FCIC APPROVES PILOT PROGRAM TO ENCOURAGE REDUCED FERTILIZER USAGE

WASHINGTON, Feb 14, 2002 - The U.S. Department of Agriculture's Federal Crop Insurance Corporation (FCIC) approved the Nutrient Best Management Practice (N-BMP) insurance plan for crop year 2003. AgFlex and the Agricultural Conservation Innovation Center of the American Farmland Trust submitted N-BMP. This pilot insurance plan will protect corn producers in Iowa, Minnesota, Pennsylvania, and Wisconsin from the risk that a best management practice (BMP) fertilizer recommendation fails to produce the expected yield. It is expected that this will allow producers to cut back on the amount of fertilizer they apply.

The N-BMP insurance plan is an endorsement to the Multiple Peril Crop Insurance (MPCI) policy for corn and provides insurance protection from crop production loss when a producer applies a rate of fertilizer (nitrogen and/or phosphorus) recommended as a BMP.

Here's how the insurance will work. First, a certified crop consultant recommends a BMP for the crop and production area. The producer applies the rate of fertilizer specified in the BMP on the insured acreage (known as the management unit). Then, if the producer believes the yield on the management unit is low because of insufficient fertilizer, an adjustment is requested. The adjuster compares the yield on a test strip to the yield on a directly adjacent portion of the management unit. If the difference in the yield is greater than the deductible, which can be as little as 5 percent, the producer is paid an indemnity. The policy does not cover any cause of loss insured by any other policy reinsured by the FCIC.

Policy procedures and other material related to BMP will be released for 2003 crop year sales this summer. The duration of the pilot program, and whether or not it is a success, will be determined by producer participation, changes in fertilizer usage, and the general administrative feasibility of the product. For more information on RMA's pilot programs, visit our Pilot Programs page online at: http://www.rma.usda.gov/pilots/ .