Crop Insurance

Published on AidPage by IDILOGIC on Jun 24, 2005

Administered by:

US Federal Government Agency (see all agencies)
Department of Agriculture , Risk Management Agency
CFDA #: 10.450

Purpose of this program:

To promote the national welfare by improving the economic stability of agriculture through a sound system of crop insurance and providing the means for the research and experience helpful in devising and establishing such insurance.

Possible uses and use restrictions...

The Federal Crop Insurance Corporation (FCIC) is a wholly-owned government corporation created February 16, 1938 (7 U.S.C. 1501.) The program was amended by Public Law 96-365, dated September 26, 1980, to provide for nationwide expansion of a comprehensive crop insurance plan. The Federal Agriculture Improvement and Reform Act of 1996 (P.L.104-127) required the Secretary of Agriculture to establish an independent office for supervision of the FCIC. FCIC is administered by the Risk Management Agency (RMA), and promotes the national welfare by improving the economic stability of agriculture through a secure system of crop insurance. In recent years, RMA has seen dramatic changes in the network of Federal programs designed to give producers a meaningful "safety net" against adversity. The President enacted emergency supplemental appropriations during fiscal years 1999 and 2000 due to the precipitous drop in farm income and the plunge of commodity prices in 1998. These supplementals included funding for a reduction of approximately 30 percent in the farmers share of premium costs. Catastrophic crop insurance protection (CAT) is fully subsidized except for administrative fees paid by the producer. This coverage compensates the producer for yield losses exceeding 50 percent of yield and at a price equal to 55 percent of maximum price (or equivalent amounts for dollar-based programs). Additional protection is offered at higher levels of coverage and variable levels of premium subsidy. The Noninsured Assistance Program (NAP), which is administered by the Farm Service Agency, is available to provide coverage equivalent to the catastrophic crop insurance protection in areas where catastrophic crop insurance protection is not available and if such crop is produced for food or fiber. The FCIC currently has 32 pilot programs underway that implement legislation or test new and innovative crop insurance concepts. Crop insurance pilot programs which are available include programs for: adjusted gross revenue, apple quality option, avocado actual production history, avocado revenue, avocado/mango trees, blueberries, cabbage, cherries, citrus (dollar),coverage enhancement option, crambe, cultivated clams, cultivated wild rice, dairy options, Florida fruit trees, forage seed, fresh market beans, the Income Protection (IP) plan of insurance, IP barley, malting barley price option, millet, mint, mustard, onion pilot stage removal option, pecan revenue, processing chile peppers, processing cucumbers, rangeland (GRP), raspberry/blackberry, strawberry, sweet potatoes, and winter squash (including pumpkins). Insurance was offered on the following crops and/or commodities for the 2001 and 2002 crop years, with some available only in limited areas: almonds, apples, barley (feed and malting), dry beans, beans (processing), canola, carambola trees, citrus, citrus trees, corn (grain, silage, and hybrid seed corn), cotton (upland and ELS), cranberries, figs, flax, forage, forage seeding, grain sorghum (and hybrid grain sorghum), grapes, table grapes, grapefruit, grapefruit trees, lemon, lemon trees, lime, lime trees, macadamia nuts, macadamia trees, mandarins, mango trees, murcott honey oranges, nursery stock, oats, onions, orange, orange trees, peaches, peanuts, pears, peas (dry and green), pecans, peppers, plums, popcorn, potatoes, prunes, raisins, rapeseed, rice, rye, safflower, soybeans, stone fruit, sugar beets, sugarcane, sunflowers, sweet corn (fresh market and processing), tangelos, tangerines, tobacco (guaranteed production and quota), tomatoes (fresh market and processing), walnuts, and wheat. On June 20, 2000, the President signed into law, provisions which invest $8.2 billion in five years to further improve Federal crop insurance. The Agricultural Risk Protection Act of 2000 (ARPA) amended the Federal Crop Insurance Act to strengthen the safety net for agricultural producers by

Who is eligible to apply...

