Real Cost of Crop Insurance, Farmers Write Big Premium Checks

Real Cost of Crop Insurance, Farmers Write Big Premium Checks By Dr. G. Art Barnaby, Jr. Professor Agricultural Economics Kansas State University Presented to Minnesota Crop Insurance Conference, Sponsored by Center for Farm Financial Management, Verizon Wireless Center Mankato, MN, September 11-12, 2013 Email barnaby@ksu.edu Check out our WEB page at http://www.agmanager.info 1 Real Taxpayer Cost for Crop Insurance 1. Headlines claim 2012 crop insurance will cost taxpayers $30 to $40 billion! Farmers laughing all the way to the bank with over paid claims! Forecast? 2. New headline; Crop insurance Cost Taxpayers $17.4 Billion! Fact or Repeated false claim? 3. Replace crop insurance with a free disaster program; 4. Or Free Market ; eliminate all safety net programs and layoff all FSA and RMA employees. 5. Farm Bill interest groups include farmers, ag. lenders, Farm Credit (agent), Grain Companies, RMA employees, FSA employees, crop insurance agents, AIPs, EWG, RMA consultants, food stamp supporters, Land Grant Universities, others, and taxpayers. 6. Many analysts doubt that current institutional constraints would allow either policy extreme. 2 1

Are Crop Insurance Claims Higher than Expected? 1. The $17.4 billion in 2012 claims were only partly paid by Taxpayers! In addition, the long run national loss ratio will remain below 1.0; the targeted loss ratio. 2. During the past 19 years, only 2 underwriting losses over 5%, 2002 & 2012. 3. Government accounting does not recognize RMA underwriting gains (under spent subsidy), but does include underwriting losses. 4. Net RMA cost including net gains have averaged about $4 billion per year. Including A&O total under $5.2B average. 3 USA Crop Insurance Performance, All Contracts Pol Earn Prem Net Acres Liabilities Total Premium Subsidy Indemnity /Gain Premium Paid Ratio by Farmers Farm-er Ratio Year (000) (000) (000) (000) (000) (000) (000) (000) (000) 1988 2 333 45,475 4,423,961 294,957 74,723 797,178 (502,221) 2.70 74.7% 3.62 1989 949 101,632 13,535,807 814,302 204,965 1,212,235 (397,933) 1.49 74.8% 1.99 1990 895 101,361 12,828,368 836,468 215,308 973,032 (136,563) 1.16 74.3% 1.57 1991 707 82,357 11,215,994 737,049 190,066 955,289 (218,240) 1.30 74.2% 1.75 1992 663 83,107 11,334,059 758,789 196,721 918,215 (159,426) 1.21 74.1% 1.63 1993 679 83,725 11,353,421 755,739 200,009 1,655,479 (899,740) 2.19 73.5% 2.98 1994 801 99,640 13,608,387 949,396 254,876 601,146 348,250 0.63 73.2% 0.87 1995 2,034 220,511 23,728,454 1,543,350 889,372 1,567,732 (24,382) 1.02 42.4% 2.40 1996 1,615 204,864 26,876,813 1,838,559 982,063 1,492,663 345,896 0.81 46.6% 1.74 1997 1,320 182,189 25,458,851 1,775,368 902,794 993,551 781,817 0.56 49.1% 1.14 1998 1,243 181,835 27,921,436 1,875,927 946,312 1,677,542 198,385 0.89 49.6% 1.80 1999 1,289 196,918 30,939,450 2,310,133 954,872 2,434,715 (124,582) 1.05 58.7% 1.80 2000 1,323 206,467 34,443,753 2,540,164 951,192 2,594,834 (54,671) 1.02 62.6% 1.63 2001 1,298 211,329 36,728,587 2,961,848 1,771,322 2,960,125 1,723 1.00 40.2% 2.49 2002 1,259 214,865 37,299,303 2,915,944 1,741,028 4,066,732 (1,150,788) 1.39 40.3% 3.46 2003 