#### Capabilities Statement

**Review of Exponential Parameter**

**And Type/Practice Factors**

# 

**Solicitation Number 0404RP32971**

# RMA-AD-03-04

**FarmRisk, Inc.**

**3240 Evergreen Road**

######### Ames, Iowa 50014

**November 13, 2023**

**Table of Contents**

Section Page

Section 1. Key Personnel 1

A. General Overview of Key Personnel 1

B. Overview of Notable Crop Insurance Accomplishments of FarmRisk
Personnel 2

C. Vitae of Key Personnel 3

####### 

####### Section 2. Specific Organizational Experience 22

####### 

####### Section 3. Overall Past Performance 24

**Section 1. Key Personnel**

**A. General Overview of Key Personnel**

The four key personnel of FarmRisk, Inc. together provide a unique
combination of academic credibility, real world knowledge and
experience, and the ability to generate high-quality, on-time output.
Their creativity, work ethic, and training is revealed by their ability
to regularly publish their relevant research in high-quality,
peer-reviewed journals. The fact that their partners have won approval
for four 508h insurance products demonstrates their ability to deliver
work on-time, their high degree of work flexibility, and their strong
problem-solving skills. And their strong connection with production
agriculture gives them the ability to design insurance products that
meet the needs of farmers while protecting the interests of taxpayers.

Bruce Babcock is a Professor of Economics at Iowa State. Dr. Babcock
received his Ph.D. in Agricultural and Resource Economics from the
University of California at Berkeley and his M.S. degree in Agricultural
Economics from the University of California at Davis. He has published
50 peer-reviewed journal articles on a variety of topics including new
rating methods for yield and revenue insurance products, effects of
yield and price risk on farmer-decision making, and optimal estimation
of crop yield distributions. Dr. Babcock has rated and designed many
innovative insurance products.

Dermot Hayes is a Professor of Finance and Economics at Iowa State
University. Dr. Hayes received his Ph.D. in Agricultural and Resource
Economics from the University of California at Berkeley. He has
published more than 60 peer-reviewed journal articles. Much of his
research focuses on the use of financial derivatives and crop insurance
by farmers. Dr. Hayes teaches graduate and undergraduate courses in
option pricing, insurance, and reinsurance. Dr. Hayes has rated and
designed many innovative insurance products.

Chad Hart is a Research Scientist in the Center for Agricultural and
Rural Development at Iowa State University. Dr. Hart has a Ph.D. in
Statistics and in Economics. He has more than six years experience
conducting research on the actuarial fairness of crop insurance rates
and on how policy changes affect the operation of the U.S. crop
insurance programs. His peer-reviewed publications make important
contributions to our understanding of how modern statistical tools can
be use to design efficient risk management tools for farmers. Dr. Hart
has rated and developed new rating methods for a variety of insurance
products.

Todd Campbell is both an expert database manager and computer
programmer. He has a B.S. degree in computer science from Iowa State
University. He has many years experience at designing Monte Carlo
simulation programs that interact with large databases. These programs
have been used to both rate crop insurance products, but also to study
the sensitivity of rates to alternative parameter values.

FarmRisk's key personnel have the ability to combine academic excellence
with real-world experience to deliver innovative products, on time, to
some of the world's most demanding customers. A review of some key
accomplishments demonstrates this ability to work with a variety of
customers on a variety of products.

**B. Overview of Notable Crop Insurance Accomplishments**

**of FarmRisk Personnel**

**Revenue Assurance (RA)** -- Designed and rated RA for the Iowa Farm
Bureau Mutual Insurance Company and American Farm Bureau Insurance
Services. Product innovations include: whole-farm and enterprise unit
coverage; use of implied price volatilities; use of a yield distribution
to base rates; equation-based premium calculation procedures; and use of
negative price-yield correlations. Total premium for RA in 2003 was more
than \$1.011 billion with more than 330,000 policies sold on more than
57 million acres.

**Group Risk Income Protection (GRIP)** -- Designed, rated, and
maintained GRIP for IGF Insurance Company, then for American
Agrisurance, and now for RMA. GRIP was the first area revenue insurance
product developed. Thus innovative solutions for rate making needed to
be developed. The GRIP rate making methods have been peer-reviewed three
times. In 2004 GRIP will be offered in seven states. In 2003 almost 1.2
million acres was insured with GRIP, generating \$21.7 million in total
premium.

**Livestock Gross Margin (LGM)** -- Designed and rated LGM, which was
the first livestock insurance product improved by the Board of the
Directors of the Federal Crop Insurance Corporation. The innovations
included the first "average-margin" insurance product designed to insure
a minimum level of returns from livestock marketings that occur
periodically throughout the year.

