Whole Farm Revenue Protection Insurance workshop
Nebraska Extension will sponsor a workshop on Whole Farm Revenue Protection (WFRP) insurance policies on Thursday (Feb. 13) at the Panhandle Research and Extension Center. The workshop will focus on how WFRP policies relate to sugarbeet producers.
The workshop will start at 9 a.m. in the Bluestem Room and will also be available as a live internet stream for those interested. Presenter will be Cory Walters, UNL Associate Professor of Ag Economics.
There is no fee, and it is expected to last about an hour. Bankers, sugarbeet producers, and insurance agents are welcome.
“There are been several questions from producers regarding WFRP policies,” said event organizer Jessica Groskopf, Ag Economist based at the Panhandle Center. “This is an opportunity for those with questions to get some clarification on how these policies work from unbiased crop insurance experts.”
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[00:00:00.000]And honestly, you're getting beyond
[00:00:04.260]my knowledge of how the rules would apply
[00:00:07.050]specifically to sugar production.
[00:00:10.990]And we thought it was important that
[00:00:12.500]we brought in unbiased presenters
[00:00:15.810]to flat bring in education.
[00:00:18.470]So today, we are not going to be promoting
[00:00:21.900]any specific agents or APIs,
[00:00:25.350]approved insurance providers.
[00:00:27.590]We are going to be discussing
[00:00:29.090]how the rules and regulations apply to sugar
[00:00:32.390]as we understand them, and so online...
[00:00:36.610]Oh, I've got two online.
[00:00:38.670]Let me see if I can make those both come in.
[00:00:43.910]So online, we've got Cory Walters
[00:00:46.440]and we have Collin Olsen.
[00:00:49.570]Collin, would you introduce who else is with you?
[00:00:51.650]I'm sorry, I missed that.
[00:00:54.930]I'm Collin Olsen, I'm the director
[00:00:56.480]of the Topeka regional office,
[00:00:58.670]servicing the states of Colorado,
[00:01:00.100]Kansas, Nebraska and Missouri.
[00:01:02.460]With me is my deputy director Jeff Durro.
[00:01:05.170]Jeff is even more up to snuff on
[00:01:07.080]whole farm than I am, and we're here, as you mentioned.
[00:01:14.760]Our role in this call is to provide information
[00:01:17.380]about the whole farm revenue policy.
[00:01:19.720]We're not endorsing one agent or company
[00:01:22.770]or disparaging any other company.
[00:01:25.390]We're just here to explain our policy
[00:01:29.040]and the procedures for it.
[00:01:32.463]Also online, we have Cory Walters.
[00:01:36.920]Corey, you wanna introduce yourself?
[00:01:39.540]You bet, yeah.
[00:01:40.430]Good morning, everyone.
[00:01:41.690]My name's Cory Walters, and I'm a faculty member here
[00:01:44.010]at the University of Nebraska
[00:01:45.388]in the Department of Agricultural Economics,
[00:01:48.230]and I spend quite a bit of my time
[00:01:51.710]in decision-making under uncertainty,
[00:01:53.470]so that entails crop insurance.
[00:01:58.148]Okay, so I'm gonna make
[00:01:59.660]a couple of adjustments here.
[00:02:01.010]I'm gonna turn, hopefully, your speaker around,
[00:02:03.310]so you're not gonna see me any more, which is fine.
[00:02:07.030]Again, for those of you online,
[00:02:08.560]there's about 23 people online.
[00:02:11.780]You are not able to unmute yourself,
[00:02:15.100]so your only way to communicate with us,
[00:02:17.600]unfortunately, is through the chat,
[00:02:19.750]but that's to keep the road noise down.
[00:02:22.270]So again, I'll be monitoring the chat.
[00:02:25.610]Those of you in the room will be able to ask live questions,
[00:02:29.640]so I'll try to stop them
[00:02:34.430]if we have a live question in the room.
[00:02:36.830]So, with that, let me make a few adjustments
[00:02:41.120]and then Cory, you'll be ready to go.
[00:02:43.990]All right, you let me know when,
[00:02:46.330]and I'll share my screen.
[00:03:04.335]I think, Cory, you're good to share.
[00:03:16.700]All right, everyone can see that?
[00:03:26.600]I'll take the lack of hearing anything just as good.
[00:03:29.600]We can only see the presenter view.
[00:03:36.570]It's popping over on my other screen,
[00:03:39.630]but this works too.
[00:03:42.070]I'm fine with that.
[00:03:44.330]So, what we were thinking of starting off with here
[00:03:47.680]was just a little bit of background
[00:03:49.680]about whole farm revenue
[00:03:51.710]so that everyone's got some basic understanding of it.
[00:03:55.530]It is a relatively new product out of the RMA,
[00:03:58.807]and so I'm just gonna walk through
[00:04:00.450]a few of the facts about it,
[00:04:05.180]'cause it is a more detailed policy,
[00:04:10.360]making it quite a bit more interesting
[00:04:14.090]than a normal multi-peril policy.
[00:04:19.760]It is available across the country.
[00:04:21.720]You've got all 50 states involved,
[00:04:23.510]and it represents an insurance policy
[00:04:25.750]for all commodities on a farm,
[00:04:27.860]effectively meaning that you're gonna be averaging
[00:04:30.830]what happens across all those commodities.
[00:04:34.811]So a gain in one commodity's revenue
[00:04:36.760]can be offset with a loss in another one
[00:04:39.180]but might not trigger an indemnity.
[00:04:43.170]There is a slew of eligibility requirements.
[00:04:48.240]Typically runs off of schedule F tax form,
[00:04:51.180]past number of years.
[00:04:52.885]There's revenue constraints of maxes and mins,
[00:04:56.780]diversification of crops
[00:04:59.110]trigger different attributes about the product.
[00:05:02.270]And most importantly here,
[00:05:03.990]protects against losses of uninsured revenue,
[00:05:06.330]which was also liability,
[00:05:09.720]due to unavoidable natural causes
[00:05:11.440]during the insurance period.
[00:05:13.310]That's also intriguing, the way that is.
[00:05:15.820]So that means it's only what's growing during that.
[00:05:19.510]So if you're in cattle, it's the pounds put on that cow
[00:05:24.950]between the beginning and the end of that policy.
[00:05:30.150]There are higher coverage levels,
[00:05:31.577]80 and 85%, just like on the multi-peril side,
[00:05:34.850]but they do require three commodities
[00:05:37.710]to go in to get up to that level.
[00:05:42.700]Premiums are subsidized.
[00:05:44.240]Making sure that you're on a different screen
[00:05:47.350]here in a second.
[00:05:49.740]And there are, of course, adjustments to operations
[00:05:52.340]that are growing over time.
[00:05:55.273]And like I said, it does cover revenue
[00:05:56.930]produced during the insurance period.
[00:05:59.450]It can be purchased with buy-up policies,
[00:06:01.450]so that then interacts with the premium
[00:06:04.951]on the whole farm side.
[00:06:09.580]And historic insurance payments
[00:06:11.420]and other ag related payments are not included as revenue.
[00:06:14.679]Therefore, the insurance guarantee is based on
[00:06:17.250]what you expect to be produced,
[00:06:19.800]but those payments in that given year
[00:06:23.540]are then counted in that given year.
[00:06:27.970]After filing income taxes,
[00:06:30.141]the loss adjuster will come out and complete a form,
[00:06:36.350]the revenue and allowable expense worksheet.
[00:06:39.300]Allowable revenue will be adjusted by inventory,
[00:06:41.680]unsold or unharvested production
[00:06:43.720]and production lost for uncovered causes.
[00:06:46.140]And then that remainder,
[00:06:47.550]that is equal to the revenue-to-count.
[00:06:50.428]Of course, payments are made when
[00:06:51.910]revenue-to-count is less than the amount of revenue,
[00:06:54.270]and then you've got this other expense reduction factor
[00:06:57.660]inside that thing.
