AGR-Lite: The Details

What the 2007 Adjusted Gross Revenue-Lite insurance plan offers farmers.

Published on: Nov 7, 2006

Late last week, U.S. Ag Secretary Mike Johanns announced yet another expansion of the Adjusted Gross Revenue-Lite (AGR-Lite) whole-farm revenue protection insurance plan. With the addition of Arizona, Colorado, Kansas, Minnesota, Montana, Nevada, New Mexico, Utah, Wisconsin, and Wyoming, it’ll be available in 28 states for the 2007 insurance year.

So how does this plan work?

AGR-Lite provides gross revenue (income) protection based on the previous five years of federal IRS records plus current year's projections. It covers crops, livestock and livestock products, notes Pennsylvania's Executive Deputy Ag Secretary Russell Redding, one of the plan's originators.

Key provision include . . .

  • $1 million liability coverage: Producers of crops, animals and animal products such as milk can qualify as long as average adjusted gross revenues don't exceed $2 million. It opens the opportunity to small, diversified niche market producers running high revenue/ low margin operations and to producers with uninsurable crops.
  • Natural disasters clarified: Loss of revenue due to any unavoidable natural disaster is covered. But "natural disasters" was clarified: to include but not be limited to: adverse weather, fire, insects, plant disease, earthquake, volcanic eruption, or failure of irrigation water supply that occurs during the current or previous insurance year or market fluctuation that causes a loss in revenue during the current insurance year.
  • Insect and plant disease losses resulting from insufficient or improper control measures would be excepted. This change is necessary to reduce confusion and increase faith in the insurance plan, notes Redding.

How AGR-Lite differs from conventional crop coverage

  • Conventional crop insurance covers major crops, commodity by commodity, with many specialty, and high-value crops not covered. AGR-Lite bridges that gap by covering revenue rather than specific crops.
  • Revenue protection is based on your own crop yield, quality and price history, plus downside price fluctuations of the current year. Protection reflects the unique higher prices of special practices (i.e. organic), unique varieties (nato soybeans), staked tomatoes, etc.
  • It covers producer's income history/projections of almost all ag commodities with one simple policy (crops, nursery, greenhouse production, animals, animal products [milk, honey, wool], aquaculture, etc.). Forests, forest products, timber, hobbies and pets are excluded.
  • It simplifies record keeping requirements; Income tax records can be used.
  • It provides protection for producers direct marketing crops. Most conventional vegetable crop insurance programs exclude acreage grown for direct market.
  • Premium cost generally are lower than conventional crop insurance.