Unless otherwise restricted by the insurance policy, owners or operators of farmland, who have an insurable interest in a crop in a county where insurance is offered on that crop are eligible for insurance. Producers will be covered under the Noninsured Assistance Program (NAP) which is available to provide coverage similar to the catastrophic risk protection in areas where catastrophic risk protection is not available, if such crop is produced for food or fiber and the area is authorized.

Eligible Applicant Categories:
Eligible Functional Categories:
Credentials/Documentation

None. This program is excluded from coverage under OMB Circular No. A-87.

Note:This is a brief description of the credentials or documentation required prior to, or along with, an application for assistance.

About this section:

This section indicates who can apply to the Federal government for assistance and the criteria the potential applicant must satisfy. For example, individuals may be eligible for research grants, and the criteria to be satisfied may be that they have a professional or scientific degree, 3 years of research experience, and be a citizen of the United States. Universities, medical schools, hospitals, or State and local governments may also be eligible. Where State governments are eligible, the type of State agency will be indicated (State welfare agency or State agency on aging) and the criteria that they must satisfy.

Certain federal programs (e.g., the Pell Grant program which provides grants to students) involve intermediate levels of application processing, i.e., applications are transmitted through colleges or universities that are neither the direct applicant nor the ultimate beneficiary. For these programs, the criteria that the intermediaries must satisfy are also indicated, along with intermediaries who are not eligible.

How to apply...

Application Procedure:

Application for multiple peril crop insurance offered by a company reinsured by FCIC must be filed with a crop insurance sales agent. Both catastrophic and additional coverage are available only from private companies. In general, crops and acreage must be reported to establish insurance coverage for crop insurance and, if not eligible for crop insurance, such must be filed to establish eligibility for NAP. This program is excluded from coverage under OMB Circular No. A-110.

Note: Each program will indicate whether applications are to be submitted to the Federal headquarters, regional or local office, or to a State or local government office.

Award Procedure:

The insurance contract becomes effective upon issuance of a Notice of Acceptance by the insurance company. Notices of Acceptance for insurance coverage are issued upon a determination that the applicant is eligible.

Note: Grant payments may be made by a letter of credit, advance by Treasury check, or reimbursement by Treasury check. Awards may be made by the headquarters office directly to the applicant, an agency field office, a regional office, or by an authorized county office. The assistance may pass through the initial applicant for further distribution by intermediate level applicants to groups or individuals in the private sector.

Deadlines and process...

Deadlines

Applications must be filed by the appropriate sales closing date for the crop involved.

Note: When available, this section indicates the deadlines for applications to the funding agency which will be stated in terms of the date(s) or between what dates the application should be received. When not available, applicants should contact the funding agency for deadline information.

Range of Approval/Disapproval Time

From 15 to 20 days.

Preapplication Coordination

None. This program is excluded from coverage under OMB Circular No. A-102 and E.O. 12372.

Note: This section indicates whether any prior coordination or approval is required with governmental or nongovernmental units prior to the submission of a formal application to the federal funding agency.

Appeals

Appeals should be addressed within 30 days to the National Appeals Division, U.S. Department of Agriculture, Washington, DC 20250.

Note: In some cases, there are no provisions for appeal. Where applicable, this section discusses appeal procedures or allowable rework time for resubmission of applications to be processed by the funding agency. Appeal procedures vary with individual programs and are either listed in this section or applicants are referred to appeal procedures documented in the relevant Code of Federal Regulations (CFR).

Renewals

Continuous insurance contract.

Note: In some instances, renewal procedures may be the same as for the application procedure, e.g., for projects of a non-continuing nature renewals will be treated as new, competing applications; for projects of an ongoing nature, renewals may be given annually.

Who can benefit...

Any insured producer who has a financial loss caused from a covered peril for the particular crop insured or covered by the Noninsured Assistance Program (NAP).

