Common Land Unit Acreage Reporting Plan - PowerPoint Presentation

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Common Land Unit Acreage Reporting Plan

2012 Crop Insurance Workshops

Drought, Politics and Risk Management StrategiesOctober 30 – November 2, 2012Troy Brady, Vice PresidentData Quality & Systems DesignNational Crop Insurance ServicesSlide2

Industry Role

NCIS serves as the primary service organization for the crop insurance industry.

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NCIS Functions

MPCI and Crop-Hail Program Development and Analysis Policy Analysis, Loss Adjustment Procedures, Legal Analysis, Agronomic ResearchEconomic and Actuarial Analysis

Education and TrainingLoss Adjuster Schools – 17 (1,692 attendees)National Conferences – 5 (1,037 attendees)Annual Regional/State Meetings – 14 (531 attendees)Crop-Hail Advisory Organization and Statistical AgentLicensed by Individual State Insurance DepartmentPublic Relations and Industry Outreach3Slide4

Objective

To provide a history of the United States Department of Agriculture (USDA) Risk Management Agency’s (RMA) efforts to convert acreage reporting to a common land unit (CLU) basis, outlining the requirements and impacts of these efforts for Approved Insurance Providers (AIP), agents and the insured producer.

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Agenda

Definition and examples of a Common Land Unit

Background of RMA’s efforts to adopt acreage reporting by CLUBrief overview of USDA’s Acreage Crop Reporting Streamlining Initiative (ACRSI) and its requirements for acreage reporting by CLURequirements of RMA’s CLU implementation plan outlined in RMA Bulletin IS-12-002Resources available to AIPs and agents to facilitate acreage reporting by CLUImpacts to AIPs, agents and insured producers to report acreage by CLUIndustry efforts to address issues arising from the adoption of acreage reporting by CLU 5Slide6

What is a Common Land Unit (CLU)?

In Farm Service Agency terminology, a CLU is an individual contiguous farming parcel, which

is the smallest unit of land that has:1. A permanent, contiguous boundary2. Common land cover and land management3. A common owner, and/or4. A common producer association.6Slide7

CLU Identification

The Acreage Crop Reporting Streamlining Initiative (ACRSI) defines a CLU as the smallest area of land with the same land classification

and ownership that has a permanent contiguous boundary. Permanent boundaries may include: field boundaries, fences, rivers, creeks, grass waterways, tree/forest lines or other similar features.A CLU can be subdivided or contain subfields that are separated from the balance of the field by a temporary boundary that may change from year to year. Subfields may be established annually and may represent different commodities, cropping patterns, etc. that can be identified by temporary boundaries. The CLU subfields will retain the CLU identifier.7Slide8

CLU IdentificationA CLU is identified by FSA farm, tract, and field numbers.

FSA also assigns each farm, tract, and field a unique identifier called the CLU ID. The CLU ID is a globally unique identifier (GUID) that is system generated, primarily used by automated systems, and generally not known by the producer.

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CLU Example #1

Rectangular fields outlined by CLU boundaries

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CLU Example #2

Center pivot irrigation with non-irrigated corners in separate CLUs.

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Acreage Reporting By CLU

Originated with the 2010 SRA in Appendix III (A-III) on 6/30/2009Companies were required to report 20% of their insured acreage by CLU by the annual settlement date (Feb, 2011)

RMA issued IS-10-004 on 7/9/2010 to clarify the new A-III reporting requirementProducers could voluntarily provide the FSA Farm Number, Tract and Field to identify CLU information when reporting acreage;orAIPs could derive CLU information from USDA’s Comprehensive Information Management System (CIMS) data or other sources to provide the FSA FN, Tract and Field to identify CLU information for the acreage reported by producers11Slide12

Acreage Reporting By CLU

In determining total acres, RMA included acreage for RA, CRC and Yield Protection insurance plans for those counties where RMA has provided valid CLU shape files by 5/1/2010All CLU records reported applied toward the 20% minimum reporting requirement

