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    Crop Insurance News and Analysis – February 19, 2020 – Nursery Value Select Pilot Program

    February 26, 2020 By //  by Kim Arrigo

    On February 19-20, 2020, the Risk Management Agency (RMA) announced a new crop insurance program for nursery through a Product Management Bulletin: PM-20-10, press release, Nursery Value Select Crop Provisions, Frequently Asked Questions, and National Fact Sheet. https://www.rma.usda.gov/en/Policy-and-Procedure/Bulletins-and-Memos/2020/PM-20-010; https://www.rma.usda.gov/en/News-Room/Press/Press-Releases/2020-News/USDA-Offers-New-Crop-Insurance-Pilot-Program-for-Nursery-Crops-in-2021; https://www.rma.usda.gov/-/media/RMAweb/Policies/Nursery-Value-Select/Nursery-Value-Select-Crop-Provisions-21-1010.ashx; https://www.rma.usda.gov/en/News-Room/Frequently-Asked-Questions/Nursery-Value-Select; https://www.rma.usda.gov/en/Fact-Sheets/National-Fact-Sheets/Nursery-Value-Select.

    RMA states that the new Nursery Value Select Pilot Program will: 1) simplify the application and annual policy renewal process; 2) allow nursery producers to select the dollar amount of coverage that best fits their risk management needs, and for buy-up policies; coverage tailored by an individual practice (container or field grown) or by choosing from any of 10 potential plant categories; 3) simplify the loss adjustment process by using a more accurate approach to determining plant values by placing greater reliance on the nursery producer’s actual sales receipts, along with increased producer participation in determining damaged plants’ ability to be marketed or rehabilitated; 4) eliminating the plant list based on third-party software and greater reliance on the producer’s inventory records, along with plant category naming conventions more familiar to the nursery industry; 5) tailoring program dates that are better suited to the agronomic and industry nursery management practices in different regions across the country; and 6) creating a new Occurrence Loss Option (OLO), moving the deductible from a unit level to a plant level for an additional premium (only available for buy-up policies).

    The Nursery Value Select Crop Provisions contain the provisions of insurance. The National Fact Sheet contains basic information regarding the states where the new nursery policy is available, the crop insured, causes of loss, important dates, coverage levels and subsidies, insurance units, duties in event of damage or loss, the Loss Occurrence Option and a loss example. The Frequently Asked Questions do provide additional information regarding the workings of the program.

    ANALYSIS – Hopefully, this new nursery pilot program will be a valuable risk management tool for nursery producers. However, reading the documents published by RMA, it is unclears how this new pilot will accomplish the goals stated in the Press Release. The documents RMA published do contain information about the policy provisions and parsing those and comparing them to the existing program may provide answers for what was changed but it will not explain RMA’s rational basis for why these changes were made. Most importantly, the nursery crop insurance program has had a history or fraud and abuse. Some of the provisions that have been revised or eliminated were in place to protect program integrity because nursery is a movable crop, for which sales occurs all year round, and there is restocking so inventories change throughout the year. No information has been provided regarding how program integrity will be protected under the new pilot program. It would have been helpful to explain what changes were made, why they were made, what impacts they have on the program, and what safeguards are in place to protect the program from fraud and abuse.

    All statements made are opinions of the author and are not intended to provide legal opinions or legal advice.

    Filed Under: Blog

    Previous Post: « Crop Insurance News and Analysis – February 14, 2020 – Actuarial Rates from Breached Levees Missouri, Iowa, Kansas, Nebraska
    Next Post: Crop Insurance News and Analysis – February 20, 2020 – Prevented Planting on Added Land »

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