Title: Extension
1Working with New Partners
- Extensions Experiences with
- USDA Risk Management Agency
- Leslie N. Sturmer
- University of Florida
- Shellfish Aquaculture Extension Program
- Cedar Key, Florida USA
2OVERVIEW
- History of Crop Insurance and RMA
- Extension Experiences in an Aquaculture Crop
Insurance Program - Development
- Implementation
- Pilot Cultivated Clam Insurance Program
- Other Partnership Opportunities
3CROP INSURANCEBackground
- 1930s
- Authorized by Congress to help agriculture
- recover from Great Depression and Dust Bowl
- 1938
- Federal Crop Insurance Corp (FCIC)
created to carry out program - Activities limited to major crops
in main producing areas
4CROP INSURANCEBackground
- 1980 Federal Crop Insurance Act
- Expanded to all states and primary field crops
- Authorized a subsidy of premium
- Dual delivery sales
- FCIC contract agents
- Private insurance
companies/agents
5RISK MANAGEMENT AGENCYBackground
- 1996 Federal Ag Improvement Reform Act (FAIR)
- Risk Management Agency (RMA) created in USDA to
administer FCIC programs - Regional Services Offices (RSOs) directed to work
with producers, groups, universities - All sales loss adjustment
- Private companies/agents
6RISK MANAGEMENT AGENCYBackground
- 1996 Federal Ag Improvement Reform (continued)
- Emphasis on Risk Management and Education (RME)
- New program development
- Crop expansion
- Authorized to investigate aquaculture insurance
7RISK MANAGEMENT AGENCYBackground
- 2000 - Agriculture Reform Protection Act
(ARPA) - Increased premium subsidies
- New crop expansion
- Further emphasis on Risk Management Education
- Under-served States
- Specialty Crop States (Under-served commodities)
- Expanded role of private sector in conducting RD
- Contracting and Partnership Agreements
8AQUACULTURE INSURANCEBackground
- 1996 RMA begins investigating aquaculture
insurance programs - Listening sessions throughout U.S.
- Fact finding tours conducted regionally
- Participation in industry meetings
- 1997 RSOs identifies areas and species
- Additional data gathered
- Time lines determined
9AQUACULTURE INSURANCEBackground
- 1998 RMA selects hard clams (quahogs) as
first candidate for crop insurance - Crops resistance to diseases and other perils
- Clams grown within a defined area
- Strong interest shown by growers
- Availability of producer records
- Strong congressional support
- Need for regional experts willing to work with
RMA provided through extension
10EXTENSIONS INVOLVEMENT IN PILOT INSURANCE PROGRAM
- Development
- Implementation
11EXTENSION INVOLVEMENTProgram Development
- Network created in participating states
- Electronic mail group established
- Hosted by USDA Cooperative State Research,
Education, and Extension Services (CSREES) - Facilitated exchange of information and ideas
among agents and RMA -
12 EXTENSION INVOLVEMENT Program Development
- Focus workshops organized, 1998-99
- Clam growers interacted with Valdosta RSO
- Information shared during meetings
- Understanding of crop insurance
- Determining risks involved with clam production
- Obtaining data on crop value and production
techniques - Determining what type of insurance growers want
- Follow-up workshops conducted
- RMA staff reviewed crop provisions of draft
insurance policy with growers
13 EXTENSION INVOLVEMENT Program
Development
- Growers production records obtained
- Actuarial documents were based
- Premium schedule determined
- Appraisal methods for assessing crop losses
established - Incorporated in loss adjustment manual
- Tours for RMA staff and insurance providers
conducted
14 EXTENSION INVOLVEMENT Program Development
- Pilot program policy approved by FCIC, 1999
- Workshops held for RMA to introduce eligible clam
growers to program - Policy provisions
- Reporting requirements
- Types of coverage
- Examples of premium costs, indemnity payments
- Insurable causes of crop loss
- Program announcement in newsletters and extension
publications
15 EXTENSION INVOLVEMENT Program
Implementation
- Emphases shifted from educating RMA and growers
to insurance providers, 2000-02 - Private insurance agents, loss adjustors,
compliance officers - Hosted Clam Crop Insurance School with
National Crop Insurance Association - Representatives from reinsured companies
introduced to clam aquaculture and biology - Shellfish experts provided info on clam
tolerances and susceptibility to losses covered
in policy
16EXTENSION INVOLVEMENTProgram Implementation
- Other activities included
- Maintaining list of insurance agents
- Keeping growers informed of important dates
- Purchase policy, File inventory report
- Instructing new growers in eligible counties on
provisions and benefits of program - Consulting with growers and loss adjustors on
crop losses
17EXTENSION INVOLVEMENTProgram Implementation
- Formed regional team with risk management and
extension faculty at UF and Clemson University - Requested by RMA due to initial interpretation of
ARPA, 2001 - Submitted proposal to make recommendations,
develop course of action, and conduct subsequent
tasks to pilot clam program - Funding for partnership not approved
- New guidelines released by FCIC allows RMA to
begin implementing revisions to clam policy, 2002
18PILOT CULTURED CLAM INSURANCE PROGRAM
- States include
- Massachusetts
- Virginia
- South Carolina
- Florida
19PILOT CLAM INSURANCE PROGRAMBackground
Crop Value Insurance, or Dollar,
Plan
- Insurance guarantee based on dollar amount
- Crop Value Before Loss
- Value of undamaged insurable clams prior to
occurrence - At start of crop year of policy, its the same as
the growers clam inventory report - Determined value includes
- Number and ages of clams on inventory value
report - Adjustment for changes
- Prices in actuarials
- Applicable survival factors
20PILOT CLAM INSURANCE PROGRAMBackground
Dollar Plan (continued)
- Crop Value After Loss
- Value of insurable clams based on prices
contained in actuarials, following
occurrence of a loss as determined by appraisal - Plus any reduction in value due to insured causes
- Loss, and resulting indemnity, occurs if
inventory value of crop is less than amount of
insurance based on the coverage level
21 PILOT CLAM INSURANCE PROGRAM Coverage Levels
Level () Price ()
CAT 50 55
Limited 50 100
55 100
60 100
Additional 65 100
70 100
75 100
22PILOT CLAM INSURANCE PROGRAM Insurable Causes of
Losses
- Oxygen depletion
- Vegetation, microbial activity, harmful algal
blooms, high water temperatures - Salinity increase/decrease
- Freeze
- Disease
- Hurricane
- Tidal or storm surge
- Windstorm
23PILOT CLAM INSURANCE PROGRAM Causes of Loss Not
Covered
- Any cause that occurred prior to or after the
insurance period - Inability to market clams
- Loss of market value
- Vandalism
- Theft
- Pollution
- Predation
- Dredging
24PILOT CLAM INSURANCE PROGRAM Practices
- Age 1 Nursery Bag
- Clams a minimum of 5 mm shell length
- Florida only
- Age 2 Growout Bag
- Age 2 Round Pen
- Age 2 Bottom Culture
- Clams a minimum of
10 mm shell length
25PILOT CLAM INSURANCE PROGRAM Example of Loss
Payment
Grower has 1 million growout clams (Age 2) and
0.25 million nursery seed (Age
2) planted in bags on a lease in Levy County.
Grower
experiences a 75 crop loss due to hurricane.
Coverage Level Inventory Value Premium Loss Payment
CAT 27,431 0 13,715
50/100 49,875 585 24,937
65/100 64,837 1,826 39,900
Note Example based on 2000 crop year premium
prior to approved subsidy rate
26 PILOT CLAM INSURANCE PROGRAM Participation
Crop Year Policies Sold Liabilities
2000 347 36M
2001 429 41M
2002 553 59M
27PILOT CLAM INSURANCE PROGRAM Participation
Crop Year Total Premiums () Indemnity Payments () Loss Ratio
2000 1,126,780 2,045,903 1.82
2001 1,401,005 2,218,156 1.58
2002 2,158,051 3,133,982 1.45
Ratio of indemnity (loss) payments to premium
costs
28FUNDING AND PARTNERSHIP AGREEMENTS
29EDUCATIONAL SEMINARS
- Series targeting management of risks by Florida
clam producers, 2000-01 - Financial support from Valdosta RSO
- Specialists invited to address topics
- Genetics in seed production
- New marine mollusks for aquaculture
- Marketing
- Product quality
30SOFTWARE PROGRAM
- Development of simplified computerized
spreadsheets, 2000-01 - Funded by RMA through CSREES
- C.L.A.M., Computer Logbook
And Management - Specific to practices of
Florida clam culture industry
31SOFTWARE PROGRAM
- Companion Users Guide
- Easy-to-follow explanation
- Business tool to enhance
record keeping and
inventory management - Documentation for crop
assistance programs
32CLAMMRS PROJECTClam Lease Assessment,
Management, and Modeling using Remote Sensing
- Funded by USDA, 2001-2004
- Endorsed by RMA
- Create database to be used by
insurance program to document
events associated with crop loss - Installation and operation of
water quality and weather
equipment at lease areas
33CLAMMRS PROJECTClam Lease Assessment,
Management, and Modeling using Remote Sensing
- Real time data posted
to web site
34CLAMMRS PROJECTClam Lease Assessment,
Management, and Modeling using Remote Sensing
- Continuous data base
- Details of temporal variability
- Trends in environmental
conditions in relation to
clam
health emerging - Allows growers to make
informed decisions - Refine production
management practices
35OTHER PARTNERSHIP AGREEMENTS
- Targeted Commodity Partnerships for Risk
Management Education - FCIC, 2002
- Research Partnerships for Risk Management
Development and Implementation - FCIC, 2002
- Partnerships for Risk Management Education Grants
Program - USDA CSREES, 2002-03
- Southern Regional Center (Texas Cooperative
Extension)
36ORGANIZATIONAL STUCTURES AND STRATEGIES
- Funded FCIC, 2002-03
- Provide workshops to introduce clam growers to
agriculture and aquaculture industry
organizations - Conduct assessment of
successful associations - Develop informational flyer
that discusses need for
organizational structure - Develop strategies for
Florida clam culture
industry
37MARKETING EDUCATION FOR FLORIDA CLAM FARMERS
- Funded FCIC, 2002-03
- Florida Department of Agriculture and
Consumer Services - Identify preferences of buyers
for Florida clams - Identify approach to reach
potential buyers - Develop training and materials
for growers to
use in market expansion
38SUMMARY
- Extension played integral role in development and
implementation of pilot crop insurance program - Insurance minimizes environmental and
catastrophic risks beyond control of clam grower - Insurance provides important financial protection
to clam aquaculture industry - Pilot program legitimizes aquaculture in eyes
of federal government
39SUMMARY
- Evaluation of clam culture insurance program
thwarted by APRA in 2000 - No changes incorporated in policy or loss
adjustment procedures during 3-year pilot program
- Aquatic crops present unique risk and
underwriting challenges - Turn over of reinsured company representatives
who service policy high
40SUMMARY
- Crop insurance programs
can cause moral hazard - Fraud, waste, and abuse can
cause detriments to
industry - Change culture practices
- Change market price structure
- Other complaints
- Encourages investment growers
- Keeps marginal growers subsidized