ts slides for mn crop insurance conf september 2020 · microsoft powerpoint - ts slides for mn crop...
TRANSCRIPT
MinnesotaCropInsuranceConferenceWashingtonUpdate‐ ALookAhead
September2020TaraSmith
CropInsuranceandReinsuranceBureau
Agenda
• Where Have We Been?
• What Is On The Horizon?
• What Can We Do About It?
WhereHaveWeBeen?
0
50,000
100,000
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2018
Thousand Acres
US Acres in Crop Insurance, 1981‐2018
Ag Risk Protection Act
Increase in Premium Discount
TheCropInsuranceIndustryHasBeenDrivenByDecisionsMadeinWashington,DC
WhereHaveWeBeen?
0
10
20
30
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1996 Today
Percent of Acres Covered at 70% or Higher
WhereHaveWeBeen?“Protect and Preserve”
• Cuts to Premium Assistance• Harvest Price Coverage
• Cuts to the Private Sector Delivery System• Reduced Target Rate of Return
• Means Testing• Adjusted Gross Income Caps
• Premium Assistance Caps
WhereHaveWeBeen?
WhereHaveWeBeen?
WhatIsOnTheHorizon?
• Political Change
• Market Volatility
• Extreme Weather Events and Climate Change
• Scrutiny of Support for Agriculture
WhatIsOnTheHorizon?PoliticalChange
Retiring
RetiringTough Re‐Elect
WhatIsOnTheHorizon?MarketVolatility
WhatIsOnTheHorizon?MarketVolatility
WhatIsOnTheHorizon?MarketVolatility
US Soybean PricesUSD
WhatIsOnTheHorizon?ExtremeWeatherEventsandClimateChange
2019 was the second wettest year on record according to NOAA. More than 19 million acres were prevented from planting in 2019. The previous record for prevented from planting acres was in 2011 with fewer than 10 million acres.
WhatIsOnTheHorizon?ExtremeWeatherEventsandClimateChange
And 2019 was riding in on the heels of a turbulent 2018 hurricane season that brought Hurricane Florence and Hurricane Michael to bear over key ag production regions in the South, and is being followed by 2020, where there have been a record 13 named storms before September.
State Estimated Ag Damages from Hurricanes in 2018
Alabama $204 million
Florida $158 million plus $1.3 billion in timber damages
Georgia $2.8‐$3 billion
North Carolina
$1.2‐$2 billion
WhatIsOnTheHorizon?ExtremeWeatherEventsandClimateChange
1998 Crop Year 2016 Crop Year
Acreage 181 million 291 million
Total Premium $1.8 billion $9.3 billion
Farmer Paid Premium
$929 million $3.5 billion
Subsidy $946 million $5.8 billion
Insured Liability $27.9 billion $100.5 billion
Ad Hoc Disaster Assistance
Approximately$6 billion
None
WhatIsOnTheHorizon?ExtremeWeatherEventsandClimateChange
1998 Crop Year 2019 Crop Year
Acreage 181 million ~ 320 million
Total Premium $1.8 billion ~$9.7 billion
Farmer Paid Premium
$929 million ~$3.5 billion
Subsidy $946 million ~$6 billion
Insured Liability $27.9 billion ~$105 billion
Ad Hoc Disaster Assistance
Approximately$6 billion
More than $19 billion
WhatIsOnTheHorizon?ExtremeWeatherEventsandClimateChange
Source: USDA, ERS
WhatIsOnTheHorizon?ScrutinyofSupportforAgriculture
Crop Insurance
Title 1
Trade Aid
Ad Hoc/COVID
CI Prevent Plant
Danger Zone
WhatIsOnTheHorizon?ScrutinyofSupportforAgriculture
“The amount sent to farmers tops the auto‐industry bailout by billions, and was delivered without Congressional approval.” –Rolling Stone
WhatIsOnTheHorizon?ScrutinyofSupportforAgriculture
WhatIsOnTheHorizon?ScrutinyofSupportforAgriculture
WhatIsOnTheHorizon?ScrutinyofSupportforAgriculture
Deficit as a Percent of GDP
WhatCanWeDoAboutIt?Defense
Position ourselves as the best option• Predictable• Timely payments in time of need• Farmers pay for policies and have
choice over coverage levels/types• Private sector delivery allows
farmers choice over their policy provider
• Policies are available to almost all types of farmers in all regions
• Flexibility to meet changing needs of farmers and ranchers
WhatCanWeDoAboutIt?Offense
Be prepared to address the gaps that have been identified in the last couple of years
• Hurricane Endorsement• Prevent Plant
Be prepared to be “for” something as it relates to climate change
• Cover crop policy• Data collection
WhatCanWeDoAboutIt?Offense
If funding is available to improve farm policy, how could it be best used within the crop insurance space?
Recognize that changes need to be within the boundaries of the program to maintain the underlying integrity of the program
• Respect for actuarial soundness• Respect for contracts
WhatCanWeDoAboutIt?
#ProtectCropInsurance
Get Involved!
Tara Smith – [email protected]