[00:07:00.520]As we went through years of this thing,
[00:07:03.797]the RMA has been very diligent in this,
[00:07:07.220]and has provided yearly enhancements
[00:07:10.260]to keep improving this program.
[00:07:12.560]And the point here is, in these last three slides is,
[00:07:15.920]this thing is a complicated beast.
[00:07:20.250]There's plenty of stuff floating around in this thing
[00:07:23.580]that makes it difficult to understand
[00:07:27.910]without really diving into the details
[00:07:33.430]of a farm's operation, the crops,
[00:07:36.310]and how the whole farm will work.
[00:07:40.030]It is definitely, definitely complicated.
[00:07:43.180]And I wanna pull up, let's see here.
[00:07:46.800]Come over to one other thing.
[00:07:48.870]Just to give you a flavor of whole farm,
[00:07:52.720]in Nebraska, this is just for 2018,
[00:07:55.810]so a couple of years ago, we can see then down here,
[00:08:00.880]this is the state summary for Nebraska for whole farm.
[00:08:06.549]I'm just trying to give you an idea
[00:08:07.690]of the exposure of whole farm across the state.
[00:08:10.510]There were 22 policies sold.
[00:08:12.984]Four of those policies had indemnities.
[00:08:18.560]Across all policies, there was just under
[00:08:20.797]$12 million in liabilities.
[00:08:26.101]Total premiums, this is not the subsidy, is $600,000,
[00:08:29.640]with the subsidy picking up $480,000,
[00:08:31.707]and then the indemnities were very small
[00:08:34.180]at $170,000 with a very small loss ratio.
[00:08:39.320]But point here is, there wasn't much in '18.
[00:08:44.210]I didn't go back to any other years,
[00:08:45.650]and '19 is not very useful yet,
[00:08:47.950]because we've gotta get through the tax season.
[00:08:52.600]Let's see, what else?
[00:08:53.870]The subsidies, like I said.
[00:08:58.160]The subsidy bait matters on the commodity they count,
[00:09:03.200]so as you go up in commodities,
[00:09:05.210]your subsidies and options,
[00:09:07.740]you can pick up, coverage levels change.
[00:09:09.720]So, they're very common around 80%.
[00:09:11.787]If you're up at three crop side or more,
[00:09:15.950]then you're 80%, even going higher.
[00:09:18.370]You can get up to 80 and 85% coverage level.
[00:09:22.820]So that kind of gives you an overview of whole farm.
[00:09:26.802]I was gonna leave it there,
[00:09:29.630]and then open this thing up for questions,
[00:09:33.617]and let the RMA jump in here,
[00:09:37.250]if they have something in particular
[00:09:39.670]with crops in Scott's bluff, or any other changes
[00:09:44.930]that I should've highlighted that I didn't,
[00:09:48.130]because the final say on this stuff
[00:09:50.060]definitely falls on the RMA side,
[00:09:52.650]and they're more in tune with
[00:09:55.683]the current policies right now, current rules.
[00:10:01.400]And I'm also happy to take any questions.
[00:10:14.110]Cory, do you wanna go ahead and stop sharing?
[00:10:16.300]Collin, do you have anything to add to Cory's setup?
[00:10:30.322]No, I appreciate the comments that Cory made.
[00:10:35.410]I think at this point just
[00:10:36.800]we'd be available to answer questions.
[00:10:38.420]I'm not exactly sure exactly the questions
[00:10:42.420]that are coming out of the panhandle
[00:10:44.230]or out of Western Nebraska
[00:10:45.370]but we're happy to address any concerns
[00:10:48.150]that you guys might have about whole farm.
[00:10:55.640]Corey, you were given a few questions.
That came through.
[00:10:59.440]You wanna start with those?
[00:11:02.550]Where do I see 'em?
They were emailed to you.
[00:11:08.973]In the past five days.
So, those ones!
[00:11:15.190]I was looking for something on Zoom.
[00:11:18.770]Okay, so you want me to pull up the ones
[00:11:21.950]that have been sent to me.
[00:11:26.110]Yeah, so you should be able.
[00:11:27.540]There's nothing in the chat yet.
[00:11:28.920]If you have questions in the chat,
[00:11:30.710]go ahead and start plugging in questions.
[00:11:34.850]Okay, I don't see anything in there.
[00:11:41.390]I'll pull them up and ask.
[00:11:47.325]I'm gonna get to these.
[00:11:49.650]So, you're referring to the questions
[00:11:52.210]that I got on an email chain?
[00:11:54.958]Okay, and those questions
[00:11:57.930]were the ones in red?
[00:12:04.620]I don't know where this was exactly going,
[00:12:10.731]so you want me to summarize some of the questions,
[00:12:16.368]and what was being asked?
[00:12:23.670]So, let's go through a couple.
[00:12:26.240]Let me find the good ones.
[00:12:30.600]Some of this is just discussion.
[00:12:35.210]You're thinking of the document with additional sugar,
[00:12:38.017]the whole farm questions, right?
[00:12:43.369]I wanna see how many yeses I can get out of you
[00:12:44.480]at one time here.
[00:12:48.340]All right, so see here.
[00:13:02.660]So, what this comes down to is,
[00:13:05.410]there's some concern with Western Sugar
[00:13:08.697]and the low payments over the last number of years,
[00:13:11.520]and people are financially upset.
[00:13:16.520]There's potentially a role
[00:13:19.890]that whole farm could play in this,
[00:13:22.390]in that it will guarantee $42,
[00:13:26.210]is that for a ton of beets?
[00:13:31.860]The producers will be made whole by the whole farm,
[00:13:35.790]and then there's some concern about,
[00:13:37.480]is this how the policy is expected to work,
[00:13:43.509]and is that really a revenue loss that's insurable?
[00:13:47.040]And I believe, at the end of the day,
[00:13:51.519]that is not an insurable loss
[00:13:58.070]because of poor management at a co-op.
[00:14:03.200]But I will let the RMA identify
[00:14:07.260]what is a insurable loss compared to a non-insurable loss?
[00:14:16.890]This is Collin again, can you hear me?
[00:14:20.848]I attempted to share my screen.
[00:14:22.822]Can anybody see?
[00:14:25.300]I've actually got the policy pulled up,
[00:14:27.000]and I've highlighted a couple of sections.
[00:14:30.030]Yes, it's up.
[00:14:32.370]So, this is the whole farm revenue pilot policy
[00:14:36.490]for the 2020 crop year.
[00:14:40.650]I'm on page 36 of the document,
[00:14:43.810]and it was getting to loss determinations.
[00:14:45.840]So, under section 21, Causes of Loss, okay?
[00:14:51.707]"This policy will not cover losses
[00:14:53.827]"due to any of the following causes."
[00:14:57.630]I'm working my way down to specificity,
[00:15:00.418]so if you scroll down to the next page...
[00:15:05.930]So, this continues one, two, three, four,
[00:15:07.790]all the way down to eight, nine.
[00:15:09.830]This is a list of the clauses that are not covered.
[00:15:13.920]Number 11 is a loss that is not covered is,
[00:15:17.727]"Failure to receive payment for produced commodities."
[00:15:23.160]And then number 16 is,
[00:15:26.467]"Loss of expected revenue from the production
[00:15:29.037]"of a commodity, or a quantity of a commodity,
[00:15:31.807]"which has not been sold because
[00:15:33.267]"there is no verifiable market for the commodity
[00:15:35.350]"or the amount of the commodity produced
[00:15:37.347]"exceeds the amount of production
[00:15:38.587]"that could be expected to be received
[00:15:40.487]"by the market under normal growing conditions
[00:15:42.383]"(For example, the producer producers
[00:15:45.477]"a variety of artichokes in an area where
[00:15:47.067]"there is no market for that variety of artichokes
[00:15:49.247]"or the only processor will accept no more than 1000 bushels
[00:15:52.523]"and the producer produces 5000 bushels)."
