
• What makes best financial sense?

12
What part of my income is allowed by AGR-Lite?

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

13
How do I calculate my approved Adjusted Gross
Revenue?

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

14
How do I calculate my approved Adjusted Gross
Revenue?

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

15
How do I calculate my approved Adjusted Gross
Revenue?

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

.
16
How do I calculate my approved Adjusted Gross
Revenue?
.

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

17
How much will it cost me?

• Premium is subsidized by the government
• 48 subsidy at the 80 level.
• 55 subsidy at the 75 level.
• 59 subsidy at the 65 level.
• Visit RMAs premium calculation web page at
  www.rma.usda.gov

18
How do I get coverage and who can help me?

• Visit a crop insurance agent.
• Discuss coverage options with and get help from
  an agent.
• Complete and submit an application to an agent.

19
What should I take with me when I meet with a
crop insurance agent?

• IRS 1040 Schedule F forms, schedule C or other
  tax forms that reflect sales and expenses for
  agricultural commodities for the previous 5
  years.
• Proposed plan of operation for the upcoming
  insurance year.
• If you choose 75 or 80 coverage, a commodity
  profile report for previous 2 years.
• If applicable, beginning inventories, accounts
  receivable, or prepaid purchases.

20
Finding An Agent

• Ask other growers for recommendation.
• Check with insurance agency where you purchase
  other types of insurance.
• Go to Crop Insurance Company Websites
• Check with farm organizations you have a
  relationship with.
• Use the USDA Risk Management Agencys Web sites
  Agent Locator.
• www.rma.usda.gov

21
Crop Insurance ProvidersIn Rhode Island in 2008

• 1. ARMtech Insurance Services
• 800-335-0120
• www.armt.com
• 2. Rain and Hail L.L.C.
• 800-776-4045
• www.rainhail.com
• 3. Rural Community Insurance Services
• 800-451-3836
• www.rcis.com

22
Crops Insurable in Rhode Island
AGR is a plan of insurance and not a crop. Under
AGR many crops (including livestock) are
insurable that are not insurable under any other
plan of insurance.
90 (APH) Actual Production History 44 (CRC)
Crop Revenue Coverage 50 (DO) Dollar
Amount of Insurance 86 (GYC) Grower Yield
Certification 61 (AGR-L) Adjusted Gross Revenue
Light 63 (AGR) Adjusted Gross Revenue
(P) Pilot program