**Group Risk Income Protection -- Harvest Revenue Option (GRIP-HRO)** --
Designed and rated GRIP-HRO in partnership with NAU Country Company.
GRIP-HRO is an optional endorsement to the GRIP policy that increases
liability if the actual fall harvest price exceeds the projected harvest
price.

**Actuarial Fairness of Crop Insurance Rates with Constant Rate
Relativities --** This is the title of a paper that demonstrates that
crop insurance premium rates should not increase at a constant amount as
coverage levels increase. Rather, the increase should be inversely
related to the premium rate at the 65% coverage level. The findings of
this paper have helped convince RMA to revamp rating methods for APH and
CRC. The paper had been accepted for publication by the *American
Journal of Agricultural Economics*.

**Rating of Performance 90 --** This is a private pricing product that
was rated and developed for Cargill. There were two innovative aspects
to this work. Because this product was privately developed, Cargill
needed help in understanding the level of risk it was assuming and how
alternative reinsurance plans affected their exposure. The second
innovation was estimation of the degree to which spatial diversification
of a grower's crop production base reduced the amount of yield risk on
the farm.

**C. Vitae of Key Personnel**

**BRUCE A. BABCOCK**

568D Heady Hall 3240 Evergreen Rd

Iowa State University Ames, IA 50014

Ames, IA 50011 Home: (515) 292-3285

Email: babcock@iastate.edu Work: (515) 294-5764

FAX: (515) 294-6336

**Present position:**

Director, Center for Agricultural and Rural Development and

Professor, Department of Economics, Iowa State University

**Past Positions**:

1993‑1998: Associate Professor, Department of Economics, Iowa State
University.

1990‑1993: Assistant Professor, Department of Economics, Iowa State
University.

1987‑1990: Assistant Professor and Extension Specialist, North Carolina
State University.

1982‑1983: Research Associate, Department of Agricultural Economics,
Texas A&M University.

**Education:**

Ph.D. Agricultural and Resource Economics, University of California at
Berkeley, 1987.

M.S. Agricultural Economics, University of California at Davis, 1981.

B.S. Economics of Resource Use, University of California at Davis, 1980

**Major Fields of Interest:**

Agricultural markets, agricultural policy and insurance, marketing and
production decisions under risk.

**Teaching Experience:**

Graduate courses in production economics and agricultural policy,
undergraduate courses in principles of economics, agribusiness
management, and agricultural policy.

**Memberships:**

American Agricultural Economics Association, Western Agricultural
Economics Association

International Agribusiness Management Association

**Honors and Awards:**

> AAEA Quality of Research Discovery for "Environmental and
> Distributional Impacts of Conservation Targeting Strategies," 2002.
>
> WAEA Outstanding JARE Article for "Bt Corn and Insect Resistance: An
> Economic Assessment of Refuges," 2002.
>
> USDA Secretary of Agriculture Award for outstanding accomplishments in
> the areas of agricultural public policy research and formulation,
> 2002.

AAEA Distinguished Extension Program -- Group for "Managing Risk and
Profits," 2000.

AAEA Outstanding Dissertation (honorable mention) for [The Value of
Weather Information in Agriculture]{.underline}, 1987.

Listed in the 4^th^ Edition of Who's Who in Economics as one of the most
cited economists for work published from 1990 to 2000.

**National Panels:**

FIFRA Scientific Advisory Panel, Environmental Protection Agency.
"Projecting Domestic per-Crop-Treated with Pesticides for Dietary
Assessment." 2002.

**Publications**

1.  Babcock, B.A., C. E. Hart, and D. J. Hayes. "Actuarial Fairness of
    Crop Insurance Rates with Constant Rate Relativities." [American
    Journal of Agricultural Economics]{.underline}, in press.

2.  Hennessy, D., J.A. Miranowski, and B. A. Babcock. "Genetic
    Information in Agricultural Productivity and Product Development."
    [American Journal of Agricultural Economics]{.underline}, in press.

3.  Krell, R.K., L. Pedigo, and B.A. Babcock. "Comparison of Estimated
    Costs and Benefits of Site-Specific Versus Uniform Management for
    the Bean Leaf Beetle in Soybean." [Precision
    Agriculture]{.underline}, 4(2003):401-411.