[00:15:58.020]So if I'm understanding the question that's being posed,
[00:16:02.750]in the situation where Western Sugar
[00:16:05.420]is not able to adequately pay for
[00:16:13.700]the amount of sugar beet production that's been delivered,
[00:16:20.300]it is the way that the policy's written,
[00:16:22.660]those losses of revenue due to
[00:16:27.280]the failure to receive payment
[00:16:30.540]or production or quantity that the market can't handle,
[00:16:36.630]those are not insurable causes of loss.
[00:16:39.960]Collin, we have a question in the room.
[00:16:42.100]Michael, you wanna speak up real loud for us?
[00:16:54.140]I'm not hearing anything.
[00:16:59.820]Collin, in 2019,
[00:17:01.790]the biggest factor in the payment is the loss of production.
[00:17:07.200]So a freeze caused the production from the grower's side
[00:17:11.040]to be both lower on an individual basis
[00:17:13.910]and loss of crop to the point that
[00:17:17.240]what was delivered to the factory
[00:17:18.670]is not the same number the grower was working off of
[00:17:22.203]when they started the season.
[00:17:23.880]So under this policy, it is nothing to do with
[00:17:26.760]actual management at the factory level.
[00:17:29.390]It is driven by a weather factor, I guess,
[00:17:33.080]from October when we had a freeze three days into harvest.
[00:17:38.480]I mean, to me, that is a different scenario
[00:17:40.530]than what you're proposing up there.
[00:17:42.830]How do you view that?
[00:17:51.317]"This policy provides protection against
[00:17:53.067]"loss of approved revenue due to unavoidable natural causes
[00:17:56.077]"that occur during the insurance period."
[00:17:58.700]So, if you've got adverse weather conditions
[00:18:01.080]that causes either the production amount
[00:18:08.610]or the production quality, in the case of sugar beets.
[00:18:13.120]If that is the reason that there is a loss of revenue,
[00:18:18.250]and it can be tied back to a weather event,
[00:18:22.450]then barring any unseen circumstances
[00:18:27.270]that I don't have in my mind,
[00:18:29.304]that would be an insurable cause of loss.
[00:18:35.760]We have another question from the room.
[00:18:40.293]If there was still a loss
[00:18:41.673]from the sugar beets themselves,
[00:18:44.240]it would still have to come under
[00:18:45.620]what the whole farm number would be, correct?
[00:18:50.770]So even if they did have a loss,
[00:18:52.340]you would still have to be under
[00:18:54.780]the number that's on your policy, correct?
To be paid at all.
Even if they'd only paid $30
[00:19:03.000]if you squeak by on your deal,
[00:19:04.920]you're still not gonna get paid.
[00:19:10.631]The depth of the loss would have to
[00:19:13.420]fall below the guarantee,
[00:19:17.150]which is the liability multiplied by the coverage level.
[00:19:23.030]So, yeah, even if you experience a loss of revenue,
[00:19:27.400]if it wasn't deep enough to trigger indemnity,
[00:19:31.100]then no indemnity will be paid.
[00:19:36.410]Another question from the room.
[00:19:39.133]So, sugar beets are a little unique
[00:19:40.310]to other commodities in that
[00:19:42.090]the weather can impact them even after harvest,
[00:19:45.800]so when we see these cold snaps and warm-ups
[00:19:49.696]and then we get beet loss per pile,
[00:19:53.610]is that a weather event that would be insurable?
[00:19:57.320]Again, it's not negligence,
[00:19:59.370]but it's something that the weather's creating a loss
[00:20:02.118]on the pile grounds.
[00:20:06.020]I'd have to study the policy closely.
[00:20:08.370]I know that in our APH policy,
[00:20:12.080]once it's been harvested, crop insurance no longer applies.
[00:20:19.843]That particular issue is not unique to sugar beets.
[00:20:23.580]It would be the same thing you got
[00:20:25.000]over the east side of the state last spring,
[00:20:27.560]and all of the flooding and the water
[00:20:30.270]that was getting into those green bins
[00:20:31.890]and destroying stored production.
[00:20:35.270]We wouldn't cover that either.
[00:20:37.300]I don't know specifically if there's a provision
[00:20:43.940]in the whole farm policy,
[00:20:46.990]so I'm going to qualify my answer,
[00:20:50.840]but I would be surprised if that was covered.
[00:20:56.250]'Cause we wouldn't cover that.
[00:20:58.390]Really, the only other place we cover something
[00:21:00.160]after it's been harvested that I can think of
[00:21:01.810]off the top of my head is tobacco.
[00:21:04.600]So I can double-check on that
[00:21:06.430]and get that answer back to Cory or Jessica.
[00:21:10.150]But without looking very deeply into it,
[00:21:13.060]right off the top of my head, I don't think so.
[00:21:19.970]Collin, you might refer to
[00:21:21.510]uninsurable cause of loss number 15.
[00:21:28.320]Yep, there it is, thank you.
[00:21:32.380]I guess maybe the follow-up question there is
[00:21:35.550]if you had any documentation of the loss before harvest.
[00:21:40.907]Or of the possible cause of loss.
[00:21:46.840]Yeah, that would be something that
[00:21:50.576]you would have to be able to document it at loss time
[00:21:54.600]to say the reason the sugar beets deteriorated in the pile
[00:22:00.080]was 'cause we harvested them wet, or mudded them out.
[00:22:09.730]Not the normal freeze-thaw cycle
[00:22:13.087]in western Nebraska damaged the beets.
[00:22:24.210](question obscured by static)
And not price?
[00:22:28.989]How do you value the crop?
[00:22:31.439]Did you hear the question okay, Collin?
[00:22:33.609]I did not.
[00:22:34.936]So, because of the contract
[00:22:36.567]for acre per crop rather than an open market crop,
[00:22:40.960]how do you value the crop for the policy?
[00:22:55.467]I don't know.
[00:22:57.340]I'm not sure I understand the context of the question.
[00:23:02.960]So, for the revenue protection mechanism to work
[00:23:07.750]you have to assume some sort of dollar amount per ton
[00:23:11.670]for the sugar beets.
[00:23:13.300]How are you, as RMA,
[00:23:15.500]determining that dollar amount per time
[00:23:18.440]when you set the policy?
[00:23:21.640]Oh, well, right.
[00:23:25.200]In absence of any information
[00:23:27.590]that would supplant or, what's the word I'm looking for?
[00:23:37.030]Over the top?
[00:23:38.400]We would calculate the value in revenue
[00:23:41.846]based on the same formula that we do for APH crops.
[00:23:46.310]If we've got another MPCI policy
[00:23:48.840]that could be applied to that crop,
[00:23:52.170]the math that we use to establish the liability
[00:23:56.380]on that MPCI policy would be the default method
[00:24:01.700]for establishing the revenue value
[00:24:04.530]for the whole farm policy for that crop.
[00:24:17.173]What was that?
(static obscuring question)
[00:24:20.378]So the question is, what is the closest crop?
[00:24:26.487]The closest crop to sugar beet?
[00:24:30.340]I don't fully understand the question.
[00:24:33.720]Well, maybe if I rephrase my answer,
[00:24:37.170]it'll make more sense.
[00:24:38.003]I realize I'm not fully fired up yet this morning.
[00:24:46.400]Breakfast of champions!
[00:24:49.220]So when you're establishing the revenue
[00:24:53.120]for a crop on whole farm, sugar beets is the example,
[00:24:58.000]and there is an underlying MPCI policy,
[00:25:01.710]even if you don't purchase the MPCI policy,
[00:25:05.667]APH sugar beets in this case,
[00:25:08.060]we've established a price selection,
[00:25:11.830]so a value per pounds of sugar,
[00:25:15.650]and your yield history, so your master yield
[00:25:18.970]that you got, or your APH yield otherwise,
[00:25:22.020]and you use those numbers to calculate
[00:25:24.835]the production value that you got in the field
[00:25:28.460]based on your demonstrated history
[00:25:31.555]and the current value of the crop.
[00:25:34.380]Now, in situations where we don't have an MPCI policy,
[00:25:40.010]some of the smaller commodities or perennials,
[00:25:44.820]things like that,
[00:25:45.960]or if you've got documentation to support
[00:25:49.930]a deviance from the MBCI policy,
[00:25:58.170]those situations can be taken into consideration.
[00:26:01.410]But in absence of something unique,
[00:26:04.410]the value of the sugar beets portion
[00:26:07.710]of the whole farm revenue policy
[00:26:10.660]should be calculated in the same manner that
[00:26:13.680]the value for an APH policy would be calculated.
[00:26:21.227]Michael and Bose
[00:26:22.520]probably know this better than I do.
[00:26:23.640]So, when the co-op quotes a price per ton
[00:26:27.690]that is not utilized in the insurance
[00:26:30.870]at the beginning of the year, though,
[00:26:32.380]that would be any insurance agent
[00:26:34.585](static obscuring speech)
[00:26:39.270]Okay, so for producers,
[00:26:40.710]it has nothing to do...
[00:26:43.100]It does, but it doesn't,
[00:26:45.130]to what the starting price per ton would be
[00:26:49.340]if you adjust up or down from there,
[00:26:51.720]the revenue protection policy is then set
[00:26:54.730]by the insurance.
[00:26:57.577](static obscuring speaker)
[00:27:10.110]Right, but your price per ton
[00:27:11.790]that's quoted to your producer.
[00:27:15.910]Switch back to price per--
(static obscuring speech)
[00:27:20.340]But that's what I'm saying is,
[00:27:21.400]if you're announcing what price you're paying
[00:27:23.990]to your shareholders, it does not influence
[00:27:27.675]the insurance product that's available.
[00:27:30.930]It's just the model.
Can you explain that
[00:27:38.430]for everyone online?
[00:27:41.357]We couldn't hear you very well.
[00:27:43.070]Jessica, just for display purposes,
[00:27:48.150]I'm sharing my screen to show the sugar beets
[00:27:52.050]APH offer as it stands right now for Morrow County.
[00:27:56.350]Are you guys able to see my screen?
[00:28:02.890]So, right now, we've got
[00:28:04.320]an established price of 12.3 cents per pound of sugar.
[00:28:12.170]We can establish a higher price selection.
[00:28:17.680]We usually do that right around the first of March.
[00:28:19.900]So if you got the T yield in Morrow County,
[00:28:23.580]so if you're a new producer,
[00:28:25.850]I mean, this is just a proxy.
[00:28:27.940]So you're averaging 6500 pounds of sugar per acre
[00:28:33.600]times 12.3 cents per pound
[00:28:38.324]times however many acres you've got.
[00:28:40.830]That would be your liability for that field of sugar beets,
[00:28:47.020]and then establishing whatever your coverage level.
[00:28:50.580]So, if you're carrying 75%,
[00:28:52.830]you get 25% off that calculated value
[00:28:57.780]to come up with your guarantee.
[00:29:00.150]And unless there's something different,
[00:29:04.140]something unique, like somehow the contract price
[00:29:07.426]isn't reflected very well in here,
[00:29:10.960]that would be, you'd have to document that,
[00:29:13.500]but if you have a contract price
[00:29:15.390]that exceeds what we've got for the price selections
[00:29:19.341]for the APH policy and you've documented that,
[00:29:22.060]then you could use that.
[00:29:26.238]I believe the policy refers to that
[00:29:27.620]as reasonably expected value.
[00:29:29.970]If you can document why you would expect
[00:29:32.300]your income from selling that crop to differ significantly
[00:29:35.950]from what Collin's showing on the screen here,
[00:29:38.700]you will work with your agent and with the AIP
[00:29:41.120]to document the reasons that you would expect
[00:29:43.380]your revenue to be different from that.
[00:29:49.780]There is a question in the chat that asks
[00:29:52.850]what crop year was the whole farm revenue protection policy
[00:29:58.670]first introduced into the marketplace?
[00:30:07.050]Nebraska didn't get it initially.
[00:30:10.970]I mean, it's part of the 14th farm bill.
[00:30:16.360]They didn't get AGR lite, I know that,
[00:30:17.887]but I thought we whole farm rolled out,
[00:30:19.950]everybody got it.
[00:30:30.295]It was there in '15.
[00:30:32.450]Sorry, I'm doing this kind of an awkward way.
[00:30:39.040]Yep, 2015, 'cause in 2014,
[00:30:43.050]whole farm revenue wasn't an option.
[00:30:45.360]If you go to 2015, whole farm is there,
[00:30:50.260]and it's available in Nebraska.
[00:30:53.960]So, 2015 crop year.
[00:30:56.150]And there was one policy sold.
[00:31:02.746]All right, other questions, yes.
[00:31:06.210]Collin or Jeff, if you can please
[00:31:08.890]just clarify that even though we have
[00:31:11.450]this projected price for 2020,
[00:31:14.290]and yield and so forth, that's a very small part
[00:31:17.270]of coming up with our revenue guarantee.
[00:31:21.200]So maybe could you walk through the steps of
[00:31:23.310]how we actually come up with our revenue protection?
[00:31:32.900]Yeah, I'm not tracking what you're asking me.
[00:31:36.040]How do I get a whole farm policy?
[00:31:38.480]What do I have to do?
[00:31:40.060]Oh, yeah, you need five years of tax records,
[00:31:43.470]schedule F, so farm income,
[00:31:46.740]to establish your historical income for the operation,
[00:31:55.410]and then you need to provide a realistic expectation,
[00:32:00.670]a reasonable expectation of what you expect,
[00:32:07.180]what revenue you expect for the given year.
[00:32:09.980]So you've got two big pieces there.
[00:32:14.780]So if you're looking at an expanding operation...
[00:32:17.650]If your historical revenue is based on 1000 acres
[00:32:20.750]and you've picked up another quarter,
[00:32:23.550]you'd have to document that.
[00:32:27.110]There are procedures to be able to
[00:32:30.427]establish an expanding operation or contraction,
[00:32:35.030]or these kinds of things.
[00:32:38.100]I'm not sure I'm quite answering
[00:32:39.290]the question that you're asking,
[00:32:40.550]but you'd to have that five years
[00:32:44.673]of tax records, schedule F, to be able to establish
[00:32:50.070]the baseline revenue that you've got on that operation,
[00:32:55.460]and then establish a reasonable expectation
[00:33:00.780]of your revenue for the current year.
[00:33:04.553]And my selection's one of those two, correct?
[00:33:08.560]Right, 'cause yeah.
[00:33:09.400]There's indexing, yeah.
[00:33:12.010]Once you get into the details of
[00:33:14.560]if your current revenue exceeds your historical revenue,
[00:33:19.540]there are some things that have to apply.
[00:33:22.150]If you are trending up or you're trending down,
[00:33:24.970]there's indexing that has to apply.
[00:33:28.700]The calculations for establishing your liability
[00:33:32.000]and your guarantee for the 2020 crop year
[00:33:35.980]can be a little bit--
[00:33:39.360]Nuanced, that's a good word, nuanced.
[00:33:44.010]Other questions from the room or from the chat?
Collin, can you tell me why
[00:33:51.760]RMA reduced the price selection 2.3 cents--
[00:33:55.678](static obscuring speaker)
[00:34:02.709]Is there a reason why RMA decreased that?
[00:34:05.663]Talking about in that APH policy
[00:34:08.470]that I was just showing you guys a minute ago?
[00:34:10.850]My selection is dead on 46 and 12.3.
[00:34:13.961]What's the reason they dropped that selection?
[00:34:17.900]Well, we have a prices group
[00:34:19.240]over at Kansas City that gathers.
[00:34:24.010]We don't have a lot to do with that
[00:34:25.043]here in the regional office in terms of
[00:34:27.280]how that price selection is established.
[00:34:31.480]I can reach out to the prices group and ask that question,
[00:34:35.870]but I know they talked to Western Sugar.
[00:34:38.310]I mean, certainly Western Sugar in you guys's region.
[00:34:42.120]That is the cooperative that's driving the price.
[00:34:48.276]But you said drops
[00:34:49.109]'cause the production of sugar,
[00:34:50.459]they've got to realize this is the weather
[00:34:51.571]that's bringing that price selection down.
[00:34:55.640]Oh, I'm sorry,
[00:34:57.220]I didn't answer the question you were asking.
[00:35:00.300]You're indicating that
[00:35:04.100]the contract price that Western Sugar offered
[00:35:10.700]back in March of '19, or whenever.
[00:35:14.070]First of the year of '19.
[00:35:15.830]That contract price was 14.6, 14 cents?
But now that they're
[00:35:23.840]distributing the paychecks...
[00:35:31.530]That's not the right word.
[00:35:34.670]They're paying them on less than 14 cents per pound?
[00:35:39.040]Well, this setup beet industry wise,
[00:35:41.760]not only Western Sugar,
[00:35:42.593]but all the other cooperatives are the same way.
[00:35:46.210]So it is set at 12.3 for US beet farming.
[00:35:50.755](static obscuring speaker)
[00:35:56.393]2020 were set at 12.3 price selection.
[00:35:58.650]Yet if somebody has a loss,
[00:36:00.588]that's taking quite a bit of money out of their check.
[00:36:06.400]Okay, I think I'm finally tracking you.
[00:36:09.160]So what you're saying is that
[00:36:10.640]in 2019 the price selection was 14 and change,
[00:36:15.498]and in 2020 the price selection is 12 and change,
[00:36:19.810]and the question is,
[00:36:22.986]when RMA establishes that price selection
[00:36:25.961]lower in 2020 than they do in 2019,
[00:36:31.300]that has a negative impact on the guarantee
[00:36:35.630]for that producer?
[00:36:39.150]Yeah, that's an interesting question.
[00:36:45.600]The price selection that we establish...
[00:36:51.130]We're required to reflect the value of the crop
[00:36:55.500]for that crop year.
[00:36:56.640]So if sugar beets are contracting out
[00:37:00.530]at 12 cents, or 12 and change right now,
[00:37:03.700]it wouldn't be appropriate for us
[00:37:05.700]to artificially inflate that price.
[00:37:08.760]The question you're asking is,
[00:37:11.310]sugar beets are a unique crop 'cause it's a contracted crop,
[00:37:14.750]and it's a cooperative crop,
[00:37:16.730]different than corn, but if you remember back 2011, 2012,
[00:37:22.120]corn's worth five bucks, and it's not any more.
[00:37:25.515]It would lead to adverse selection
[00:37:30.420]if we maintained a price selection
[00:37:33.730]that was not reflected in the market.
[00:37:38.140]The crop would be worth more as a loss
[00:37:41.200]than it would as a delivered production.
[00:37:48.520]There's another question in the chat
[00:37:50.400]for you guys to answer, and it is,
[00:37:53.110]so is a reasonable expectation of revenue
[00:37:56.050]based on APH information from the crop insurance records?
[00:38:00.810]What else would play into the expectation or projection?
[00:38:06.420]And you can read it in the chat.
[00:38:09.690]That expectation of revenue,
[00:38:11.760]the number of dollars that you're insuring against,
[00:38:14.630]is more based off of that historical revenue
[00:38:17.350]coming off of those schedule Fs.
[00:38:19.600]We're looking at five years of schedule F documented revenue
[00:38:25.430]and that's what we're basing that liability off of.
[00:38:28.410]Now there are reports, and there are paperwork,
[00:38:30.460]and part of the process of setting up
[00:38:32.250]a whole farm policy goes into
[00:38:37.460]why your current operation may be made a little different
[00:38:40.400]than it has in the past.
[00:38:41.700]Collin mentioned indexing for revenues,
[00:38:44.930]and expanding operations.
[00:38:47.460]If you're picking up a whole bunch of acres,
[00:38:49.623]you can increase the revenue of your farm
[00:38:52.520]by up to 35%, providing you can provide documentation
[00:38:58.090]for why that farm is gonna be producing
[00:39:00.270]a different number than what they've done historically.
[00:39:10.670]We're just under 15 minutes left.
With Kendall's question,
[00:39:20.090]did the price of sugar drop 16%?
[00:39:23.960]Or has the number that
[00:39:25.350]the cooperative is reporting dropped 16%?
[00:39:30.315](static obscuring speech)
[00:39:36.324]Can you hear the questions okay?
[00:39:39.200]Yeah, not sure there's an answer
[00:39:40.954](laughing) that RMA can provide for that.
[00:39:45.050]We're establishing the price selections
[00:39:46.390]based on the information that's provided to us.
[00:39:52.580]I think the question you're asking
[00:39:58.150]could lead us down an interesting path, actually.
[00:40:03.753](static obscuring speaker)
[00:40:07.630]But also, the pricing mechanism
[00:40:09.310]isn't just based off of the previous year.
[00:40:11.330]Doesn't RMA use a five-year historical index to see what,
[00:40:16.877]regardless of whether sugar beets,
[00:40:18.860]corn, dry beans or whatever.
[00:40:20.520]It's not just simply the most recent year.
[00:40:26.760]I probably used an oversimplified example,
[00:40:30.650]but yeah, if you're interested to know more about that,
[00:40:35.070]I can ask a few questions of the prices group
[00:40:38.280]and maybe bring that back to Jessica.
[00:40:40.800]But yeah, that's not something that we handle here
[00:40:43.790]in the regional office, but yes.
[00:40:46.640]It's more complex than what I originally described.
[00:40:50.340]That was just using a simple example.
[00:40:54.460]And like we mentioned earlier,
[00:40:55.950]if you have information that you can provide
[00:40:59.430]that says, "I'm expecting a price that's very different
[00:41:02.127]"than what you're predicting,"
[00:41:04.330]you would work with your agent and with your AIP
[00:41:07.048]and say "Let's set our liability off of
[00:41:09.577]"this more accurate price for my particular situation."
[00:41:13.410]But it's gotta be reasonable.
[00:41:14.860]It's gotta be something that's attainable,
[00:41:16.990]it's not just pulled out of thin air.
[00:41:23.770]I don't know if this is possible,
[00:41:24.810]but could they walk through a very specific loss scenario
[00:41:27.856](static obscuring speaker)
[00:41:29.975]Can you work through a loss scenario for us?
[00:41:36.960]I mean, we've got examples, but nothing
[00:41:39.360]that I brought with me.
[00:41:41.930]I think they would like to provide the example
[00:41:44.080]and make you work through it.
(Collin and Jeff laughing)
[00:41:47.858]Yeah, who do we make the check out to?
[00:41:56.535]I won't try to do that on--
On the fly.
[00:42:03.530]I was trying to think on cue.
[00:42:05.420]But if you want to send that information to us,
[00:42:08.520]we can take a look at it
[00:42:09.820]and work through it with you offline.
[00:42:14.692]Let's see, our email address is firstname.lastname@example.org.
[00:42:25.750]For those of you that signed in
[00:42:27.380]or those of you online, you can email me as well,
[00:42:30.980]and I can forward that email address to you.
[00:42:37.986](static obscuring question)
[00:42:41.766]When they what?
(static obscuring question)
[00:42:47.790]She's talking about unit retains on the sugar beets.
[00:42:50.350]Okay, there's three elephants in the room.
[00:42:55.423]One of them is,
[00:42:56.300]how did they set the price for sugar for 2020,
[00:42:59.280]and what criteria did they use to set the price
[00:43:02.670]for sugar on the policy for 2020?
[00:43:06.012]The second elephant in the room is
[00:43:07.557]higher loss, driven by a freeze early in the season,
[00:43:12.090]if they will be not paid for as a percentage of pile loss
[00:43:18.694]to all the growers, they get a percentage,
[00:43:20.860]take it as a percentage.
[00:43:22.826]Can they qualify that for a loss on a whole farm policy
[00:43:28.300]'cause they did not get paid for that pile loss?
[00:43:31.492]And the third one is,
[00:43:32.920]unit retention to pay back a debt to the factory.
[00:43:39.033]Is that also allowed for lost revenue
[00:43:43.930]for the unit retention?
[00:43:47.064]Those are the three big issues
[00:43:48.020]on the whole farm policy
[00:43:49.733]that people are struggling with.
[00:43:52.120]So do you feel like
[00:43:53.430]we have clarified why the set price for 2020
[00:43:57.530]they have said that
[00:43:59.384]they need to check back with their office there?
We're okay with that one.
[00:44:04.073]Just like all the other commodities,
[00:44:06.290]they take a running total and a running average,
[00:44:09.100]and this is the price per pound of sugar
[00:44:13.480]based off of this criteria for 2020,
[00:44:15.690]just like corn is and everything else is.
[00:44:18.100]The only problem with that is,
[00:44:19.840]unless they go to a revenue priced policy,
[00:44:23.300]which sugar doesn't have yet,
[00:44:25.660]but I think that's why they went to sugar
[00:44:28.710]instead of tons, because they were gonna eventually go to
[00:44:31.960]a revenue price policy set on the worldwide trade.
[00:44:36.230]As of right now, they just have a price.
[00:44:38.780]It can't go up, it can't down later in the season,
[00:44:41.400]because it's not a revenue but a price.
[00:44:44.230]So yeah, they need to come up with
[00:44:46.270]why they set that price and how they got that.
[00:44:49.077]But the other two is big, the other two is.
[00:44:52.720]Have we adequately addressed
[00:44:54.380]price loss from the freeze?
[00:44:58.160]Okay, so I'm gonna kick it back to Collin.
[00:45:02.040]So we can qualify the loss this year
[00:45:05.290]or we can tie the loss this year
[00:45:07.559]to an early harvest freeze that is now causing pile loss.
[00:45:13.320]Go ahead, clarify for me.
[00:45:14.620]So, I would say there's two separate rules there.
[00:45:17.570]You can have pile loss, loss due to the freeze,
[00:45:20.790]that yes, after their pile--
(static obscuring speech)
[00:45:24.798]The price tied to what the grower's going to get paid,
[00:45:30.278]basically, that price is how it works.
[00:45:32.580]Beets growers own the factory from one end
[00:45:35.190]to the point that we market sugar.
[00:45:37.510]So it's all tied together,
[00:45:39.390]and we have, at the end of harvest,
[00:45:41.670]we have a 3 billion hundred-weight short
[00:45:46.180]of sugar juice because of a lack of funds
[00:45:49.280]and crop left in the field due to freeze.
[00:45:51.650]So to me, they're two separate things.
[00:45:53.360]There is a loss at the pile grounds,
[00:45:55.350]but there could also be a loss of production
[00:45:58.110]going into the campaign to process that sugar,
[00:46:02.880]which impacted this year.
[00:46:03.970]So going into November before we even had a true pile loss,
[00:46:08.180]we had a loss of price due to the fact--
[00:46:11.202](static obscuring question)
[00:46:13.370]So each individual grower is impacted by that.
[00:46:18.430]But those are both covered as,
[00:46:22.970]and Collin, correct me if I'm wrong,
[00:46:25.060]but those would both be covered
[00:46:27.220]because that happened prior to harvest.
[00:46:32.897]The event that's causing the loss happened prior to harvest.
[00:46:36.920]And that would be one of my biggest questions,
[00:46:38.630]'cause you pointed out, was it article 15?
[00:46:40.760]Or something in there as to storage.
[00:46:44.130]I mean, you're not usually seeing that loss in storage
[00:46:46.700]until it's on the--
(static obscuring speech)
[00:46:52.770]And so it would be nice to have clarification
[00:46:54.870]on all of that.
[00:46:57.330]I would say prior to process.
[00:47:02.340]So, Collin, do you have any comments,
[00:47:03.700]or do you want to do a follow-up
[00:47:05.440]on that specific discussion?
[00:47:09.960]Well, yeah, probably both.
[00:47:12.180]Probably answer that question too.
[00:47:13.880]First one was, I know you guys don't use clamps
[00:47:17.120]in western Nebraska.
[00:47:19.700]It's more of a Red River Valley kind of thing.
[00:47:23.020]But this is the first year that we authorized
[00:47:26.490]adjustment for losses that occurred
[00:47:28.850]during the time that the beets were stored in clamps.
[00:47:33.370]So that is a change from what we've done in prior years.
[00:47:37.210]I'm talking about that in terms of an APH policy.
[00:47:42.450]As it pertains to pile loss,
[00:47:45.140]one of the big challenges I see is,
[00:47:47.370]how is the producer going to establish
[00:47:49.710]that it was his or her beets that suffered the pile loss
[00:47:54.930]and not someone else's?
[00:47:56.230]'Cause once they're in the pile,
[00:47:57.420]they're pretty well comingled,
[00:47:58.297]and you can't track an individual beet
[00:48:01.410]back to an individual policy.
[00:48:03.770]So I see some serious challenges
[00:48:07.440]ahead of trying to establish an insurable cause there.
[00:48:12.550]Now, I understand your point that
[00:48:16.052]the quality of the beet was diminished
[00:48:21.070]as a result of the early season freeze,
[00:48:24.630]and that could contribute to
[00:48:27.210]a higher percentage of pile loss compared to prior years,
[00:48:31.160]and I can see the point that you're making.
[00:48:35.100]So I'll look a little bit more into that,
[00:48:37.730]but it's comingled production on a much grander scale.
[00:48:43.910]It's not even comingled within a producer's operation.
[00:48:46.890]It's kind of a community pile now,
[00:48:49.960]and how do we sort out which producer
[00:48:53.650]or which beet was the guilty party?
[00:49:01.560]I'll come back to you.
[00:49:02.800]The third question on there, or the third elephant,
[00:49:05.890]was the issue of unit retains.
[00:49:08.850]Would those be quantifiable for a loss of revenue?
[00:49:16.911]So, the cooperative provides unit retainers.
[00:49:25.420]I don't know what the right word is,
[00:49:26.470]but takes unit retains?
Withholds, thank you.
[00:49:33.480]Any thought on that, Collin?
[00:49:35.780]Well, I'm just highlighting
[00:49:37.050]a portion in the whole farm policy so it's blue.
[00:49:48.740]I think unit retain shows up on their 10-99,
[00:49:53.910]so we have to add that back into income
[00:49:59.010]when we work a claim.
[00:50:05.735](static obscuring speech)
[00:50:23.740]Are we all okay with that?
[00:50:27.010]Don't understand that.
[00:50:28.340]So the price they have in our revenue protection policy
[00:50:32.460]is written at $30 per ton, but we'd only get paid $15.
[00:50:37.840]But on our schedule F, it still shows the $30 payment,
[00:50:43.770]'cause they kept $15?
[00:50:50.300]I need a tax accountant to clarify,
[00:50:54.240]but essentially, to my understanding,
[00:50:57.324]if they retain those funds then yes,
[00:51:01.241]it would be shown on your 10-99
[00:51:02.367]and then reflected in your schedule F,
[00:51:04.930]so they'd have to add that back in
[00:51:07.410]when they do they whole farm calculation.
[00:51:09.410]Because even though that cash didn't pass,
[00:51:12.070]necessarily, through your hand,
[00:51:13.850]it was retained by the cooperative on your behalf.
[00:51:16.820]Got a little clarification on that.
[00:51:18.374](static obscuring speech)
[00:51:30.540]Dwayne, you had a question.
[00:51:32.622]Yeah, on the process,
[00:51:33.550]you have to make the estimate beginning,
[00:51:36.070]halfway through the year and at the end, correct?
[00:51:39.810]So, Collin, the question was,
[00:51:40.960]you have to make the estimate
[00:51:42.040]at the beginning, middle and end, is that correct?
[00:51:46.210]Yeah, at the beginning of the year,
[00:51:47.620]you have a report where you say,
[00:51:49.780]this is what I expect to plant,
[00:51:52.220]and this is the revenue that I expect to garner
[00:51:54.650]from the production of these acres and this crop.
[00:51:58.930]And then you have the opportunity during the year
[00:52:01.680]to revise that report, and that's where you can update
[00:52:05.040]and say, "Well, I thought I was gonna plant 60 acres,
[00:52:07.537]"but I planted 160 acres."
[00:52:09.810]Something like that.
[00:52:11.160]And then at the end of the year
[00:52:12.980]is when you would actually have tax records,
[00:52:15.806]April 15th or whenever that happens to be,
[00:52:18.975]and you could provide what the actual revenues were
[00:52:21.760]and what actually happened on the farm.
[00:52:25.530]If you don't have significant adjustments to make,
[00:52:28.310]those aren't required reports,
[00:52:29.930]but if your ending liability is gonna be different
[00:52:33.620]than your beginning liability,
[00:52:35.510]that's where those revised reports would come into play.
[00:52:42.130]When they get paid for their sugar beets,
[00:52:43.610]they get paid through the next years.
[00:52:45.710]Several payments if they're busy.
[00:52:49.098]If you get your taxes done
[00:52:50.317]and you've still got some income coming in,
[00:52:52.693]then if you have a loss that you get paid on,
[00:52:56.630]and you get more money coming in,
[00:52:58.810]can they go back and ask for them to up that payment--
[00:53:02.492](static obscuring question)
[00:53:08.987]You wanna add to that question?
[00:53:10.710]Whole revenue is blocked as work--
[00:53:13.026](static obscuring speech)
[00:53:15.030]Than what you actually took for your actual crop.
[00:53:24.591]So you bring everything in that crop year
[00:53:26.130]back to that crop year.
[00:53:28.140]You get paid or you deliver,
[00:53:32.120]you should count that on your crop year
[00:53:34.500]for '19 instead of '20?
[00:53:36.670]Right, 'cause it will be brought back
[00:53:38.370]into that year.
[00:53:39.550]Anything that you made in '17
[00:53:41.420]will not be brought forward into '18--
[00:53:43.493](static obscuring speech)
[00:53:48.530]Right, so my question is,
[00:53:50.120]if they get paid, it's a increase in their income,
[00:53:55.290]and then you pay for '19
[00:53:58.500]and you get more money in '20 from '19 crop,
[00:54:03.600]will they risk a chance that
[00:54:06.012]that will pay money back off--
(static obscuring speech)
[00:54:10.160]He could go three years,
[00:54:11.237]then could go back and revise this?
[00:54:15.451]Did you hear the question, Collin?
[00:54:21.440]You can tell by Jeff's puzzled look
[00:54:24.560]It was a really interesting question,
[00:54:25.830]probably one we'll have to run to
[00:54:26.980]the policy experts over in Kansas City.
[00:54:29.640]I kinda heard the discussion leading up to the question,
[00:54:34.480]and I agree that the 2019 production,
[00:54:38.840]the payment for the 2019 production
[00:54:41.840]should be applied against the 2019 crop year.
[00:54:45.150]It does get tricky though,
[00:54:46.180]because when you're doing schedule F,
[00:54:50.200]you don't get to apply that payment
[00:54:52.990]back into a prior crop year, or a tax year, excuse me.
[00:54:56.690]It's got to go to the current tax year.
[00:55:01.749]If you guys could frame that question,
[00:55:05.080]write it down, just email it to me.
[00:55:09.450]We'll send that to Kansas City
[00:55:10.690]to our policy experts and get you an answer on it.
[00:55:16.560]Yeah, typically, whole farm,
[00:55:18.130]one of the things that producers are concerned about
[00:55:21.320]is you're not reporting final revenues
[00:55:23.900]until whenever you file your taxes,
[00:55:26.820]and that's usually well after any harvest,
[00:55:29.380]anything like that has been done.
[00:55:33.290]Normally under whole farm, this wouldn't come into play,
[00:55:36.380]because any other insurance products
[00:55:38.810]would typically have paid by then.
[00:55:41.590]So if you're talking about something
[00:55:42.860]that's several months delayed after the harvest,
[00:55:47.460]that's a bit of an unusual situation
[00:55:49.400]that I don't have first-hand experience with yet.
[00:55:55.980]Why would it be any different
[00:55:57.080]than somebody holding over their old crop hoard
[00:55:59.530]and selling it during the following year?
[00:56:04.413]To take it out of sugar and put it into a different crop...
[00:56:07.812](static obscuring speech)
[00:56:12.840]This year wouldn't count towards whole farm,
[00:56:16.110]because whole farm is only concerned with corn
[00:56:18.060]that was planted, grown and harvested in the 2019 crop year.
[00:56:22.100]If you're talking about a 2019 whole farm policy,
[00:56:25.993]anything that you sold from the 2018 crop year
[00:56:30.340]should be held separately,
[00:56:32.870]and it's not gonna be reported as revenue
[00:56:35.350]for that 2019 crop year.
[00:56:36.980]That would have to be an adjustment to 2018 revenue.
[00:56:41.186](static obscuring speech)
[00:56:44.720]It shows on the schedule F,
[00:56:47.640]because I had grain sales during the crop year
[00:56:50.870]that's showing on my schedule F.
[00:56:54.770]But it wouldn't be a part of the 2019 crop year,
[00:56:58.280]so it should be considered separately.
[00:57:00.910]It's not gonna be what they call allowable revenue for 2019.
[00:57:07.730]So you would have to (mumbling) back
[00:57:10.319]as stored product and put a market on it?
[00:57:15.870]For product, you would have a value assigned to it,
[00:57:18.960]and even though you haven't sold it,
[00:57:20.320]you haven't gotten dollars for it,
[00:57:21.860]you still physically possess--
[00:57:25.750]You didn't before the year,
[00:57:27.160]so that would still be accounted for
[00:57:28.950]within the whole farm system.
[00:57:34.780]It's now after 10:00am,
[00:57:36.140]and I want to respect everybody's time.
[00:57:38.830]I think this is good discussion,
[00:57:40.220]so just to let you know, it is after 10:00am.
[00:57:43.900]Other questions, though,
[00:57:45.620]I'm gonna let us go 'til 10:15.
[00:57:49.270]Other questions that either you want answered publicly
[00:57:53.070]or you can always email me after 10:15
[00:57:57.350]and we'll try to get these questions for the RMA
[00:57:59.670]back out to everyone.
[00:58:02.670]Other questions, on the chat or live?
[00:58:08.800]Anybody can go online and dig right in
[00:58:11.800]to the whole farm revenue policy
[00:58:13.540]at rma.usda.gov and search it.
[00:58:16.840]It has worksheets, there's examples, there's exhibits.
[00:58:20.010]Dig as deep as you want.
[00:58:21.877]Make great late-night reading if you wanna get to sleep.
[00:58:32.360]Other questions, yes.
