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The Risk Management Safety Net:
V. Market Penetration of Other Field Crops, Hay, Livestock, Nursery, and Pasture/Range/ Forage

Market penetration of the other field crops at a strong 70 percent in 2011, increased substantially from 59 percent in 2000 and the 3 percent market share in 1990. The following chart shows the level of market penetration by crop for the field crops that are not principle crops:

Other Field Crops- Market Penetration

Actual market penetration numbers for all crops by crop are in Attachment 1.

These crops also have a relatively high level of buy-up coverage as shown the following chart and in Attachment 2.

Market Penetration for Hay, Pasture-Range-Forage, Livestock & Nursery

Hay, nursery, livestock, and pasture/range/forage are all very large crops that are grown across the U.S. While the majority of field crops have good participation in the crop insurance program, market penetration for hay crops was only 8 percent in 2011, although up from 3 percent in 2000 and 1 percent in 1990 as shown in the following table. This clearly indicates there is substantial market potential available for hay insurance coverage. The new Annual Forage insurance product, released for the 2014 crop year, may capture more of the market potential for hay.

The Pasture, Range and Forage insurance product, while covering over 33 million acres in 2011, provided protection for only 5 percent of the estimated pasture and range. Because there is not a catastrophic level of insurance for the Pasture, Range and Forage product, all of this coverage was sold at buy-up coverage levels. The low market penetration for both hay and pasture and range indicates there are opportunities for new or improved products for these crops to improve the risk management safety net for livestock producers.

Livestock insurance was first authorized in 2000 in the Agricultural Risk Protection Act so is the newcomer in Federal Crop Insurance coverage. Livestock market penetration was highest for lambs, with nearly 40 percent of the 2012 lamb crop covered. Expenses for livestock insurance coverage, that provides coverage for the animals or products from the animals like milk, are statutorily limited to $20 million per Fiscal Year and include premium subsidy paid on behalf of the producer for their insurance as well as administrative and operating subsidy paid to Approved Insurance Providers to sell and service the insurance.

Underwriting capacity for various livestock insurance products is allocated across the livestock insurance products and managed throughout the year in order to spread the capacity between products to assure that producers of all of the insurable species have opportunities to purchase insurance and that the funds are fully utilized for the Fiscal Year. Although market penetration may vary some by species from year to year and additional insurance products could be added to the portfolio, with the statutory limitation on expenses Federal crop insurance will be unable to capture additional market potential for livestock. All livestock insurance is sold at buy-up coverage levels. The following table shows 2012 livestock market penetration.

In addition, finally, the nursery crop has the fifth largest total liability in the entire book of business for 2011 counting the principle crops. Market penetration for nursery is high, at 85 percent (measured with 2009 numbers due to national number availability), but buy-up levels of coverage are very low, at only 14 percent for 2011. The following table shows the market penetration numbers for nursery in 2009:

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