1,241 217,409 40,620,507 3,431,359 2,041,658 3,260,806 170,553 0.95 40.5% 2.35 2004 1,229 221,020 46,602,280 4,186,133 2,472,282 3,209,723 976,409 0.77 40.9% 1.87 2005 1,191 245,856 44,258,915 3,949,230 2,337,101 2,367,323 1,581,907 0.60 40.8% 1.47 2006 1,148 242,082 49,919,480 4,579,539 2,682,006 3,503,536 1,076,003 0.77 41.4% 1.85 2007 1,138 271,634 67,339,911 6,562,118 3,823,353 3,547,569 3,014,549 0.54 41.7% 1.30 2008 1,149 272,250 89,892,360 9,850,879 5,690,668 8,677,910 1,172,969 0.88 42.2% 2.09 2009 1,172 264,776 79,575,187 8,950,746 5,426,886 5,228,924 3,721,822 0.58 39.4% 1.48 2010 1,141 256,268 78,104,325 7,594,397 4,711,271 4,251,436 3,342,960 0.56 38.0% 1.47 2011 1,152 265,609 114,112,377 11,955,219 7,452,814 10,826,308 1,128,911 0.91 37.7% 2.40 2012 3 1,173 282,503 116,938,299 11,087,372 6,960,499 17,316,100 (6,228,728) 1.56 37.2% 4.20 1988 to 2011 4,473,177 932,121,987 83,967,611 47,113,662 69,774,003 14,193,608 0.83 43.9% 1.89 Est 2012 + History 4,755,680 1,049,060,285 95,054,983 54,074,162 87,090,103 7,964,880 0.92 43.1% 2.13 4 2

Pol Earn Prem Minnesota Corn Ratio by Year % Of Premium Net Total Farm-er Indemnity Year Acres Liabilities Prem-ium Subsidy Paid Ratio (000) (000) (000) (000) (000) (000) Farm- Ratio 1992 18,875 2,423.5 381,710 22,416 6,358 16,058 23,616 1.05 72% 1.47 1993 22,053 2,628.6 371,316 21,659 6,198 15,461 179,177 8.27 71% 11.59 1994 34,333 4,410.1 630,721 39,224 11,197 28,027 3,503 0.09 71% 0.12 1995 44,534 5,910.9 746,493 47,285 24,216 23,069 9,750 0.21 49% 0.42 1996 39,406 5,964.8 955,117 61,142 30,643 30,499 10,250 0.17 50% 0.34 1997 36,471 5,599.5 882,757 56,514 26,474 30,040 7,321 0.13 53% 0.24 1998 35,886 5,951.0 1,059,034 67,276 30,483 36,793 7,245 0.11 55% 0.20 1999 34,825 5,798.6 960,655 70,007 24,804 45,203 10,487 0.15 65% 0.23 2000 34,720 6,094.3 1,093,857 80,844 23,096 57,748 13,103 0.16 71% 0.23 2001 33,232 5,893.7 1,158,036 92,635 53,929 38,706 71,047 0.77 42% 1.84 2002 32,816 6,154.5 1,244,363 99,937 56,506 43,430 10,839 0.11 43% 0.25 2003 32,068 6,226.4 1,348,818 113,168 64,238 48,930 28,511 0.25 43% 0.58 2004 32,055 6,523.4 1,700,747 148,328 84,397 63,931 92,449 0.62 43% 1.45 2005 31,099 6,423.1 1,437,918 119,530 67,338 52,192 24,060 0.20 44% 0.46 2006 30,320 6,461.1 1,654,727 134,500 75,316 59,184 39,745 0.30 44% 0.67 2007 32,035 7,613.7 3,309,740 312,528 170,796 141,733 166,350 0.53 45% 1.17 2008 31,439 7,041.9 4,069,093 388,968 216,246 172,722 270,648 0.70 44% 1.57 2009 31,475 7,044.5 3,228,864 317,825 195,858 121,967 45,968 0.14 38% 0.38 2010 30,737 7,026.7 3,256,633 251,190 157,312 93,878 22,085 0.09 37% 0.24 2011 32,068 7,632.2 5,455,004 446,187 280,329 165,858 178,461 0.40 37% 1.08 2012 33,986 8,197.7 6,086,021 458,590 287,185 171,404 164,429 0.36 37% 0.96 21 Yr Total 127,020 41,031,624 3,349,753 1,892,918 1,456,835 1,379,042 0.41 43% 0.95 One Year Stress Equal to 1.00 loss Ratio = 3,793,658 Aggregate Ratio With a Catastrophic Year 1.36 Farmer Paid 5 Pol Earn Prem Illinois Corn Crop Insurance History % Of Premium Farmer Paid Net Total Farm-er Indemnity Year Acres Liabilities Prem-ium Subsidy Paid Ratio (000) (000) (000) (000) (000) (000) Farm- Ratio 1992 33,033 3,548.2 677,302 29,782 6,158 