Tag Archives: Risk Management Agency


If you grow CORN or TOMATOES and have crop insurance ! one final REMINDER! JUNE 10TH is the final planting date for corn and tomato crop insurance policies. If you have corn or tomato crop insurance policies be sure to get your crops in the ground before the June 10th deadline or you may be subjected to late planting production guarantee reductions!



June 10th Crop Insurance Final Planting Deadline!

JUNE 10TH is the final planting date for corn and tomato crop insurance policies. If you have corn or tomato crop insurance policies be sure to get your crops in the ground before the June 10th deadline or you may be subjected to late planting production guarantee reductions!

REMINDER Fruit crop insurance policy holders……!!!

ATTENTION Growers with FRUIT crop insurance!!! If you have a blueberry, cranberry, peach or apple fruit crop insurance policy, acreage reports for that policy are due JANUARY 15! If you have any questions, please contact your crop insurance agent or our office at 856-769-0090 Happy Holidays!!!!



TO: All Approved Insurance Providers
All Risk Management Field Offices
All Other Interested Parties

FROM: William J. Murphy /s/ William J. Murphy 5/9/2012

Section 524(b), Agricultural Management Assistance, of the Federal Crop Insurance Act
(the Act) states that the Secretary shall provide financial assistance to producers in the
States of–Connecticut, Delaware, Hawaii, Maine, Maryland, Massachusetts, Nevada,
New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, Utah, Vermont,
West Virginia, and Wyoming. Pursuant to section 524(b) of the Act, funding will be
made available by the Commodity Credit Corporation.
1. Financial Assistance Program (FAP) funding will be provided to producers in the
above identified States who purchase buy-up insurance policies (except as excluded
in paragraph 2) for the 2012 crop year with acreage reporting or inventory value
reporting dates prior to September 30, 2012.

2. Policies not eligible for financial assistance include all catastrophic risk protection
policies, and any policies or endorsements insured under the Livestock Risk
Protection and Livestock Gross Margin plans of insurance.

3. The Risk Management Agency (RMA) will provide a fixed premium reduction of
$225.00 per crop policy for eligible producers. If the total producer-paid premium
per crop policy is less than $225.00, the amount of premium reduction will be capped at 100 percent of producer-paid premium for the crop policy.
BULLETIN NO.: MGR-12-006 Page 2

4. No portion of any administrative fee will be paid under the FAP.

5. RMA is making $5.5 million available for this initiative. If participation in the FAP results in total expenditures that exceed this amount, RMA will determine a pro-ration factor to reduce the aggregated financial assistance to an amount equal to or below the $5.5 million appropriation. Approved Insurance Providers (AIPs) will reduce the amount of financial assistance using the pro-ration factor for all eligible producers and reflect the correct amount of financial assistance in the producers’ billing statements or revised billing statements (if applicable). If the pro-ration factor, when applied, results in underpayment of premium by insureds, the AIPs will be responsible for collection of any underpaid premium from the insured entity. AIPs will be required to utilize the pro-ration factor to determine accurate amounts of financial assistance to be submitted through RMA’s Policy Acceptance Storage System (PASS) or eDAS System for validation and reimbursement purposes.

6. Section 524(b)(3) of the Act provides that the total amount of payments made to a person (as defined in Section 1001(5) of the Food Security Act (7 U.S.C. 1308(5))) (before the amendment made by section 1703(a) of the Food, Conservation, and Energy Act of 2008) under this subsection for any year may not exceed $50,000. RMA will coordinate with other USDA agencies as necessary to apply this limitation.

7. No additional application is necessary to qualify for the FAP. Financial assistance will be applied automatically to all applicable crop policies which meet the eligibility criteria outlined in this bulletin, including those policies insured by written agreement, not to exceed the $5.5 million appropriation.

8. For billing purposes, AIPs will either deduct the amount of financial assistance from the producer premium on the billing statement, or note on the billing statement that the producer premium will be subject to a refund based on the final amount of financial assistance provided. In the event that participation results in the projected total expenditures for financial assistance exceeding the $5.5 million appropriation, it will be reduced on a pro-ration basis as outlined in Item No. 5 above.

9. In order to determine expenditures timely and accurately, AIPs should submit all information through the PASS or eDAS systems regarding premium by the latter of the following deadlines: a) Within 30 days after the applicable acreage reporting date or; b) Within 30 days after issuance of this bulletin.

10. At the December accounting cutoff prior to the Annual Settlement, RMA will establish an amount billable (to FSA for the FAP and to applicable state governments for any State subsidies). These billable amounts per AIP become the maximum amount that can be paid to the AIP for the applicable category.
a) RMA aggregates all AIP billable amounts to determine the total amount billed to the respective funding entity. RMA bills each funding entity as soon as feasibly possible.
b) If a pro-ration process is required due to insufficient funds availability from the funding entity, then:

BULLETIN NO.: MGR-12-006 Page 3
i. RMA will determine the pro-ration factor;
ii. RMA will calculate correct amounts based on these pro-ration factors and;
iii. RMA will notify AIPs as to the pro-ration factor to be utilized in each situation.
AIPs must submit to RMA by October 31, 2012, a list of all policies receiving financial assistance for which Appendix III information was not accepted by PASS or by eDAS prior to the October accounting cut-off date (October 12, 2012). This list in spreadsheet format must contain the following: AIP Code, State Code, Crop Year, County Code, Policy Number, Plan of Insurance, Crop Code, Coverage Level, and the amount of financial assistance for each crop policy. Please submit this list electronically in Microsoft Excel format to Lee Z. Ziegler, Economist, Reinsurance Services Division, at lee.ziegler@rma.usda.gov.
AIPs can refer to Appendix III for instructions regarding processing and reimbursement.

December 31, 2013.

Farming is a Risky Buisness

Every business and every person faces risks each day, but, really, What is Risk? People have different attitudes about risk. Some will wager a week’s pay at a casino, while others will hide their money under a mattress. A person’s aversion to risk is a key factor in the extent to which they will try to manage their risks. In general terms, people often think of risk as the chance of something bad happening. “Bad” and “chance” are two key elements of risk. In financial terms, risk is the possibility of financial loss.

Risk Management, in a business context, is about reducing the cost of risk, which includes the cost of managing risk. Business, including farming, is about making profits or gains. Farmers need money to make a living for themselves and their families. To make a living, farmers must take risks, investing $200,000 or more worth of seed, fertilizer, and herbicides and hoping for rain – but not too much rain. Farming is risky; one doesn’t know what the outcome will be when the crop is planted (the “chance” element), as all or a portion of the crop could be lost (the “bad” element). Because farmers are willing to take this risk, our nation has a plentiful food supply.

Don’t Risk a Lot for a Little

The first key concept of risk management can be expressed by the old saying, “nothing ventured, nothing gained.” Risk management involves asking the question, “Is the risk appropriate for the return?” Is the farmer venturing too much for too little gain, (i.e., will the farmer make enough profit to reasonably justify the risk?) The word “reasonable” is key. Usually, as people take greater risks, they seek a higher return on their investments. Banks, for example, charge higher interest rates to customers who they believe are less likely to pay back a loan.  Remember, the more risk you take, the greater the reward you should expect.  In short, “Don’t Risk a Lot for a Little.”

Don’t Risk More than You Can Afford to Lose

Few people think it wise for retirees to invest their life’s savings in a technology stock. If they lose, there is no opportunity to make back the loss. Who hasn’t seen movies of the gambler who loses, but just needs that last “score” to get even? It never seems to work out for this person. No matter how good the odds, sometimes bad things still happen. No one should invest more than they can afford to lose, unless they want a drastic change in their lifestyle, because sometimes they’ll lose. Ruin is the result of losing more than you can afford. Unfortunately, to support a family by farming, some farmers must face the possibility of ruin each year. Crop insurance helps reduce the chance of ruin by reducing the maximum amount of money a producer can lose. Still, in today’s economic climate, ruin is a real issue for farmers.

Know the Odds

A coin toss is a 50-50 proposition. A roll of a die is a 1-in-6 event. What are the chances that this year will bring a drought? And, if it does, how much revenue will be lost? No one knows precisely, but estimates can be made based on historical data, and these estimates can be invaluable in making an investment decision. The USDA’s Risk Management Agency (RMA) develops tools to help farmers estimate the chances of profit or loss. The odds may be in a farmer’s favor, but sometimes they still lose. That is why avoiding ruin is important—it allows a farmer to keep farming. A loss doesn’t put them out of business.

It is very important to realize that the odds of making a profit or of ruin change every year, and a losing year can make the odds of either outcome much worse the next year. “Losing years” must be paid for by borrowing or by using equity built up in good years. The greater the debt or the less equity a farmer has, the harder it will be for the farmer to pay the bills if another loss occurs. Thus, it is very important that farmers understand their true financial situation, including not only preparing cash flow projections, but also preparing a balance sheet and income statement. Remember, a farmer can have a positive cash flow and still lose money.

In Conclusion

For risk management to be effective, a farming operation must have a reasonable expectation of making a profit (assuming financial returns are important). Risk management cannot make a business that is fundamentally not profitable, profitable. Today’s most effective farm managers keep careful records that facilitate effective use of available risk management strategies designed to keep expected financial returns in line with the risks. Done well, risk management can help protect a farmer’s  hard-earned money from the risks associated with farming.  RMA’s mission is to encourage farmers to proactively manage their risks. Farming is risky, more so than many other businesses. For taking these risks—and feeding the world—some farmers earn a good return on their investment. Others do not. By practicing risk management, farmers can gain greater control over their risks, financial returns, and solvency.