AIPs could choose which units to submit CLU records for, but the FSA FN, Tract, Field Numbers must be reported for all acreage in the unitAIPs that do not demonstrate substantial compliance with this reporting requirement may be subject to penalties under Section IV.(H) of the Standard Reinsurance Agreement12Slide13

CLU Data Reporting

Acreage reporting remains on a county/commodity/unit/type/practice/t-yield map area (TMA) basis

CLU reporting was implemented as a sub-division of the acreage line and is reported separately:For our center pivot with non-irrigated corners example:Acreage Line 1 Unit 00100 159.71 Irrigated acresCLU # 1 references Acreage Line 1 with 159.71 acresAcreage Line 2 Unit 00200 38.41 Non-Irrigated acresCLU # 2 references Acreage Line 2 with 9.71 acresCLU # 3 references Acreage Line 2 with 10.21 acresCLU # 4 references Acreage Line 2 with 8.5 acresCLU # 5 references Acreage Line 2 with 9.99 acres13Slide14

Increasing Requirement for 2011

The draft 2011 SRA issued 12/4/2009 expanded on this requirementCompanies were required to report

by CLU 35% of their insured acreage for additional coverage policies under Yield Protection, Revenue Protection (RP) and RP with Harvest Price Exclusion insurance plans by February following the reinsurance year (Feb, 2012)14Slide15

So Where is RMA Headed with CLUs?

During 2010 SRA negotiations RMA was asked for a timeline to convert acreage reporting to a CLU basis over the life of the SRA

Informational Memorandum IS-12-002 was issued in response to this request15Slide16

So Where is RMA Headed with CLUs?

In July 2010 USDA initiated a “Retrospective Review Under E.O. 13563; Improving Common Acreage Reporting Processes”Originally published in the Federal Register 4/20/2011 and later modified on 7/19/2011

The goal of ACRSI is to establish common data elements and automated processes for producers to report common information for USDA programs, simplify and reduce the reporting burden on producers, and reduce USDA administrative and operating costs by sharing similar data across participating agenciesACRSI recommendations called for common USDA reporting standards, such as entity types, acreage reporting dates, commodities, acreage location, and production terminology16Slide17

So Where is RMA Headed with CLUs?

MGR-11-017, “Request for Comments to Actual Production History (APH) Potential Enhancements”, envisions “Correlating producer and land experience into the production guarantee”

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IS-12-002

Acreage reporting at a CLU level will continue to increase each year through 2016 when 100 percent of all acreage for applicable plans of insurance will be required to be reported by CLU

2012: 50% of the total acreage for additional coverage policies under insurance plans 01, 02 and 03 by February 20132013: 70% of the total acreage for additional coverage policies under insurance plans 01, 02 and 03 by January 20142014: 90% of the total acreage reported for insurance plans 01, 02, and 03 (catastrophic and additional coverage) by December 201418Slide19

IS-12-002

2015: 95% of the total acreage reported for all applicable insurance plans and coverage types (e.g. catastrophic, additional), as provided in A-III, by November 2015

2016: 100% of the total acreage by CLU for all applicable insurance plans and coverage types (e.g. catastrophic, additional), as provided in A-IIIInsured must certify acreage by CLU for all applicable plansCLU data must be displayed on the Acreage ReportIncreasing the percentage requirement over several years allows AIPs flexibility to fully integrate CLU reporting to best meet the routine activities of agents, policyholders, AIPs and RMA.19Slide20

CLU ACREAGE

REPORTING

RY

Reporting Percentage

Plans

Total Acres for Designated Plans

Applicable Acres

Percent of Total Acres for Designated

Plans*

2012

50%

Buy

Up Plans 1, 2, 3

195,529,218

97,764,609

43%

2013

70%

Buy

Up Plans 1, 2, 3

195,529,218

136,870,453

60%

2014

90%

All Coverage

Levels

for Plans 1, 2, 3

209,918,903

188,927,013

83%

2015

95%

All

Applicable (includes:

APH

minus

Category C Perennials, Revenue Protection (RP), RP with Harvest Price Exclusion, Yield Protection, Dollar

Coverage

minus Category C Perennials,

Yield Dollar

Option, GRP/GRPH/GRIP;

excludes livestock, tree dollar,

Aquaculture,

nursery, AGR, ARH, Pecan and RI/VI)

227,276,641

215,912,809

95%

2016

100%

All Applicable

227,276,641

227,276,641

100%

* Total Insured

Acreage for the 2011 Crop Year

is 264,595,305 as of

2/19/2012

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IS-12-002

RMA has confirmed that the Common Crop Insurance Policy Basic Provisions legally support collection of acreage reporting data by CLU from the insured

IS-12-002 is a roadmap Modifications, including collecting acreage reports by CLU for perennial crops, actions by USDA such as Farm Bill Amendments or ACRSI developments, may be requiredAIPs will only be required to submit policy information by CLU when a CLU is available from FSA.21Slide22

CLU Reporting Resources

CIMS provides AIPs access to state geospatial files of

CLU polygonsUsed to identify field boundariesReleased approximately every two months for the entire state in which the AIP operatesProducers provide planting records for each of their CLU polygonsAIPs may electronically request from CIMS the current year and prior year FSA acreage report information from the FSA Form 578 for their policyholderProducers may provide their FSA Form 578The total acreage used to calculate the annual % will be determined using only reported acreage for those counties where CIMS has provided complete and valid CLU data in each of the GIS CLU files released from February prior to the RY through December of the RYFor 2012: Feb 2011 - Dec 2011

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Impacts to Agents

RMA anticipates advancements in geospatial information systems and software that will provide the opportunity to use precision agriculture technology as well as AIP utilization of mapping technologies to facilitate collection of acreage reports by CLU

RMA will work with AIPs, FSA and other USDA agencies to develop procedures and requirements to encourage the use of this technology, as well as to simplify the use of CLUs to reduce the burden on AIPs in reporting acreage by CLU, and the USDA in maintaining the CLUsHeightened importance with Acreage Reporting Date moving to 7/15 under ACRSI with an 8/15 billing date as a result of the 2008 Farm Bill 23Slide24

Impact to Insured Producers

RMA believes that acreage identified by CLU location can be used

to:Improve actuarial soundnessEnable the acreage to be correlated with other types of data such as soils, slope, elevation or weatherReduce duplicative reporting by the producerEnable the efficient sharing of RMA data with Approved Insurance Providers (AIPs), Farm Service Agency (FSA) and other USDA agenciesReduce program vulnerabilitiesAssist with compliance effortsRealization of the full benefits and program improvements lies in the future; however, to achieve such benefits it is imperative to make progress in obtaining more refined data24Slide25

Issues with CLUs

CLU files are created and maintained by FSAA number of issues with using CLU shape filesCIMS

Location State is NULL (44,422 CLUs) CLU Identifier has Invalid Characters (364,897 CLUs) CLU Identifier is Duplicated (208,439 CLUs) Location County Code is NULL (98,369 CLUs) Farm Number is Zero (32,569 CLUs) Tract Number is Zero (995 CLUs) Field Number is Zero (32,569 CLUs) 25Slide26

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Industry Efforts to Resolve CLU Errors

Ongoing discussions with RMA through NCIS’ Technology & Information Processing (TIP) CommitteeRMA sends error listings to FSA after validating each iteration

Industry meetings with Undersecretary ScuseFSA expects most issues to be resolved when they introduce their Modernize and Innovate the Delivery of Agricultural Systems (MIDAS) project in January 2013Industry formed a Production Reporting Workgroup earlier this yearExtend transition to 2016 to even out annual increasesDeferring perennial crop reporting until CLU reporting issues can be resolvedReviewing CLU issues and potential means to mitigate impactsModifying CIMS filters to ensure successful inquiryModifying validation requirements30Slide31

NCIS Websitewww.ag-risk.org 

Crop Insurance in America Websitewww.cropinsuranceinamerica.org Support Crop Insurance Websitewww.supportcropinsurance.orgTwitter@USCropInsuranceFacebookCropInsuranceInAmericaYouTubeNCISAmerica

Questions/Comments about today’s presentation:

troyb@ag-risk.org

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