23,624 6,476 0.22 79% 0.27 1993 31,580 3,247.3 635,423 27,596 5,703 21,893 15,956 0.58 79% 0.73 1994 32,275 3,671.8 737,609 36,000 7,607 28,393 2,657 0.07 79% 0.09 1995 91,519 8,727.0 1,152,122 48,050 24,345 23,705 41,031 0.85 49% 1.73 1996 66,477 7,370.2 1,253,366 58,458 26,772 31,687 28,425 0.49 54% 0.90 1997 56,986 6,483.1 1,111,147 53,838 22,693 31,145 14,117 0.26 58% 0.45 1998 54,919 6,318.4 1,227,417 61,084 24,026 37,059 31,249 0.51 61% 0.84 1999 57,257 6,933.9 1,302,777 79,773 21,650 58,123 33,931 0.43 73% 0.58 2000 60,750 7,525.6 1,628,708 103,782 20,564 83,219 28,274 0.27 80% 0.34 2001 57,241 7,343.5 1,653,373 113,188 60,311 52,877 30,015 0.27 47% 0.57 2002 55,108 7,538.7 1,749,769 115,409 60,482 54,927 99,762 0.86 48% 1.82 2003 54,773 7,826.0 1,960,088 136,961 71,642 65,318 40,242 0.29 48% 0.62 2004 53,338 8,118.3 2,431,995 173,049 92,456 80,594 60,542 0.35 47% 0.75 2005 53,075 8,616.2 2,375,234 168,968 89,933 79,036 191,314 1.13 47% 2.42 2006 54,880 8,939.9 3,535,050 277,198 147,847 129,350 26,412 0.10 47% 0.20 2007 54,753 10,232.7 5,960,600 487,173 258,310 228,863 47,362 0.10 47% 0.21 2008 52,422 9,416.2 6,717,206 547,433 274,457 272,976 325,840 0.60 50% 1.19 2009 53,020 9,680.9 5,350,848 465,003 249,958 215,045 135,268 0.29 46% 0.63 2010 52,965 9,915.4 5,496,266 376,807 207,384 169,423 239,412 0.64 45% 1.41 2011 53,780 10,195.6 8,591,969 631,078 347,509 283,569 264,191 0.42 45% 0.93 2012 54,911 10,313.8 8,399,863 521,976 293,289 228,687 3,197,181 6.13 44% 13.98 20 Yr Total 151,649 55,548,273 3,990,632 2,019,806 1,970,826 1,662,478 0.42 49% 0.84 21 Yr Total 161,963 63,948,135 4,512,608 2,313,095 2,199,513 4,859,659 1.08 49% 2.21 One Year Stress Equal to 1.00 loss Ratio = 3,197,181 Aggregate Ratio With a Catastrophic Year 1.60 6 3

2012 Current Crop Insurance Results (Top 15 Premium States) Earn Pre Ne t Acres Total Liabilities Premium Subsidy Indemnity Assigned Farm - State m (000) (000) (000) (000) (000) Ratio Risk er LR ILLINOIS 111.7 17,928 12,157,604 772,605 439,671 3,501,369 4.53 5.0% 10.52 KENTUCKY 16.2 2,978 1,571,401 144,453 93,661 489,820 3.39 24.4% 9.64 INDIANA 43.5 8,743 5,760,338 437,529 245,630 1,481,935 3.39 5.0% 7.72 MISSOURI 50.1 8,490 3,491,540 367,187 241,711 1,158,393 3.15 7.6% 9.23 NEBRASKA 86.5 15,685 8,733,940 668,833 397,489 1,551,292 2.32 2.2% 5.72 IOWA 126.5 21,713 14,939,405 902,149 520,518 2,012,313 2.23 1.1% 5.27 KANSAS 119.9 18,272 5,666,730 808,691 489,703 1,372,765 1.70 26.3% 4.30 WISCONSIN 34.6 5,202 2,842,937 269,563 175,857 456,201 1.69 9.1% 4.87 SOUTH DAKOTA 55.6 14,988 5,392,296 701,202 476,220 1,112,150 1.59 11.8% 4.94 TEXAS 77.0 48,160 5,240,947 1,082,419 711,429 1,414,058 1.31 71.4% 3.81 COLORADO 16.0 6,108 1,394,113 217,908 130,533 278,007 1.28 32.1% 3.18 OHIO 43.9 6,882 4,036,657 326,200 196,521 406,658 1.25 7.7% 3.14 MICHIGAN 22.8 4,255 2,189,316 195,148 130,404 236,579 1.21 12.5% 3.65 OKLAHOMA 21.0 6,794 1,207,710 253,609 158,752 211,430.83 70.3% 2.23 MONTANA 16.0 10,436 1,287,525 206,502 126,427 106,305.51 10.5% 1.33 CALIFORNIA NORTH 25.5 4,603 5,396,844 261,091 177,019 112,337.43 11.3% 1.34 CAROLINA 20.3 3,680 1,784,399 201,809 131,295 85,021.42 40.5% 1.21 MISSISSIPPI 8.2 3,512 1,244,333 