4.  Mitchell, P. D., T. M. Hurley, B. A. Babcock, and R. L. Hellmich.
    "Insuring the Stewardship of Bt Corn: A Carrot versus a Stick."
    [Journal of Agricultural and Resource Economics]{.underline},
    27(2002):390-405.

5.  Hart, C. E., and B.A. Babcock. "U.S. Farm Policy and the WTO: How Do
    They Match Up?" [The Estey Centre Journal of International Law and
    Trade Policy]{.underline}, 3(2002):119-139.

6.  Hurley, T. M., S. Secchi, B. A. Babcock, and R. Hellmich. "Managing
    the Risk of European Corn Borer Resistance to Bt Corn."
    [Environmental and Resource Economics]{.underline},
    22(2002):537-558.

7.  Hurley, T. M., B. A. Babcock, and R. Hellmich. "Bt Corn and Insect
    Resistance: An Economic Assessment of Refuges." [Journal of
    Agricultural and Resource Economics]{.underline}, 26(2001):176-194.

8.  Hart, C. E., B. A. Babcock, and D. J. Hayes. "Livestock Revenue
    Insurance." [Journal of Futures Markets]{.underline},
    21(2001):553-580.

9.  Wu, J., D. Zilberman, and B.A. Babcock, "Environmental and
    Distributional Impacts of Conservation Targeting Strategies."
    [Journal of Environmental Economics and Management]{.underline},
    41(2001):333-350.

10. Wu, J. and B. A. Babcock. "Spatial Heterogeneity and the Choice of
    Instruments To Control Nonpoint Pollution, [Environmental and
    Resource Economics,]{.underline} 18(2001):173-192.

11. Pautsch, G. R., L. Kurkalova, Babcock, B. A., and C. L. Kling. "The
    Efficiency of Sequestering Carbon in Agricultural Soils."
    [Contemporary Economic Policy]{.underline}, 19(2001):123-134.

12. Wu, J., and B. A. Babcock. "Metamodeling Potential Nitrate Water
    Pollution in the Central United States." [Journal of Environmental
    Quality]{.underline}, 28(1999):1916-1928.

13. Wu, J., R. D. Adams, D. Zilberman, and B. A. Babcock. "Targeting
    Resource Conservation Expenditures." [Choices]{.underline}, 2nd
    Quarter, 2000, 33-38.

14. Paz, J.O., W.D. Batchelor, B. A. Babcock, T.S. Colvin, S.D. Logsdon,
    T.C. Kaspar, and D.L. Karlen. "Model-Based Technique to Determine
    Variable-Rate Nitrogen for Corn." [Agricultural
    Systems]{.underline}, 61(1999) 69-75.

15. Pautsch, G. R., B. A. Babcock and F. Jay Breidt. "Optimal
    Information Acquisition under a Geostatistical Model." [Journal of
    Agricultural and Resource Economics]{.underline}, 24(1999): 342-366.

16. Babcock, B. A. "Conflict Between Theory and Practice in Production
    Economics: Discussion" invited in [American Journal of Agricultural
    Economics]{.underline}, 81(1999):719-721.

17. Wu, J.-J., and B. A. Babcock. The Relative Efficiency of Voluntary
    vs. Mandatory Environmental Regulations." [Journal of Environmental
    Economics and Management]{.underline}, 38(1999):158-175.

18. Babcock, B. A., and G. R. Pautsch. "Moving from Uniform to Variable
    Nitrogen Applications on Iowa Corn: Effects on Rates and Returns."
    [Journal of Agricultural and Resource Economics]{.underline},
    23(1998):385-400.

19. Hennessy, D., and B. A. Babcock. "Information, Flexibility, and
    Value Added." [Information Economics and Policy]{.underline},
    10(1998) 431-449.

20. Fleming, R. A., B. A. Babcock, and E. Wang. "Resource or Waste? The
    Economics of Swine Manure Storage and Management." [Review of
    Agricultural Economics]{.underline}, 20(1998) 96-113.

21. Wu, J., and B. A. Babcock. "The Choice of Tillage, Rotation, and
    Soil Testing Practices: Economic and Environmental Implications."
    [American Journal of Agricultural Economics]{.underline}, 80(1998)
    494-511.

22. Hennessy, D., B. A. Babcock, and D. Hayes. "The Budgetary and
    Producer Welfare Effects of Revenue Assurance," [American Journal of
    Agricultural Economics]{.underline}, 79(August 1997) 1024-1034.

23. Babcock, B. A., P. G. Lakshminarayan, J. Wu, and D. Zilberman.
    "Targeting Tools for the Purchase of Environmental Amenities." [Land
    Economics]{.underline}, 73(1997):325-339.

