Crop Insurance Update

2014 Crop Insurance Update

Today s Agenda Review of 2013 Important Dates Revenue (RP) and Yield Protection (YP) Products Looking Ahead to 2014 MPCI Changes New Products Hail & Wind Products Premium Estimates RMA Changes

AGSTAR WI Claims Review (2013) The Perfect Storm Late Spring (Late Snows, Cold Wet): Late Plant/Prevent Plant, Germination-Population issues Rainy wet June in Eastern side of territory: Late planted crops pushed even later saw some corn planted in July Flash Drought (July, August): caught late planted corn during tasseling stressed soybeans during R stages Price Drop for Corn Spring Price = $5.65 Fall Price = $4.39 Difference of 22.3% Pushed Corn guarantees higher on already lower yields Many $200K Reviews still working on some

AGSTAR WI Claims Review (2013) 9 8 Summary of Local Rainfall by Month 7 6 5 4 3 Baldwin New Richmond Ellsworth Menomonie St. Croix Falls Eau Claire Cambridge, MN 2 1 0 April May June July August Sept. Source: http://weatherwarehouse.com

2013 Revenue Prices Spring Price Harvest Price Change % Change Corn $5.65 $4.39 ($1.26) -22.3% Soybeans $12.87 $12.87 $0.00 0% Wheat $8.44 $7.33 ($1.11) -13.2%

Corn Bushel Guarantee Increase Spring Guarantee Harvest Guarantee APH 150 150 Coverage Level 80% 80% Bushel Guarantee 120 147 Price $5.65 $4.39 Revenue Guarantee $678 $678

NO Change to Guarantees Soybeans Spring Guarantee Harvest Guarantee APH 40 40 Coverage Level 80% 80% Bushel Guarantee 32 32 Price $12.87 $12.87 Revenue Guarantee $412 $412

Bushel & Revenue Loss Examples (RP) * Bushel Loss Example * * Revenue Loss Example * APH 180 APH 180 Coverage Level 80% Coverage Level 80% Bushel Guarantee 144 Bushel Guarantee 144 Spring Price ($4.50) Spring Price ($4.50) Revenue Guarantee $648 Revenue Guarantee $648 Harvest Price ($6.00) Harvest Price ($3.50) Bushel Guarantee 144 Bushel Guarantee 185 Revenue Guarantee $864 Revenue Guarantee $648 Bushel loss would be paid on production under 144 bushels/acre @ $6.00/bushel Revenue loss would be paid on production under 185 bushels/acre

Important WI Crop Insurance Dates Acreage Reporting July 15 th MPCI Premiums August 15 th Late fees attach on October 1 st 1.5% per month

Important Dates (Corn) Grain April 11 th - Early Plant Date (Northern Counties Apr 21st) May 31 st - Final Plant Date (Northern Counties May 25 th ) June 1 st June 25 th (Late Planting Period) Silage Specific or Tonnage June 5 th - Final Plant Date (Northern Counties May 31st) June 6 th June 30 th (Late Planting Period)

Important Dates (Soybeans) April 26 th - Early Plant Date (Northern Counties No Coverage: Douglas, Bayfield, Ashland, Iron) June 10 th - Final Plant Date June 11 th July 5 th - Late Planting Period

Precision Farming Pilot

Price Discovery Periods RP Corn: Spring Price: Harvest Price: February average of December Futures October average of December Futures RP Soybeans: Spring Price: Harvest Price: February average of November Futures October average of November Futures YP Corn and Soybeans: Uses the Spring price discovery

Insurance Products Offered Through AgStar Multi-Peril Crop Insurance (MPCI) Revenue Protection (RP) Revenue Protection w/ Harvest Price Exclusion (RP-HPE) Yield Protection (YP) Area Revenue Protection (ARP)..(Replaces GRIP) Area Yield Protection (AYP)..(Replaces GRP) Forage Seeding

Trend Adjusted APH (TA) TA is an elected option introduced in 2012, to help boost guarantees based on the age of your APH. > 95% of policies elect TA. Some TA factors have changed slightly in our areas. Watch that TA is designated on your 2014 renewal app automatic if you ve had it the year before.

AGSTAR s Margin Manager 2014 projected Margin per acre/break Even per bushel

AGSTAR s Margin Manager 2014 projected Margin per acre/break Even per bushel

Insurance Products Offered Through AgStar Supplemental Products blend with MPCI to insure better margins Enterprise Plus (E+) Bushel Products payment on yield loss Added Price Option & Harvest Max Revenue Products follows revenue dynamic of MPCI MPD, RevNet, & Price Flex Weather Products equates bushel loss to temp & rainfall TWI & eweather Risk

Insurance Products Offered Through AgStar Hail Products: Production Plan PHP Companion Plans Basic Deductible Plans

Looking Ahead to 2014 Premium Changes From 2013 to 2014 Changes In Spring Prices Supplemental Products 2014 RMA Changes

2014 Premium & Revenue Outlook Corn 2013 ($5.65) 2014 ($4.50) $ Change 13-14 TA-APH 165 165 - Coverage 80% 80% - Bu Guar 132 132 - Rev Guar $746 $594 $ (152.60) EU $22.50 $18.75 $ (3.75) OU $45.50 $37 $ (8.50)

