noninsured crop disaster assistance program. agriculture & business management introduction 2

NAPNoninsured Crop Disaster Assistance Program

Agriculture & Business Management

Introduction

2


What is NAP?

Noninsured Crop Disaster

Assistance

Program

• Risk protection

3


Application of Coverage

You must make an application for NAP on or before the application closing date for the crop/commodity in the county.

Eligible producers must apply for coverage of noninsurable crops using Form CCC-471, “Application for Coverage” and pay the applicable service fee at the FSA office where their farm records are maintained

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Application of Coverage (Continued)

For basic CAT (Catastrophic) coverage The service fee is the lesser of :

$250 per crop, $750 per producer per administrative county, not to

exceed a total of $1875 for a producer with farming interests in multiple

counties.

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Application of Coverage (Continued)

Basic CAT level is figured as 50% of the yield and 55% of the price.

Acres x share x (50%) yield x (55%) price

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Service Fee & Premium

FSA will waive NAP service fees and reduce buy-up premiums by 50% for: Beginning farmers (BF) Limited resource farmers (LR) Socially disadvantaged farmers (SDA)

The completion of form CCC-860 is required.

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Statutory Changes

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Buy-Up Coverage

In addition to CAT-level coverage, NAP will offer buy-up coverage for the 2015 through 2018 crop years

Crops and grasses intended for grazing are excluded from buy-up coverage

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Buy-Up Coverage (Continued)

Buy-up coverage levels:

Yield Level Price Level50% 100%55% 100%60% 100%65% 100%

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In addition to the service fee, producers who elect buy-up coverage must pay a premium equal to the lesser of: 5.25% of the guarantee• Guarantee acres x share x yield x coverage level

(yield/price) x price x 5.25% 5.25% of the payment limit• CAP is $125,000 x 5.25% or $6563

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For value loss crops, buy-up coverage will be based on the maximum dollar value for which the producer requests coverage

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If the application closing date for a crop has passed before publication of the NAP rule, producers will have additional time to apply for retroactive buy-up coverage for that crop

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Eligible Crops

Any commercial agricultural crop (excluding livestock and their by-products), commodity or acreage of a commodity grown for food or fiber, and commercial or industrial crops for which CAT or additional coverage (non-pilot) is not available.

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Eligible Crops (Continued)

Additional eligible crops: Sweet sorghum Biomass sorghum

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Expanded definition of industrial crops – includes crops produced as a feedstock for: Renewable biofuel Renewable electricity Bio based products

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Crops are ineligible if either type of coverage is available under the Federal Crop Insurance Act: CAT under section 508(b) Additional coverage under sections 508(c) and

508(h) (excluding some pilot programs)

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Acreage Reporting

Accurate and timely reporting• COF’s will review acreage reporting data with the

producer to verify accuracy• Producers must sign acreage report• Accurate acreage reports ensure program eligibility• Inaccurate acreage reports can result in loss of benefits or

improper payments• Total cropland report, all cropland on a farm must be

reported to ensure program eligibility

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Acreage Reporting (Continued)

Acreage reports must be filed by the final acreage reporting date

Exceptions• If crop is not planted by the final reporting date the

producer has 15 calendar days after planting is completed• Producer acquires a lease after the final reporting date –

producer has 30 calendar days after acquiring the lease to report

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Limitations and Eligibility

$125,000 payment limitation

$900,000 AGI provision

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Notice of Loss

A Notice of Loss (NOL) should be filed timely.• during the coverage period• within 15 days that loss becomes apparent

Producers of hand harvested crops shall notify COF within 72 hours and file NOL within 15 days of earlier of occurrence or loss becomes apparent

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Eligible Causes of Loss

Loss must occur from an eligible cause of loss during the coverage period before or during harvest

Eligible causes of loss apply the same to basic and buy-up coverage.

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Damaging Weather

Drought Hail Excessive moisture Freeze Tornado Hurricane Excessive wind

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Adverse Natural Occurrence

Earthquake Flood Volcanic eruption Any combination of the above

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Ineligible Causes of Loss

Some examples:• Losses that are not direct result of an eligible cause

of loss in the coverage period• Failure to reseed or replant when practicable• Failure to follow good farming practices• Water contained or released

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Application for Payment

Producer signs after the loss is filed and worked by an approved loss adjuster

No later than 60 days after normal harvest date

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Production

The production reporting date (PRD) is the later of the acreage reporting date for the crop in the subsequent year or 60 days after the normal harvest date.

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Buy-Up Example

Forage Sorghum◦ 100 Acres◦ 2 T Approved Yield◦ 2014 Price $137.33◦ 100% share◦ Not SDA/LR/BF◦ Selected 60/100 Coverage Level

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Buy-Up Example (Continued)

Premium Calculation◦ Yield x Coverage Level x Price x Acres x Share = Guarantee

(used only for calculation of premium)◦ Guarantee x .0525 = Premium

So:◦ 2T x .60 x $137.33 x 100 Ac x 100% = $16,480◦ $16,480 x .0525 = $865 Premium for Buy-Up◦ The $250 Administrative Fee also applies.

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Calculating the Payment Harvests 1 ton of Forage Sorghum. There was an

eligible cause of loss.◦ 2 T Yield x 60% coverage level = 1.2 T coverage◦ 1.2 T coverage – 1 T harvest = .2 T loss◦ .2 T loss x $137.33 x 100 Ac x 100% share = $2,747 NAP

payment.

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If the same producer selected CAT only:◦ $250 administrative fee is only cost.

With the same 1 T harvest:◦ 1 T coverage (50%) – 1 T harvest = no covered loss. Zero

Payment

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Questions???

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noninsured crop disaster assistance program. agriculture & business management introduction 2

Documents

nap service fee

nap catastrophic coverage

eligible producers

applicable service fee

eligible crops

loss of production

farm service agency

production risks