Crop Insurance Today Third Quarter 2019 - 11

* The Take Away: The policy states: "The expected yield of the commodity is the yield that
you can expect to produce on your farm operation under normal growing conditions, as
demonstrated by your entire farm operation's
production history or other data sources..." It's
normal to expect that some years the weather will not cooperate, and the result will be
a catastrophic loss, but no one knows which
year will be the "one." Likewise, it's normal to
expect an exceptional year, but no one knows
which year that will be either. The answer lies
somewhere in the middle.

Myth: I experienced a loss
on one of my commodities,
I should be paid for
that loss.

Let's go back to a statement in the opening
paragraph of the policy: "Whole-farm revenue
consists of revenue from all insured commodities on the farm operation, including revenue
from animals and animal products." The farm
plan, or "Farm Operation Report," includes
detailed information for each intended commodity the farmer plans to produce or purchase
for resale on their farm operation during the
insurance period.
* The Take Away: Depending on the makeup of the farming operation, a loss on one
commodity could result in a payable loss
under WFRP. On more highly diversified
operations, however, revenue from other
commodities produced will, in most cases,
offset the loss on the one commodity. Farmers should work with their agent to under-

stand how WFRP can be paired with other
Federal crop insurance policies that cover a
loss to a single commodity and the offset in
premium liability to the WFRP policy they
provide. Additionally, having a WFRP policy
does not prevent a farmer from taking out a
private Crop-Hail policy to cover losses to a
single commodity from hail. Farmers should
also ask their agent to explain how losses paid
under the other policies interact with WFRP.

Myth: RMA will not provide
an official interpretation of
the WFRP policy.

* The Take Away: WFRP is a pilot program
and, as such, a program participant may not
obtain a Final Agency Determination (FAD)
on questions regarding the meaning or application of policy language. But the federal
regulations governing FADs now provide
an avenue for an "FCIC Interpretation" that
includes the WFRP policy and related procedural manuals. While this approach takes
time (usually 90 days) and the request must
be properly worded (e.g. no factual examples
or hypotheticals), it does provide an avenue to
obtain "bankable" answers to disputed terms.

Myth: There is an "Easy
Button" for WFRP.

This article takes a very simplistic look at
the WFRP program. The role of expenses, determinations of expected values, coverage for
fiscal year filers, and the role accrual accounting plays are some of the more detailed aspects
of WFRP that requires the help of a crop in-

surance agent. This will ensure that the requirements of the policy are met, and that coverage
is tailored to the individual farming operation
it is designed to protect. This article opened
with detailing how every farm is different,
and each has its own level of risk management
needs. To ensure that WFRP is tailored to the
farmer's operation, or any other type of insurance for that matter, a farmer needs to educate
their insurance agent about their farming operation and provide the information required to
get the best most accurate protection that crop
insurance provides.
We began with a discussion of how baseball
players and farmers both use analytics to be successful. So, let's look at how a hitting instructor
uses analytics to help a player improve his approach to hitting. Is the player best suited to hit
for average or home runs? Is their swing speed
off the charts or could they benefit from a swing
path that has the bat on a more level plane that
stays in the hitting zone longer? Has the league
employed a shift to one side of the field and the
pitcher throws more breaking balls down and
away so the player hits into the shift? Without
this information, how much help is the hitting
instructor to the player? A crop insurance agent,
without adequate analytics of their insured's
farming operation, will be challenged to tailor an
individualized crop insurance risk management
package specifically for them.
To quote President Dwight D. Eisenhower:
"Farming looks mighty easy when your plow is
a pencil and you're a thousand miles from the
corn field." It's even harder if you don't have all
the necessary information.

Crop Insurance Today Third Quarter 2019

Table of Contents for the Digital Edition of Crop Insurance Today Third Quarter 2019