The content for this article was adapted from “Risk and Risk Management”, a Risk Management Agency Fact Sheet available at

http://tinyurl.com/7exa3mc.  Custom Ag Solutions (CAS) works with producer organizations, such as the Massachusetts FFA Association, to reach America’s beginning producers with information about risk management and Federal Crop Insurance Programs administered by the USDA’s Risk Management Agency (RMA).  Look for CAS’ workshops at the upcoming Massachusetts FFA State

Convention or at your local chapter.  For more information about RMA and its programs, please visit http://www.RMA.USDA.gov or, to receive information by mail, call CAS at 877-277-8094.

Crop Insurance Performance for New Jersey as of Jan 22 2011

Policies sold: 1,629

Pol Earn Prem: 1,129

Pol Indem: 126

Units (Farms) Earn Prem: 2,282

Units (Farms) Indemnified: 218

Net Acres: 171,746

Amount of Protection: 110,598,683

Total Premium: 8,917,109

Producers Premium: 2,135,083

Indemnity: 1,765,660

Farmers Benefit /Cost Ratio:0.83Loss Ratio: 0.20

% Units (Farms) Indemnified: 10%

Verifiable Record Requirements to Qualify for Fresh Apple Production by Unit….. From the USDA and RMA


TO: All Approved Insurance Providers

All Risk Management Agency Field Offices

All Other Interested Parties

FROM: William J. Murphy /s/ William J. Murphy 11/7/2011


SUBJECT: Verifiable Record Requirements to Qualify for Fresh Apple Production by Unit.


On December 22, 2010, the Risk Management Agency (RMA) issued Informational Memorandum PM-10-071 to provide flexibility for policyholders to adapt their record keeping process to meet the new requirement that at least 50 percent of the production from fresh apple acreage in each unit was sold as fresh apples in one or more of the four most recent crop years in order to qualify for the fresh apple price. Approved Insurance Providers (AIPs) were allowed to consider records of total production (rather than by unit) from the 2007 through the 2010 crop years that reflect fresh apple sales.

Since the issuance of Informational Memorandum PM-10-071, RMA has continued to receive comments that apple producers still find it too difficult and inappropriate to maintain separate records by unit after the apple production has left the field. Apple producers point out that while they can and do maintain records of production by unit, once the apples are delivered to a warehouse, which is often a third party, for later sales and distribution it is virtually impossible and/or impractical to expect all the apples to be tracked by unit. Apple producers have requested RMA waive the new record requirement by unit for the 2012 and succeeding crop years by allowing them to provide records that demonstrate at least 50 percent of their total apple production was sold as fresh in order to qualify for the fresh apple price.


Effective for the 2012 and succeeding crop years, policyholders who do not have separate records by unit of fresh apple production in one of the last four years but do have records of total fresh apple production, may still be able to qualify for the fresh apple price. AIPs may consider records of total production (rather than by unit) from one of the four most recent crop years that reflect fresh apple sales. If only a portion of the acreage is reported as fresh, and the total amount of production sold as fresh can reasonably be determined to be reflective of at least 50 percent of the production that would have been from the apple acreage reported as fresh, such records may be used as verifiable records attributable to that portion of the acreage as fresh. Policyholders still must designate all their acreage by type (i.e. fresh or processing) by the acreage reporting date.

The AIPs should remind their agents and inform their policyholders that by designating fresh apple acreage on the acreage report, the policyholder is certifying they have verifiable records to support that they have sold in one or more of the four most recent crop years at least 50 percent of the total production as fresh apples (rather than by unit) from acreage reported as fresh apple acreage.

A verifiable record must reflect the value received was commensurate with the value of fresh apples versus processing apples. It is incumbent upon the policyholder to provide records, when requested, that demonstrate the value received for sold production is consistent with the value of fresh apple production. Section 16J(2) of the 2012 FCIC 18010 Crop Insurance Handbook provides guidance regarding what is considered an acceptable verifiable record.

The following examples illustrate the flexibility this action provides:

For example, for the 2012 crop year, a policyholder reports fresh apple acreage on three basic units. The policyholder is able to provide records proving at least 50 percent of the total production sold, from all three units, were sold as fresh apples in one or more of the four most recent crop years. Such records can be used as a verifiable record for all the fresh apple acreage for the 2012 crop year.

A second example would be for the 2012 crop year a policyholder reports two blocks of processing apple acreage and one block of fresh apple acreage in one basic unit. Records of fresh apple production sold from the entire unit can be used as a verifiable record provided the AIP can determine the records of total fresh apple production was sold in one of the four most recent years would reasonably account for at least 50 percent of the total fresh apple production from the block reported as fresh apple acreage for the 2012 crop year.

Agents should also be advised to remind policyholders that the prior years’ records used to certify fresh apple production become records that must be maintained for three years in accordance with the policy record retention requirements.


Effective for the 2012 and succeeding crop years or until incorporated into the Apple Special Provisions of Insurance.