132,061 95,036 55,048.42 32.6% 1.49 MINNESOTA 82.0 17,500 10,042,171 824,743 513,349 246,021.30 2.9%.79 NORTH DAKOTA 62.0 23,323 6,351,214 968,345 625,282 247,390.26 19.5%.72 Total 1,174 282,999 117,127,221 11,110,588 6,975,463 17,400,545 1.57 20.9% 4.21 7 State Ratio Yr NE IL IN IA MN KS TX MI OK MS OH 2012 1 2.32 4.53 3.39 2.23.30 1.70 1.31 1.10.83.41 1.25 2011.35.44.58.29.53 1.36 2.36.28 2.15 1.00.41 2010.34.58.35.59.15.26.38.41.33.93.24 2009.28.30.25.23.24.40 1.36.61 1.65 1.24.18 2008.61.66 1.17 1.20.82.62 1.27 1.01.65.76 1.76 2007.19.21.37.15.45.90.38.62 1.80.66.35 2006.44.10.18.16.27 1.20 1.55.28 2.18 1.08.21 2005.32.77.24.23.47.45.54.27.45.45.46 2004.51.38.58.31 1.03 1.16.53 1.15.53.60.77 2003.79.65.89.94.61 1.34 1.36 1.05.64.87.79 2002 2.01.82 1.39.25.54 2.64 1.21.74 1.73.97 3.00 2001.40.26.17.66.91.95 1.53 1.55 1.53 1.79.54 2000 1.32.32.37.45.44 1.38 1.80.78 1.50 1.99.54 1999.43.42.84.36.67.62 1.25.36 1.71 1.20 1.26 1998.34.46.86.55.36.31 2.03.62.81.83.44 1997.40.23.71.10.45.21.61.33.59.38.45 1996.48.61 1.07.31.26 1.58 1.65 1.35 2.42.26 1.49 1995 1.05.69.91.80.60 1.09 1.26.25 1.84.99.75 1994.42.12.21.07.90.33.77 1.27 1.59.79.28 1993 1.88.63.55 4.65 6.10 1.40.91.96 2.27 1.87.91 1992 1.54.37.55.19.79 1.59 2.86 1.89 1.62 1.00.69 MAX 2.32 4.53 3.39 4.65 6.10 2.64 2.86 1.89 2.42 1.99 3.00 Min.19.10.17.07.15.21.38.25.33.26.18 Avg.78.64.74.70.81 1.02 1.28.80 1.37.96.80 8 4

Comparisons of an AIP s Gain/ from Group 1 States vs. All other States Group Assigned Group 1 1 2 & 3 2 Risk 3 Underwriting Gains 0% L/R to 50% 5.0% 5.0% 5.0% 50% L/R to 65% 40.0% 40.0% 13.5% 65% L/R to 100% 75.0% 97.5% 12.5% Underwriting es 100% L/R to 160% 65.0% 42.5% 7.5% 160% L/R to 220% 45.0% 20.0% 6.0% 220% L/R to 500% 10.0% 5.0% 3.0% 500% L/R to end 0.0% 0.0% 0.0% 1 Group 1 states include Iowa, Illinois, Indiana, Nebraska, and Minnesota; all other states are group 2 and 3. 1,2 Must cede 6.5% of the premium to RMA. 3 Must retain 20% of premium. 9 Group 1 State and a AIP with a Ratio of 67% Group 1 State; AIP Gain/ Retained % AIP L/R Premium Share AIP Share Share Total Commercial 65% $1,000,000 98.0% 75.0% $257,250 Quota Share (6.5%) ($16,721) Assigned Risk 160% $1,000,000 2.0% (7.5%) ($900) AIP Gain/ $239,629 --------------- ---------------------------- RMA Gain/ RMA Commercial Pool 65% $1,000,000 98.0% 25.0% $85,750 Quota Share 6.5% $16,721 RMA Assigned Risk Pool 160% $1,000,000 2.0% (92.5%) ($11,100) RMA Gain/ $91,371 Total Gain $331,000 10 5

Group 2 State and a AIP with a Ratio of 132% Total ($315,000) 11 2012 Iowa AIP with Ratio of 220% Iowa; AIP Gain/ % AIP Group 2 State; AIP Gain/ Retained % AIP L/R Premium Share AIP Share Share Total Commercial 65% $1,000,000 30.0% 97.5% $102,375 Quota Share (6.5%) ($6,654) Assigned Risk 160% $1,000,000 70.0% (7.5%) ($31,500) AIP Gain/ $64,221 --------------- ---------------------------- RMA Gain/ RMA Commercial Pool 65% $1,000,000 30.0% 2.5% $2,625 Quota Share 6.5% $6,654 RMA Assigned Risk Pool 160% $1,000,000 70.0% (92.5%) ($388,500) RMA Gain/ ($379,221) Retain- L/R Premium ed Share AIP Share Share Total Commercial 160% $1,000,000 98.9% (65.0%) ($385,710) 220% $1,000,000 98.9% (45.0%) ($267,030) Quota Share 6.5% $42,428 Assigned Risk 160% $1,000,000 1.1% (7.5%) ($495) 220% $1,000,000 1.1% (6.0%) ($396) AIP Gain/ ($611,203) --------------- ---------------------------- RMA Gain/ RMA Commercial Pool 160% $1,000,000 98.9% (35.0%) ($207,690) 220% $1,000,000 98.9% (55.0%) ($326,370) Quota Share (6.5%) ($42,428) RMA Assigned Risk Pool 160% $1,000,000 1.1% (92.5%) ($6,105) 220% $1,000,000 1.1% (94.0%) ($6,204) RMA Gain/ ($588,797) Total ($1,200,000) 12 6