Beneficiaries
About this section:

This section lists the ultimate beneficiaries of a program, the criteria they must satisfy and who specifically is not eligible. The applicant and beneficiary will generally be the same for programs that provide assistance directly from a Federal agency. However, financial assistance that passes through State or local governments will have different applicants and beneficiaries since the assistance is transmitted to private sector beneficiaries who are not obligated to request or apply for the assistance.

What types of assistance...

Insurance

Financial assistance provided to assure reimbursement for losses sustained under specified conditions. Coverage may be provided directly by the Federal government or through private carriers and may or may not involve the payment of premiums.

How much financial aid...

Range and Average of Financial Assistance

Level of assistance varies according to policy, crop and indemnities paid.

Note: This section lists the representative range (smallest to largest) of the amount of financial assistance available. These figures are based upon funds awarded in the past fiscal year and the current fiscal year to date. Also indicated is an approximate average amount of awards which were made in the past and current fiscal years.

Obligations

(Total indemnities): Indemnities: FY 03 $3,226,540,000; FY 04 est $3,926,144,000; and FY 05 est $4,018,387,000. (Premium subsidy to farmers through reinsured companies): FY 03 $2,041,680,000, FY 04 est. $2,043,929,000, FY 05 est. $2,153,908,000.

Note: The dollar amounts listed in this section represent obligations for the past fiscal year (PY), estimates for the current fiscal year (CY), and estimates for the budget fiscal year (BY) as reported by the Federal agencies. Obligations for non-financial assistance programs indicate the administrative expenses involved in the operation of a program.

Account Identification

12-4085-0-3-351.

Note: Note: This 11-digit budget account identification code represents the account which funds a particular program. This code should be consistent with the code given for the program area as specified in Appendix III of the Budget of the United States Government.

Examples of funded projects...

Not applicable.

About this section

This section indicates the different types of projects which have been funded in the past. Only projects funded under Project Grants or Direct Payments for Specified Use should be listed here. The examples give potential applicants an idea of the types of projects that may be accepted for funding. The agency should list at least five examples of the most recently funded projects.

Program accomplishments...

For crop year 2001, the estimates are approximately 207.6 million acres for total insurance protection of an estimated $35.8 billion, and for crop year 2002, the estimates are 209.2 million acres for total insurance protection of an estimated $34.9 billion. For crop year 2003, the estimates are approximately 207.9 million acres for total insurance protection of an estimated $34.3 billion.

Criteria for selecting proposals...

Not applicable.

Assistance considerations...

Length and Time Phasing of Assistance

Not applicable.

Formula and Matching Requirements

This program has no statutory formula nor matching requirements.

Note:
A formula may be based on population, per capita income, and other statistical factors. Applicants are informed whether there are any matching requirements to be met when participating in the cost of a project. In general, the matching share represents that portion of the project costs not borne by the Federal government. Attachment F of OMB Circular No. A-102 (Office of Management and Budget) sets forth the criteria and procedures for the evaluation of matching share requirements which may be cash or in-kind contributions made by State and local governments or other agencies, institutions, private organizations, or individuals to satisfy matching requirements of Federal grants or loans.

Cash contributions represent the grantees' cash outlay, including the outlay of money contributed to the grantee by other public agencies, institutions, private organizations, or individuals. When authorized by Federal regulation, Federal funds received from other grants may be considered as the grantees' cash contribution.

In-kind contributions represent the value of noncash contributions provided by the grantee, other public agencies and institutions, private organizations or individuals. In-kind contributions may consist of charges for real property and equipment, and value of goods and services directly benefiting and specifically identifiable to the grant program. When authorized by Federal legislation, property purchased with Federal funds may be considered as grantees' in-kind contribution.

Maintenance of effort (MOE) is a requirement contained in certain legislation, regulations, or administrative policies stating that a grantee must maintain a specified level of financial effort in a specific area in order to receive Federal grant funds, and that the Federal grant funds may be used only to supplement, not supplant, the level of grantee funds.

Post assistance requirements...