2014 Premium & Revenue Outlook 2013 2014 $ Change Soybeans ($12.87) ($11.15) 2013-2014 TA-APH 45 45 - Coverage Level 80% 80% - Bushel Guarantee 36 36 - Revenue Guarantee $514.80 $401.40 $ (113.40) EU Premium / Acre $14.10 $8.25 $ (5.85) OU Premium / Acre $31 $20.50 $ (10.50)

Enterprise Plus (E+) Hybrid between OU and EU Provides OU coverage when there is no EU loss Create up to 10 sub-units Can separate by risk, share, location etc. Coverage for a single farm (Do not need on all acres) AgStar is one of the few agencies that can offer E+

Enterprise Plus (E+) Qualifiers Elect TA Elect EU Corn and Soybean Must accompany a RP, RP w/ HPE, or YP product Minimum coverage level of 75% Enterprise Units

Enterprise Plus (E+) Coverage Options 85 80 75 70 65 MPCI E+ 60 55 85/80 85/75 85/70 80/75 80/70 75/70

Considerations for E+ Concerned about Spot Loss Protection Irrigation/Dry Land Optional Unit Premium Cost too high

Enterprise Plus (E+) Loss Example Unit A B C D Enterprise Acres 40 80 120 160 APH 180 190 175 185 Bushel Guarantee @ 80% 144 (5,760 bu) 152 (12,160 bu) 140 (16,800 bu) 148 (23,680 bu) 58,400 Bushels Actual Production 170 (6,800 bu) 185 (14,800 bu) 120 (14,400 bu) 180 (28,800 bu) 64,800 Bushels E+ Guarantee @75% 135 142.5 131 139 E+ Loss NO NO YES NO NO EU loss 11 bu/acre x $4.50 x 120 acres = $5,940

E+ Pros E+ Cons Optional Unit style of coverage Combination Flexibility Full Revenue/MPCI policy Price Loss Bushel Loss Irrigated land eligibility Perfect fit with hail policies 10 Unit Limit Secondary to Enterprise Unit policy OU coverage level is lower than MPCI coverage level

Added Price Option (APO) Allows the producer to increase their price on lost bushels. Based off a production loss only February Spring Price is used as the baseline. Additional price increments from $0.10 to $1.20 Losses will be paid on an OU basis, even if you elected EU.

APO (How it Works) APH 180 APH 180 Spring Price $4.50 Coverage Level 80% Crop Value $810.00 Bushel Guarantee 144 Revenue Guarantee $648.00 Crop Value ($810) / Bushel Guar. (144 bushels) = $5.63 APO Price *** Max $1.13 increase / bushel ***

Harvest Max Ability to cover up to 96% of your APH Uses a Entire Crop Unit (ECU) type coverage All entities are considered part of the ECU (20% ownership guideline used as the base) Not all acres need to be covered on this policy Price is set in December ($4.58 corn & $11.60) Sales Closing Date: March 20 th Losses paid on established December price only.

Price Flex 15-day or 30-day pricing windows Potential to enhance the February price Available: Dec/Jan/Mar/April/May/June/July (Mar/April/May/June/July left for 2014 CY) April/May/June/July must be chosen by 3/15 Must purchase 10 days prior to the last day of the month for Dec/Jan/Mar Caps: Corn = $1.00 Soybeans = $2.00 Revenue product (bushel loss not required for an indemnity) Can select more than one window

Multiple Price Discovery (MPD) MPD provides a best of base scenario Two choices: MPD-5 Nov/Dec/Jan/Feb/Mar SCD: 11/15 MPD-4 Dec/Jan/Feb/Mar SCD: 12/15 (Too late for 2014 CY) Caps: Corn = $0.50 Soybeans = $1.00 Revenue product (bushel loss not required for an indemnity)

Revenue Net (RevNet) Two-week pricing windows Potential to enhance the February price Available: Sept.1 - Jan.15 (Too late for 2014 CY) Caps: Corn = $1.00 Soybeans = $2.00 Revenue product (bushel loss not required for an indemnity) May be attached to E+ Multiple windows can be chosen

Total Weather Insurance (TWI) Supplemental weather coverage Gap Coverage between expected yield and MPCI Can be purchased on individual farms or acres All Perils can pay as separate events Location Specific: 2.5 Mile grids for rainfall & temperature Temperature measured off of the nearest or default weather station Maximum payout or coverage per acre is flexible to suit the growers needs Retained Weather Risk essentially a deductible that the client can take.

Total Weather Insurance (TWI) Perils Covered Coverage CORN SOYBEANS Early Drought X X Drought X X Excess Moisture X X Daytime Heat Stress X X Nighttime Heat Stress X Low Heat Units/Freeze X Early Fall Freeze X

Increased Replant Option (IRO) Coverage: Range from $10 to $60 20/20 Rule: Costs Buy yourself out of the 20/20 MPCI replant rule Range from $.20 to $5.00 per acre depending on the county rating and the amount of coverage chosen Companies can have their own policy specifics Such as, having the IRO attach 20 days prior to the first multi-peril planting date

IRO & Replanting Reminders Enterprise Units make it easier to reach the 20/20 rule that goes with the MPCI policy Optional Units can have a difficult time reaching the 20/20 rule because it is based on the unit reaching 20 acres or 20% REMINDER Claims need to be turned in right away A call from an adjuster is needed before you replant, or they may deny the claim!

Hail Plans Basic Pays 1 for 1 on a loss 90% loss equals 100% payout Comp2+ Pays 1 for 1 up to 10% Pays 2 for 1 11-55% 55% loss equals 100% payout Deductible plans DXS10, DXS5 Production Plan Pays roughly 3 for 1 up to 35% loss Harvested production determines final loss

Hail Strategy Example: Basic ($325/acre) Pay s 1:1 20% loss is determined by the adjuster. Hail payment of $65/acre Leaving you with $260 of applicable hail coverage remaining per acre. Example: Comp 2+ ($325/acre) Pays 1:1 up to the first 10% loss and then 2:1 above 10% 20% loss is determined by the adjuster. Hail payment of $97.50/acre Leaving you with $227.50 of applicable hail coverage remaining per acre.

Hail Strategies MPCI Revenue Plan 80% Production Plan Hail 120 APH 140 APH 140 Coverage 80% Coverage PP 120 Bu Guarantee 112 Modified APH 157 Spring Price $4.50 Spring Price $4.50 Revenue Guarantee $504 Hail Insurance/acre $203 ($707 - $504) 20% adjusted loss 157 bu x 20% = 31.4 bushel loss 120 bu/acre harvested (NO MPCI claim) 157 120 = 37 bushel loss Production Plan pays out the lesser of the bushel loss or the loss based on the percentage of hail damage based off of the Spring Price only. So in this example, the PP120 would have paid $141.3/acre (31.4 bu x $4.50) However if the harvested bushels in this example would have been greater than 157 bushel/acre, you would NOT have received a hail indemnity payment.

Payout Comparison Product: Coverage: Indemnity: Basic $325 $65.00/acre Comp 2+ $325 $97.50/acre PP120 $325 $194.40/acre

Wind & Green Snap Polices Green Snap All companies we write with cover green snap Blowdown (Wind) Coverage is company specific Extra Harvest Expense (EHE) Some companies have this available Those that do have a range from 8 to 12% of the hail liability Coverage Attaches From planting to 7 th leaf Termination of Coverage September 15 th to October 15 th Cost Range from $3 - $5/acre

2014 RMA Changes

Power of Attorney s (POAs) Insurance Company POAs Are applicable to only crop insurance forms FSA POAs Need to have the for crop insurance purposes box checked in order to use Notarization is not required if the POA form is signed in the FSA Office and is witnessed by a FSA Employee Other POAs Executed according to state laws Must be notarized

Signature Authority Statement Insured's may authorize other(s) to sign documents on their behalf using: Legally executed POA Signature Authority Statement Insured must list names of individuals who are eligible to sign Once authority granted, grantees can sign acreage reports, production reports, and claim documents

CRP & New Breaking Ground Reminder Please let us know if you have any ground that is coming out of CRP or if you will have any new breaking ground for the 2014 Crop Year. Different rules apply for these circumstances, so we need to make sure the databases are set up correctly and written agreements are done, as necessary.

High Risk Land Reminder If requesting a standard rate for high risk land, be sure to work with AgStar personnel to have a written agreement submitted to the company or to find out what other options that you have for this land.

Actuarial / Special Provision Changes New double-cropping statement added to 11/30 crops in IA, MN and WI No insurance is available for a second crop if a hay crop is harvested or if the first crop (other than a cover crop) reaches the heading or budding stage before it is terminated\ New cover crop statement in the Special Provisions outlines that a crop following a cover crop may be insured if the producer follows the NRCS management and termination guidelines for the cover crop.

Actuarial / Special Provision Changes Irrigated and Non-Irrigated replace no type specific for hybrid seed corn. Changed the non-conventional practice statement to state that soybeans broadcast by any method and then incorporated will be insurable, not just those broadcast using a boom type spreader. Specialty type soybeans added in Wisconsin (Contract Pricing). 80 & 85 percent coverage levels have been added for dry beans.

Actuarial / Special Provision Changes Premium rates for organic practices are the same as conventional practice rates. T-Yields have been considerably lowered for organic practices. Corn and Soybean organic T-Yields are now 65% of the conventional T-Yield.

Customized Risk Management Menu Multi-Peril Hail Revenue Product Bushel Product Weather Product AgStar can customize a complete package that fully covers the risk on your farm Resources for today s presentation: www.agstar.com/insurance www.agstar.com/edge

AgStar Contacts Terry Marc (715) 307 1231 Mike Gintner (715) 495 6883 Jake Greenberg (715) 688 9410 Doug Kucko (715) 651 7071 Linda Hanson (715) 307 3111 Kelly Jones (715) 308 9887 Cindy Prellwitz (715) 236 5271 Keith Velie (715) 928 1563

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