12 Yr Avg Cost of Crop Insurance Post 2000 ARPA Act Corn Goss Strike Net $ Coverage Prem paid nity ratio Gross AIP RMA sidy" RMA A&O Gross farm-er Indem- loss Underwriting Gain/ "Sub- Net Year Price Acres 1 <-------------------(000 000)-------------------------> <---------------------------(000 000)-----------------------------> 2001 $2.46 211 36,729 2,978 1,206 2,965 1.00 12 346 (334) 1,772 2,106 636 2002 $2.32 215 37,299 2,909 1,168 4,058 1.39 (1,149) (48) (1,101) 1,741 2,842 626 2003 $2.42 217 40,621 3,434 1,392 3,259 0.95 176 377 (201) 2,042 2,243 734 2004 $2.83 221 46,602 4,186 1,709 3,291 0.79 895 691 203 2,477 2,274 888 2005 $2.32 246 44,259 3,945 1,601 2,341 0.59 1,604 915 689 2,344 1,655 829 2006 $2.59 242 49,919 4,709 2,027 3,551 0.75 1,158 822 336 2,682 2,346 959 2007 $4.06 272 67,340 6,547 2,724 3,465 0.53 3,082 1,572 1,510 3,823 2,313 1,333 2008 $5.40 272 89,892 9,832 4,141 8,719 0.89 1,113 1,095 18 5,691 5,673 2,009 2009 $4.04 265 79,575 8,949 3,522 5,216 0.58 3,733 2,298 1,435 5,427 3,992 1,619 2010 $3.99 256 78,104 7,592 2,882 4,235 0.56 3,357 1,919 1,438 4,710 3,272 1,368 2011 $6.01 266 114,112 11,959 4,506 10,807 0.90 1,152 1,666 (514) 7,453 7,967 1,330 2012 $5.68 283 117,127 11,111 4,135 17,401 1.57 (6,290) (1,313) (4,977) 6,975 11,952 1,316 Average Net Government Cost for Crop Insurance over 12 Years...... $4.053 billion Average A&O Cost for Crop Insurance..... $1.137 billion Avg. Farmer Cost for Crop Insurance.. $2.584 billion Average Insurance Companies (AIPs) Gains... $862 million Average Gross Indemnity Payments...... $5.776 billion 1 Source: United States Government Accountability Office, Crop Insurance; Savings Would Result from Program Changes and Greater Use of Data Mining, GAO-12-256, a report to the Ranking Member, Permanent Subcommittee on Investigations, Committee on Homeland Security and Governmental Affairs, U.S. Senate, March 2012. The A&O costs w ere capped in the 2013 Standard Reinsurance Agreement (SRA) at about $1.3 billion; mostly paid to agents for commissions. The A&O cap reduced the A&O payment by about a $800 to $900 million. There are about $77-80 million in RMA employee and government operating expenses, in addition to the other costs. 13 12 States with Highest % of Premium in Assigned Risk (Greater than $100 million premium) % State Assigned Total Premium TEXAS 71.4% 1,082,419,001 OKLAHOMA 70.3% 253,609,499 NORTH CAROLINA 40.5% 201,808,723 GEORGIA 38.9% 173,040,250 MISSISSIPPI 32.6% 132,061,350 COLORADO 32.1% 217,908,056 KANSAS 26.3% 808,690,529 KENTUCKY 24.4% 144,453,394 ARKANSAS 22.8% 132,704,615 TENNESSEE 22.8% 103,103,401 FLORIDA 22.8% 116,947,535 WASHINGTON 19.5% 144,028,836 14 7