[00:58:34.216]From the 2019 sugar beet crop,
[00:58:36.540]would they consider that being a loss
[00:58:39.070]because of the freeze, or is it mismanagement?
[00:58:42.020]How would the RMA react to the 2019 crop?
[00:58:53.950]One or both.
[00:58:55.400]I suppose it depends on...
[00:58:57.250]It kind of gets back to the question
[00:58:59.650]from a few minutes ago that the elephant in the room.
[00:59:02.460]If the production loss or the quality loss
[00:59:06.452]occurred prior to harvest,
[00:59:08.700]that's an easy question to answer,
[00:59:10.380]because that's an insurable cause of loss.
[00:59:12.890]It occurred within the insurance period,
[00:59:14.610]it's a production loss, it's measurable,
[00:59:16.350]it can be identified specifically to a particular policy,
[00:59:21.420]or particular policy holder.
[00:59:23.860]Now, in terms of this down the road,
[00:59:27.940]so it's in a pile,
[00:59:29.289]because of the quality loss that occurred
[00:59:36.790]while the crop was being harvested,
[00:59:39.640]and I'm kind of extrapolating here.
[00:59:43.340]I'm not exactly sure if that's even the case,
[00:59:44.950]but for discussion's sake,
[00:59:47.070]the beets were weakened during the frost,
[00:59:52.970]during the freeze event before they were harvested,
[00:59:55.010]or while they were being harvested,
[00:59:57.051]and then that led to a secondary loss in the pile.
[01:00:04.670]Is that the question that you're asking me?
[01:00:08.440]I don't know the answer to that.
[01:00:12.890]When I was speculating a little bit ago,
[01:00:15.310]one of the biggest challenges I see
[01:00:17.100]with trying to quantify that is,
[01:00:19.110]how do you know which beets were yours?
[01:00:22.424]Who makes the determination?
[01:00:24.030]I guess from November.
[01:00:26.920]Is that a adjuster?
[01:00:29.950]I mean, who makes that determination?
[01:00:32.950]Like, in this year, for a few growers
[01:00:34.620]that do have whole farm policy,
[01:00:38.820]where's that determination made?
[01:00:44.500]What determination are you asking?
[01:00:46.860]Whether or not the loss qualifies.
[01:00:48.770]Who determines whether or not the loss for 2019 qualifies?
[01:00:53.893]So, I'm gonna ask that question of
[01:00:56.230]our policy experts in Kansas City,
[01:00:58.580]and if you wanna run that through Jessica,
[01:01:00.459]and then I can just respond back to Jessica
[01:01:03.020]with the answer that we get from Kansas City.
[01:01:12.531]Any new questions?
[01:01:17.520]say we got a whole farm policy in 2020
[01:01:20.820]and we had a similar weather event.
[01:01:24.300]Would we contact our agent at that point
[01:01:25.967]and have them come and look at it,
[01:01:27.871]and would they make us leave them in the field, more likely?
[01:01:30.040]Instead of piling them then?
[01:01:31.480]Because it's an unknown circumstance
[01:01:34.326]would I (mumbling) to leave them in the field
[01:01:36.590]than to try to take them out?
[01:01:41.110]You know, that's one of the challenges
[01:01:45.170]that's bringing back this question of
[01:01:47.040]how did we get to 12.5 cents to 14, 12 and change,
[01:01:50.780]is yeah, the moral hazard part of that.
[01:01:53.520]Is the crop worth more in the field?
[01:01:55.560]I think that if you chose not to harvest
[01:02:01.990]and tried to collect 100% loss on those beets,
[01:02:10.350]I think that the AIPs in our compliance division
[01:02:14.750]would have some questions for you.
[01:02:17.530]I understand the question that you asked,
[01:02:18.940]and I understand the challenge that you've got
[01:02:21.450]in terms of you harvest the beets,
[01:02:23.140]deliver them and through the season...
[01:02:29.870]From a producer standpoint,
[01:02:31.140]I'm asking if, from the insurance's standpoint,
[01:02:34.245]would they rather us leave them in the field?
[01:02:39.200]You said you can't determine whose beets are whose.
[01:02:41.270]Well, at that point, those are my beets.
[01:02:43.340]They're right there, they're froze.
[01:02:44.570]They're no good.
[01:02:45.520]Do we leave them in the field, you know?
[01:02:49.300]Going forward, is that going to be more?
[01:03:02.405]To a point, I mean...
[01:03:11.090]Well, yeah, the question is a little different
[01:03:13.270]in terms of an APH policy.
[01:03:17.950]The logistics is a little bit different in an APH policy
[01:03:21.350]because in that case you'd have an adjuster coming out
[01:03:25.420]and looking at the beets
[01:03:27.200]and doing some research, finding out
[01:03:29.916]if there really is a significant quality issue,
[01:03:33.450]which we've kind of established now
[01:03:35.270]I'm not making that point.
[01:03:37.860]Western Sugar's still willing to accept them,
[01:03:39.960]but they're gonna cut the value in half,
[01:03:43.630]or make some adjustment to the value.
[01:03:46.050]The quality aspect.
[01:03:50.400]The first part of that is pretty straightforward in APH,
[01:03:52.813]an APH product.
[01:03:55.800]And that would be, the adjuster would allow for
[01:04:00.520]the discount factor from the loss of quality
[01:04:05.490]and would pay an adjustment payment indemnity
[01:04:07.450]based on that.
[01:04:09.290]If after that, the producer chose
[01:04:11.330]not to put any more effort into the beets,
[01:04:14.316]didn't lift 'em and deliver 'em,
[01:04:21.010]I don't know how we would find more indemnity
[01:04:26.060]in that situation.
[01:04:28.510]Now, if the processor rejects them,
[01:04:33.530]if Western Sugar says, "No, we don't want them at all,"
[01:04:36.680]then there's the possibility of zero market value,
[01:04:42.520]and then the adjuster would require the producer
[01:04:45.680]to destroy the beets.
[01:04:51.190]I'm answering that question in terms of an APH policy,
[01:04:55.040]and if you went down that path on a whole farm policy,
[01:05:00.530]there's no loss adjustment in the traditional sense,
[01:05:04.260]but if you, as a producer, chose not to harvest the beets
[01:05:09.970]and then tried to collect 100% of the loss on that
[01:05:14.870]and the AIP found that other similarly situated producers
[01:05:21.300]were delivering their beets and getting value for them,
[01:05:26.520]I think you would have
[01:05:27.500]some pretty tough questions to answer.
[01:05:34.830]All right, I hate to cut it off there.
[01:05:38.410]I hate to, but I think we probably need to.
[01:05:40.720]If you have additional questions,
[01:05:43.750]we'll continue this conversation via email.
[01:05:46.950]What I will do is, I will compile over the next...
[01:05:51.090]I'll give you 'til Tuesday of next week.
[01:05:55.130]I will compile all those questions
[01:05:57.240]that you may have bubble up,
[01:05:59.900]and I will send them to Collin and their office,
[01:06:04.980]and I will, once we have those answers back from them,
[01:06:07.930]either invite you all to another Zoom meeting
[01:06:11.250]or email those back to you.
[01:06:13.110]So if you're in the room, make sure that you've got
[01:06:16.530]your email address on the sign-in sheet out front.
[01:06:19.460]If you're online and you would like that,
[01:06:21.720]please make sure that you email me back.
[01:06:25.580]I assume you have my email since you received the link.
[01:06:29.130]Thank you all for your time.
[01:06:30.900]I know this is something that's very very interesting
[01:06:34.070]and there's lots of intricate details
[01:06:38.610]to how this could and could not apply to us,
[01:06:40.690]so I appreciate your time and your willingness
[01:06:42.840]to come in and work.
[01:06:45.190]And thank you to both Collin and Cory
[01:06:47.300]for being online today.
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