Feasibility research report for insuring commercial poultry production

not exceed $1 million. Consequently, the approved gross income insured must be less than$2,051,282, in which case the coverage level is 65 percent. Furthermore, the insured must haveexisted as the same tax entity for seven years and must have filed five consecutive years ofSchedule F tax forms; unless a change in the tax entity is reviewed and approved by theinsurance provider. No more than 50 percent of total revenue may have been derived fromcommodities purchased for resale and no more than 83.35 percent of total revenue can have beenderived from potatoes. AGR-Lite is available in Alabama, Arizona, Colorado, Connecticut,Delaware, Florida, Georgia, Hawaii, Idaho, Illinois, Kansas, Maine, Maryland, Massachusetts,Minnesota, Montana, Nevada, New Hampshire, New Jersey, New Mexico, North Carolina,Oregon, Rhode Island, South Carolina, Tennessee, Utah, Vermont, Virginia, Washington, WestVirginia, Wisconsin, and Wyoming, and in selected counties in Alaska, New York, andPennsylvania.An AGR-Lite approved adjusted gross revenue is based on a producer‘s five-year historical farmaverage revenue (as reported on the IRS Schedule F) and on an annual farm revenue report.AGR-Lite insurance indemnity payments are based on Schedule F reported revenues andexpenses and on a payment schedule which includes both a deductible and a co-payment. Theminimum deductible is 20 percent. The minimum co-payment is 10 percent. Loss payments aretriggered when the adjusted income for the insured year is less than the loss inception point. Theloss inception point is calculated by multiplying the approved adjusted gross revenue times theselected coverage level. Once a revenue loss is triggered, the producer is paid based on thepayment rate selected, at either 75 cents or 90 cents for each lost dollar.AGR is a pilot insurance program similar to AGR-Lite. AGR insurance protects producers toliabilities as high as $6.5 million. However, only 35 percent of this income can come fromanimals or animal products. Higher coverage levels and lower deductibles are only availablewhen the number of insured crops increases. Given the structure of the poultry sectors, theseconstraints limit the utility of AGR for major poultry grow-out facilities. AGR insurance isavailable in Connecticut, Delaware, Maine, Massachusetts, New Hampshire, New Jersey, RhodeIsland, and Vermont, as well as in selected counties in California, Florida, Idaho, Maryland,Michigan, New York, Oregon, Pennsylvania, Virginia, and Washington. AGR may serveproducers in these areas who have highly diversified operations. Poultry is listed generically inthe 2010 AGR Standards Handbook. However, AGR as it is currently structured is unlikely toaddress risk management concerns of those who focus their production on poultry. Furthermore,anecdotal evidence suggests that participation in the AGR/ AGR-Lite programs is limited withinthe poultry industry. Finally, RMA has made internal determinations the income from grow-outoperations is not eligible under the adjusted gross revenue programs.Rural Business–Cooperative Service (RBS)RBS is a small agency with limited funding and staff whose purpose is to finance and facilitatedevelopment of small and emerging private business enterprises, and promote sustainableeconomic development in rural communities. 36 While this agency could potentially servepoultry growers and integrators, the industry structure will limit the impact of RBS services tomany producers.36 USDA, RD, 2010, About RD, http://www.rurdev.usda.gov/Home.html, accessed May, 2010.Use or disclosure of information or datacontained on this sheet is subject to therestrictions on the title page of this report.21Risk Management AgencyContract No: N10PC18148