12 States with Lowest % of Premium in Assigned Risk (Greater than $100 million premium) State % Assigned Total Premium IOWA 1.1% 902,148,810 NEBRASKA 2.2% 668,833,002 MINNESOTA 2.9% 824,743,109 INDIANA 5.0% 437,529,330 ILLINOIS 5.0% 772,604,993 MISSOURI 7.6% 367,187,146 OHIO 7.7% 326,200,047 WISCONSIN 9.1% 269,563,460 MONTANA 10.5% 206,502,254 CALIFORNIA 11.3% 261,090,966 SOUTH DAKOTA 11.8% 701,202,312 MICHIGAN 12.5% 195,148,468 15 Consequences of SRA on AIP and Taxpayer Costs 1. Encourages AIPs to take more polices in the commercial pool with a targeted loss ratio of about 65%. 2. There is very little benefit for an AIP to reduce the number of polices in the commercial pool to generate a loss ratio below 50%. 3. AIPs have more risk exposure and receive a smaller share of the gain in a Group 1 state. 4. In Group 1, states with loss ratios below 2.20, AIPs pay 55% up to 65% of the underwriting loss vs. 31.25% up to 42% for the other states. 5. A paper titled, Understanding the Standard Reinsurance Agreement, Explains Crop Insurance Companies es, posted on www.agmanger.info at link: http://www.agmanager.info/crops/insurance/risk_mgt/rm_pdf12/ab_sra.pdf 16 8

Improved Underwriting and Rating of the Assigned Risk Pool 1. In 2011, about 82% of the national crop insurance premium was placed in the Commercial Fund. 2. In 2011, about 18% of the national crop insurance premium was placed in the Assigned Risk Fund. Companies are required to retain 20% of the premium/risk in the Assigned Risk Fund. 3. The 2011 Commercial Fund generated a $2.239B gain but Assigned Risk Fund suffered a -$1.121B loss, for a net gain of $1.117B gain. 4. In 2012, about 79% of the national crop insurance premium was placed in the Commercial Fund, with the balance of 21% in Assigned risk. 17 Improved Underwriting and Rating of the Assigned Risk Pool 4. Historically most of the underwriting losses are in the Assigned Risk Fund. Last Commercial Fund loss was in 2002 (expected loss in 2012). 5. Fix the rates and underwriting rules for policies in the Assigned Risk Fund and lower taxpayer cost. 6. Effectively the Assigned Risk Fund is the social part of the crop insurance program. In a private market many of these farmers would be uninsurable. 18 9

Comparisons of Coverage and Premiums for Iowa vs. Kansas Farmer Avg % Coverage Avg Rate Prem Ceded Avg Rate Total Net Liabilities Premium Acres (000 000) (000 000) (000 000) $ Coverage per Ac IA 21.7 14,939 902.3 $688 77 6% 1.2% 2.6% KS 18.3 5,663 808.0 $310 64 14% 19.8% 5.6% ` Premium Ceded does not include the 6.5% quota share of the Commercial pool that is ceded 19 Farm Bill Changes to Crop Insurance 1. Catastrophic Risk Protection (CAT) premium reduction that is 100% subsidy to reduce Farm Bill cost 2. Enterprise units for irrigated and non-irrigated crops in the same county 3. Secretary shall use county data collected by the Risk Management Agency or the National Agricultural Statistics Service, or both for area plans 4. If the Farm Service Agency determines any producer s average adjusted gross income is over $750,000; the producer s share of the crop insurance premium will increase 15 percentage points. Does not apply to CAT. $250K AGI limit voted down in the House. 5. Increase the yield plug from 60% to 70% of T yield. 20 10