Reports

Private Industry Crop Insurance Acreage Report; Actual Production History Yield Report; and in the event of a loss, Notice of Damage, Production Worksheet, and proof of loss.

Note: This section indicates whether program reports, expenditure reports, cash reports or performance monitoring are required by the Federal funding agency, and specifies at what time intervals (monthly, annually, etc.) this must be accomplished.

Audits

Recipients are subject to audit by the RMA internal compliance function, private insurance company auditors, Office of the Inspector General, USDA, and the General Accounting Office.

Note: This section discusses audits required by the Federal agency. The procedures and requirements for State and local governments and nonprofit entities are set forth in OMB Circular No. A-133. These requirements pertain to awards made within the respective State's fiscal year - not the Federal fiscal year, as some State and local governments may use the calendar year or other variation of time span designated as the fiscal year period, rather than that commonly known as the Federal fiscal year (from October 1st through September 30th).

Records

Insured must keep for 3 years, after the end of the crop year, records of harvesting, shipments, sale or other disposition of all insured crops produced on each unit covered by the contract and separate records for any uninsured acreage of the insured crops.

Note: This section indicates the record retention requirements and the type of records the Federal agency may require. Not included are the normally imposed requirements of the General Accounting Office. For programs falling under the purview of OMB Circular No. A-102, record retention is set forth in Attachment C. For other programs, record retention is governed by the funding agency's requirements.

Regulations...

Authorization

Federal Crop Insurance Act, as amended, 7 U.S.C. 1501-1520, Agricultural Adjustment Act of 1938, Title V, 52 Stat. 31; Federal Crop Insurance Act of 1980, as amended, Public Law 101-624; Federal Crop Insurance Reform Act of 1994, Public Law 103-354; Federal Agriculture Improvement and Reform Act of 1996, Public Law 104-127; Agricultural Research, Extension, and Education Reform Act of 1998, Public Law 105-185; Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Appropriations Act of 1999, Public Law 105- 277; Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Appropriation Act of 2000, Public Law 106-78; Agriculture Risk Protection Act of 2000, Public Law 106-224; Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Appropriation Act of 2001, Public Law 106-387; Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Appropriation Act of 2002, Public Law 107-76.

Note: This section lists the legal authority upon which a program is based (acts, amendments to acts, Public Law numbers, titles, sections, Statute Codes, citations to the U.S. Code, Executive Orders, Presidential Reorganization Plans, and Memoranda from an agency head).

Regulations, Guidelines, And Literature

7 CFR Part 400 and a brochure "Introduction to Risk Management"- available at no charge.

Contact information...

Web Sites
Regional Or Local Office

Interested producers should contact their Regional Office listed in Additional Contact Information - FMR Help, or a private industry crop insurance agent.

Note: This section lists the agency contact person, address and telephone number of the Federal Regional or Local Office(s) to be contacted for detailed information regarding a program such as: (1) current availability of funds and the likelihood of receiving assistance within a given period; (2) pre-application and application forms required; (3) whether a pre-application conference is recommended; (4) assistance available in preparation of applications; (5) whether funding decisions are made at the headquarters, regional or local level; (6) application renewal procedures (including continuations and supplementals) or appeal procedures for rejected applications; and (7) recently published program guidelines and material. However, for most federal programs, this section will instruct the reader to consult the so-called Appendix IV of the Catalog due to the large volume of Regional and Local Office Contacts for most agencies. This information is provided in Additional Contact Information (see below).

Headquarters Office

Department of Agriculture, Administrator, Risk Management Agency, Ag Box 0801, Washington, DC 20250. Telephone: (202) 690-2803.

Note: This section lists names and addresses of the office at the headquarters level with direct operational responsibility for managing a program. A telephone number is provided in cases where a Regional or Local Office is not normally able to answer detailed inquiries concerning a program. Also listed are the name(s) and telephone number(s) of the information contact person(s) who can provide additional program information to applicants.

Additional Contact Information (Appendix IV)

Due to the large volume of regional and local office contacts for most agencies, full contact information is also provided separately here in a PDF format: