1. Crop Insurance for Grape Growers
Ag-Analytics.org

2. Why Purchase Crop Insurance?
Grape prices and yields are volatile
Crop insurance is designed to help producers manage risk
In exchange for annual payments called “premiums”, crop insurance plans provide payments called "indemnities" when yields or revenues fall below covered levels.
Crop insurance is sold by private insurance companies.
The USDA shares premium costs to keep policies affordable.
Figures come from USDA risk management agency: The 2012 and 2013 represent the worst and best grape crops of the last five years. Over the five years, indemnities to grape producers in NYS totaled $11.4 million; government subsidies for crop insurance totaled $8.6 million; the cost to grape producers for insurance was $7.6 million, and grape producers themselves paid $5.6 million of the cost of insurance.

3. Protects against catastrophic losses
Why Purchase Crop Insurance?
Protects against catastrophic losses
Helps to recover after a bad planting or bad harvest (assuming that the cause of losses are beyond a farmer’s control)
Security for operating loans

4. How has grape crop insurance worked in NY?
Premiums are sometimes more than indemnities, but high indemnities reflect payments being made in response to volatile weather etc.
Over 20,000 acres have been enrolled annually in New York since 2010

5. What is covered? Adverse Weather Conditions
Insects - but not damage due to insufficient or improper application of pest control measures
Plant disease - but not damage due to insufficient or improper application of disease control measures
Wildlife - unless control measures have not been taken
Others: Fire, Earthquake, Volcanic Eruption, Failure of irrigation water supply

6. Insured Counties
Grapes are insured in the major grape producing counties in New York. Grapes in other counties may be insured by written agreement from RMA or with the NAP program from FSA.

7. What if I live in a non-insured county?
Grapes in other counties may be insurable by individual written agreement.
Application requires:
Acreage and production records for the three most recent crop years;
Confirmation from agricultural experts that the crop can be produced in the county.
Dates you and other growers in the area normally plant and harvest.
Name, location and approximate distance to the place the crop will be sold or used.
The legal description of the land to be covered by insurance.
Pre-Acceptance Inspection Report (PAIR) and
Worksheet (PAW).
Process requires significant lead time.
Grapes are insured in the major grape producing counties in New York. Grapes in other counties may be insured by written agreement from RMA or with the NAP program from FSA.
Congress requires the RMA to strive for actuarial soundness when underwriting crop insurance. The RMA deals with this requirement by identifying areas that have long-term records of growing a given crop. Producers outside of such areas may be insured if they can provide the RMA with sufficient information to calculate risk for insurers.
For grapes and other high-value crops, it often makes sense to pursue an individual written agreement; however, this can be a lengthy process. Notify your crop insurance sales agent as soon as possible so that they can help you to assemble the application. The agent must get approval from their company and the USDA for every producer seeking an individual written agreement.

8. WFRP Basics Revenue-based option for diversified farms
Premium subsidies may be higher for more diversified farms (cost is lower)
Available for all NY counties and some crops and livestock not currently available under single-crop policies
Flexibility in setting prices (expected prices)
Flexibility and additional benefits for beginning farmers and ranchers
5 years of revenue history (schedule F) required, with some exceptions
Revenue from all commodities produced on the farm is included under one policy. Individual commodity losses are not considered. The overall farm revenue determines the loss. The premium subsidy is determined by the diversification of the farm. Farms with 2 or more commodities receive the whole farm premium subsidy. Farms with only 1 commodity receive the basic premium subsidy.

9. NAP Basics
Available for commercially produced crops in which crop insurance is not available
Eligible causes of loss: damaging weather (drought, freeze, hail, excessive moisture, excessive wind)
NAP basic coverage equivalent to the CAT level protection plan of insurance coverage (Loss exceeding 50% of expected production at 55% of the average market price)
NAP now offers levels of coverage up to 65% production and 100% of market price

10. Exempt from paying admin fees
Beginning Farmers
Beginning farmers (no more than 5 years of operating a farm) qualify for additional benefits:
Exempt from paying admin fees
Higher premium subsidy levels may be available
Use of production history from a farm where the beginning farmer previously worked (but did not manage)
The requirements listed above must be met in order to obtain coverage.

11. Special requirements for insuring grapes
Grape varieties grown for wine or juice are insurable if the vines have:
Reached the fifth growing season for all Native and Hybrid varieties
Reached the seventh growing season for all Vinifera varieties
Produced an average of 2 tons per acre in at least one of the three most recent crop years unless we inspect and allow insurance on acreage that has not produced this amount.
The requirements listed above must be met in order to obtain coverage.

12. Insurable Age of Vinifera Vines
Written Agreement requests may be considered by the Raleigh Regional Office for blocks of grapes added to an existing unit of the same variety with vines less than seven growing seasons if the inspection is favorable.
Exceptions are made for insuring vinifera grapes for blocks with less than 7 years of production records.

13. Phylloxera, regardless of cause.
Causes of Loss Not Covered
Market: Inability to market the grapes other than damage from an insurable cause.
Phylloxera, regardless of cause.
Causes of loss not covered are noted above.

14. Hilling-up of graft unions in the Fall and de-hilling in the Spring.
Cause of Loss
Freeze is not a cause of loss for vinifera grapes if recognized cultural practices are not followed to prevent trunk injury or death.
For example:
Hilling-up of graft unions in the Fall and de-hilling in the Spring.
Maintaining two or three trunks, as opposed to a one trunk training system.
Freeze is not covered for Vinifera grapes unless noted cultural practices are met.

15. Certified Organic or Transitioning Acreage
Specialized insurance is provided for:
Certified organic acreage
Transitional acreage being converted to certified organic acreage in accordance with an organic plan
Buffer zone acreage
Certified organic, Transitional and Buffer Zone acreage is insurable.

16. Important 2016 Crop Year Dates
Sales Closing, Policy Change,
Cancellation and Termination: November 20, 2016
Production & Acreage Reports Due: January 15, 2017
Billing Date: August 15, 2017
End of Insurance Period: November 20, 2017
Important dates are noted above.

17. Basic Unit 3 Farms, 1 Unit Own All Farms
Key concept: basic unit
Basic Unit 3 Farms, 1 Unit Own All Farms
FSN 101
FSN 101
FSN 101
In this example, the insured owns 3 farms in the county, each having the same Farm Serial Number (FSN). Since all the acres of the insured crop in the county is under the same FSN, this is 1 Basic unit. The APH and guarantee will be calculated based upon the production from all 3 farms.
All insurable acreage of the insured crop in the county on the date coverage begins for the crop year
In which you have 100% crop share or
Which is owned by one person and operated by another person on a share basis
All crop insurance policies insure all of the acres of the crop in the county. If the producer grows crops in more than one county, he must insure each county under a separate policy. He does not have to insure every county he grows the crop. However, he must insure all of the acres of the insured crop in each county he has a crop insurance contract. A guarantee will be calculated for the basic unit and a loss will be determined based upon the production of the basic unit. As stated above, a basic unit is all of the acres of the insured crop in the county.
FSN – FSA farm serial number

18. Key concept: optional units
A Basic Unit may be divided into Optional Units if you meet one of the following:
Each Optional Unit is located in a separate FSA Farm Serial Number (FSN), or by written agreement as sectional equivalents
Optional Units may be based on irrigated and non- irrigated acreage
Acreage of the insured crop grown under organic farming practices
Optional units are not available for crops insured under a Catastrophic Risk Protection Endorsement (CAT)
A basic unit can be divided into Optional Units if one of the criteria listed above is met. A APH guarantee will be calculated for each optional unit. Harvested production from each optional unit will be compared with the guarantee from each optional unit and indemnities will be paid on each optional unit that harvested production falls below the guarantee. The premium for a optional unit is about 10% higher than the premium for a basic unit.

19. Optional Units (3) Own FSN 101, Rent FSN 102 &103
In this example, the producer owns FSN 101 and rents FSN 102 and FSN 103. Since there is 3 Farm Serial Numbers, the producer qualifies for 3 optional units provided he keeps separate production records for each optional unit.
FSN 103

20. Federal Government Subsidy
Coverage Level
CAT
50%
55%
60%
65%
70%
75%
80%
85%
Federal Subsidy
100%
67%
64%
59%
48%
38%
Your portion
of the premium
$300
33%
36%
41%
45%
52%
62%
The premium for grape crop insurance is subsidized by USDA the same level as other crop insurance programs.

21. Native Varieties and Price Election for 2017 per ton
Niagara $265
Diamond $460
Concord $265
Delaware $435
Catawba $335
Ives $400
Elvira $285
Golden Muscat..$375
Dutchess $415
Labrusca $215
Isabella $460
All other native varieties $290
The 2017 Price Election for Native Varieties are noted. This is the price that will be used to determine the guarantee and the price that will be paid to producers in the event of a loss.

22. Hybrid Varieties and Price Election for 2017 per ton
Chambourcin......$785
Vignoles $745
Traminette $870
Aurore $380
Baco Noir $575
Cayuga White.....$555
Geneva Red $585
Vidal Blanc $620
Dechaunac $495
Vincent $585
Rosette $420
Chardonel $750
Seyval Blanc $605
Casade $320

23. Hybrid Varieties and Price Election for 2017 per ton
Leon Millot $635
Noiret $575
Chancellor $660
Chelois $835
Valvin Muscat..$810
St. Vincent $475
Castel $635
Marechal Foch....$660
Colobel $605
Corot Noir $575
Rougeon $530
Landot Noir $575
Villard Blanc.....$700
All other Hybrid varieties $320
Melody $545
The 2017 Price Election for Hybrid varieties are noted.

24. Vinifera Varieties and Price Election for 2017 per ton
Cabernet Franc $1,325
Cabernet Sauvignon….$1,630
Chardonnay $1,250
Gamay $1,630
Gewurztraminer $1,535
Merlot $1,785
Pinot Blanc $1,400
Pinot Noir $1,695
Sauvignon Blanc $1,535
Riesling $460
The 2017 Vinifera prices are noted.

25. Vinifera Varieties and Price Election for 2017 per ton
Pinot Gris $1,605
Viognier $1,705
Syrah $1,775
Sangiovese $1,825
Dornfelder $1,200
Carmine $975
Muscat Ottonel $1,500
Lemberger $1,400
All other Viniferas.....$975
The 2016 Vinifera prices are noted.

26. Loss Example-Grapes
This example assumes 65% coverage level, Vidal Blanc variety, average yield of 4 tons per acre and a 2017 production of 1 ton per acre:
Premium of $32 per acre (basic units)
4 tons X .65 coverage level = 2.6 tons guarantee
2.6 tons guarantee – 1 ton produced = 1.6 tons per acre loss
1.6 tons X $620 Price Election = $ indemnity payment per acre
In this loss example, the production for the unit was 1.6 tons below the guarantee, giving an indemnity payment of $1,

27. Quality Adjustment
Grapes qualify if, due to insurable causes, damaged grapes have a value less than 75% of the average market price of undamaged grapes of the same or similar variety.
Undamaged grape price determined by averaging the prices of undamaged grapes during the week that damaged grapes were valued.
Value of damaged grapes, and the average market price of undamaged grapes are determined the earlier of the date the grapes are sold, or the date of final inspection for the unit.
Grapes that have quality losses due to an insurable cause mat be eligible for quality production adjustment.

28. Quality Adjustment
Divide the value per ton of the damaged grapes by the value per ton for undamaged grapes (the value of undamaged grapes will be the lesser of the average market price or the maximum price election for such grapes).
Multiply this result by the tons of damaged grapes.
This is the formula used to determine the quality adjustment factor.

29. Quality Loss Example
Vidal Blanc variety, 4 tons per acre average yield, 65% coverage level, produced 4 tons per acre in 2017 with a value of $124 due to an insurable cause.
$124/$620 = 0.2 Adjustment factor
0.2 X 4 tons = 0.8 Adjusted Production
2.6 tons guarantee – 0.8 = 1.8 ton loss
1.8 tons X $620 Price Election = $1,116 indemnity payment per acre
$1,116 indemnity + $496 grape receipts = $1,612 total revenue per acre
In this example, there was no production loss. Due to an insurable cause, the grapes had a low value of $ per ton and the production was adjusted to 1.0 ton and an indemnity payment was made.

30. NEW: Supplemental Coverage Option (SCO)
SCO is an option that provides additional coverage for a portion of your underlying crop insurance deductible.
It must be purchased as an “endorsement” to yield or revenue policies
The Federal Government pays 65 percent of the premium cost for SCO.
SCO increases the level of coverage to 86% of Producer’s APH Yield
Payments begin if area yield is less than 86% of historic levels, farm yield relative to county yields should be taken into account in purchase decision
SCO results in additional premium and an additional administrative fee
SCO increases the level of coverage to 86% of the Producer’s APH yield. The additional premium is subsidized at 65%. The amount of protection and cost is based upon the underlying policy coverage. The lower the underlying coverage, the greater the SCO coverage. The higher the underlying coverage, SCO coverage is lower. There is no overlap between individual and SCO coverage. All planted acres of the crop is covered.

31. Grapes 2017 SCO Expected Area Yield
County
All Types (Tons)
Cattaraugus
6.32
Seneca
5.74
Chautauqua
Steuben
5.84
Erie
6.16
Suffolk
5.89
Niagara
6.14
Ulster
Ontario
6.29
Wayne
6.12
Schuyler
Yates
Grape SCO area coverage is available in the 12 counties where grape crop insurance is available. SCO area yields are published by USDA RMA and are available on their website in the Information Browser.
Source: USDA RMA Information browser

32. Premium Calculator Estimate your costs
Estimate your annual premium costs using the Crop Insurance Premium Calculator tool at Ag-Analytics.org/CropInsurance

33. Sign-up
Fill out your location and yield information based on your production history
This comment is for this and the next slide that shows increasing premium based on the level of coverage– you might consider adding a slide that defines in general terms how farm units are insured– for example define generally what a basic unit, optional unit, and enterprise unit is. A very basic understanding of units will help your audience know how unit division influences premium cost.

34. Sign-up
Then the tool will show you premium estimates for different levels of coverage…
This comment is for this and the next slide that shows increasing premium based on the level of coverage– you might consider adding a slide that defines in general terms how farm units are insured– for example define generally what a basic unit, optional unit, and enterprise unit is. A very basic understanding of units will help your audience know how unit division influences premium cost.
As a graph

35. Sign-up
Then the tool will show you premium estimates for different levels of coverage…
And a chart

36. Additional Information
Crop insurance information and web tools, including quote estimator
USDA Risk Management Agency (RMA)
To find a crop insurance agent, go to
Whole Farm Revenue Program
NAP-Noninsured Crop Disaster Assistance Program

37. Cornell University delivers crop insurance education in New York State in partnership with the USDA Risk Management Agency.
Diversity and Inclusion are a part of Cornell University's heritage. We are an employer and educator recognized for valuing AA/EEO, Protected Veterans, and Individuals with Disabilities.

38. Jennifer Ifft