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Working with New Partners:Working with New Partners:Extension Experiences with USDA’s Extension Experiences with USDA’s
Risk Management AgencyRisk Management Agency
Dr. Terry Hanson and Dr. Keith CobleDr. Terry Hanson and Dr. Keith CobleDepartment of Agricultural EconomicsDepartment of Agricultural Economics
Mississippi State UniversityMississippi State University
ARPA Act of 2000
• PURPOSE– Authorize the FCIC to enter into partnerships to increase the
availability of loss mitigation, financial, and other risk management tools for producers, with a priority given to risk management tools for specialty crops, and underserved underserved agricultural commoditiesagricultural commodities.
• AUTHORITY– The FCIC may enter into partnerships with CSREES, ARS,
NOAA, or other public and private entities with capabilities in developing and implementing risk management and marketing options for producers of specialty crops and underserved agricultural commodities.
Project Overview
- RMA teamed with MSU for this partnership
- Feasibility of developing and implementing risk management programs for U.S. aquaculture producers
- Provide FCIC risk management products, policies, and related materials necessary to implement these programs.
Aquaculture
Science, Extension & Management
A Unique Synergism
MSU National Risk Management Feasibility Program for Aquaculture
Risk Management & Insurance
Objectives• Conduct a feasibility study of four species:
– catfish, salmon, trout, and baitfish
• Conduct listening sessions in the major production areas to determine interest level
• Collect data regarding the risks associated with aquaculture production
• Provide a feasibility report that will provide information to assess the viability of alternative risk management designs
If feasible, develop insurance programs or risk management tools with related materials:– Policies– Underwriting and loss adjustment standards
handbooks– Rating and pricing methodologies
If not feasible– Thoroughly document listening sessions,
unavailability of data, and industry/grower association recommendations not to proceed
Plan of Action
• Collecting existing and preliminary aquaculture species data
• Commissioning needed scientific reports & original research
• Developing potential risk management tools and products
• Will evaluate cost, acceptance, and feasibility of potential products
Plan of Action
• Formed species steering committees– Technical advice in developing a species research
plan
Catfish Committee
• Jimmy Avery• Jerry Crews• Carole Engle• Billy George Janous
• Joey Lowery• Rafe Taylor• Craig Tucker• Hugh Warren
Baitfish Committee
• Neal Anderson• Jeffery Gunderson• Eric Park• Danny Pool• Nathan Stone
Salmon Committee
• Sebastian Belle• Pete Granger• Mike Hastings• Colin Nash• John Thibodeau
Trout Committee
• Paul Adelizi• Richard Bragg• Gary Fornshell• Jeff Hinshaw• Ron Kinnunen
Risk Committee
• Barry Barnett• Roy Black• Barry Goodwin• Alan Ker• Tom Knight
Project Activities
Annual Workshops• Brought together more than 40 specialists in
aquaculture and risk management– Developed a list of priority peril areas
– Determined whether peril met insurability criteria
– Determined if info and data existed to measure
• Magnitude of loss and frequency of occurrence
– Identified the nature of required information and determined how best to obtain this information
– Identified experts in each peril area
– Discussed post-workshop steps for this project
– How advisory committees can best integrate into overall process
What Risks to Insure• Specific coverage for risk events
– Diseases (all)
– Bird Predation (all)
– Floods (all)
– Water Quality (all)• Oxygen Depletion
• Algal toxins
– Electrical Power Outages (catfish and baitfish)
– Off-flavor (catfish)
Species Reports
• Species industry reports for:– Catfish, Salmon, Trout and Baitfish
• Authored by:– Extension personnel– Researchers– Consultants
• Will form the background for the project’s final species reports
Species Report
• Characteristics of each selected species • Descriptions of alternative production systems
and variations in those systems• Characterization of aquaculture risks
– Identification of economic risks associated with production (treatable perils)
– Description of the potential to quantify risks including frequency and severity
Clientele Meetings– Greenville, MS: Catfish Advisory Committee
meeting at the Fish Farming Trade Show– Lonoke, Arkansas: Baitfish Advisory
Committee Meeting– Reno, Nevada: Presentation to U.S. Trout
Farmers Association’s annual meeting– Eastport, Maine: Salmon Advisory Committee
Meeting
Clientele Meetings– Fort Collins, Colorado: Presentation to USDA-
APHIS Livestock Insurance Conference (November 2002)
– Kansas City, Missouri: Project Update presented to RMA (December 2002)
Insurance Designs
• Developing a white paper to describe potential aquaculture insurance designs
• Being sent to members of each species advisory committee for comments
Areas Under Investigation• Enumeration of dead fish in pond aquaculture
environments
• Bird predation
• Production verification studies
• Disease spread modeling for aquaculture
Areas Under Investigation• Development of risk management criteria to use in
assessing producer risk level
• Surveys to obtain estimates of frequency and severity of losses
• Survey of European aquaculture insurance providers
• Develop underwriting language for potential aquaculture insurance products
Areas Under Investigation• Conduct rigorous willingness-to-pay studies
where both the insurance product and a proposed cost are presented to the farmer– Will there be demand?
– Willingness to pay studies• To determine producers willingness to pay for insurance
products that provide various degrees of protection from specified perils
The Balancing Act of Developing Viable Products
Effective Protection Producer Acceptance Actuarial Soundness
CostProduction Distortion
Project Website• Depository for project information, reports, and
recent events
• http://www.agecon.msstate.edu/aquaculture