24. Wu, J., and B. A. Babcock. "Contract Design for the Purchase of
    Environmental Goods from Agriculture." [American Journal of
    Agricultural Economics]{.underline}, 78(1996):935-945.

25. Pautsch, G. R., B. A. Babcock, C. P. Baumel. "Estimating the Value
    of Guaranteed Rail Service." [Journal of Transportation Research
    Forum]{.underline}, 36(1996):59-73.

26. Babcock, B. A., J. Wu, P. G. Lakshminarayan and D. Zilberman. "The
    Economics of a Public Fund for Environmental Amenities." [American
    Journal of Agricultural Economics,]{.underline} 78(1996):961-971.

27. Babcock, B. A., A. L. Carriquiry, and H. S. Stern. "Evaluation of
    Soil Test Information in Agricultural Decision Making." [Applied
    Statistics]{.underline}, 45(1996):447-461.

28. O'Brien, D., M. Hayenga, and B. A. Babcock. "Deriving Forecast
    Probability Distributions of Harvest-Time Corn Futures Prices."
    [Review of Agricultural Economics]{.underline}, 18(1996):167-180.

29. Babcock, B. A., and D. Hennessy. "Input Demand Under Yield and
    Revenue Insurance." [American Journal of Agricultural
    Economics]{.underline}, 78(1996):416-27.

30. Wu, J., and B. A. Babcock. "Optimal Design of a Voluntary Green
    Payment Program under Asymmetric Information." [Journal of
    Agricultural and Resource Economics]{.underline}, 20(1995):316-327.

31. Babcock, B. A., and J. F. Shogren. "The Cost of Risk in
    Agriculture," [Agricultural Economics]{.underline},
    12(1995):141-150.

32. Lence, S., and B. A. Babcock. "Flexibility, Endogenous Risk, and the
    Protection Premium." [Theory and Decision]{.underline},
    38(1995):29-50.

33. Babcock, B. A., and A. M. Blackmer. "The *Ex Post* Relationship
    between Growing Conditions and Nitrogen Fertilizer Levels." [Review
    of Agricultural Economics]{.underline}, 16(1994):441-450.

34. Foster, W. E., and B. A. Babcock. "Commodity Policy, Price
    Incentives, and the Growth in Per-Acre Yields." [Journal of
    Agricultural and Applied Economics]{.underline}, 25(1993):253-265.

35. Babcock, B. A., W. E. Foster, and D. L. Hoag. "Land Quality and
    Diversion Decisions under U.S. Commodity Programs." [Review of
    Agricultural Economics]{.underline}, 15(1993):467-476.

36. Babcock, B. A., E. K. Choi, and E. Feinerman. "Risk and Probability
    Premiums for CARA Utility Functions." [Journal of Agricultural and
    Resource Economics]{.underline}, 18(1993):17-24.

37. Hoag, D. L., B. A. Babcock and W. E. Foster. "Field-Level
    Measurements of Land Productivity and Program Slippage." [American
    Journal of Agricultural Economics]{.underline}, 75(1993):181-189.

38. Babcock, B. A., and A. M. Blackmer. "The Value of Reducing Temporal
    Input Nonuniformities." [Journal of Agricultural and Resource
    Economics]{.underline}, 17(1992):335-347.

39. Babcock, B. A. "The Effects of Uncertainty on Optimal Nitrogen
    Applications." [Review of]{.underline} [Agricultural
    Economics]{.underline}, 14(1992):271-280.

40. Babcock, B. A., and W. E. Foster. "Economic Rents under Supply
    Controls with Marketable Quota." [American Journal of Agricultural
    Economics]{.underline}, 74(1992):630-637.

41. Babcock, B. A., E. Lichtenberg, and D. Zilberman. "Impact of Damage
    Control and Quality of Output: Estimating Pest Control
    Effectiveness." [American Journal of Agricultural
    Economics]{.underline}, 74(1992):163-172.

42. Foster, W. E., and B. A. Babcock. "Producer Welfare Consequences of
    Regulating Chemical Residues on Agricultural Crops: Maleic Hydrazide
    and Flue‑Cured Tobacco." [American Journal of Agricultural
    Economics]{.underline}, 73(1991):1224-1232.

43. Babcock, B. A., and W. E. Foster. "Measuring the Contribution of
    Plant Breeding to Crop Yields: Flue‑Cured Tobacco, 1954 ‑ 1987."
    [American Journal of Agricultural Economics]{.underline},
    73(1991):850-859.

44. Babcock, B. A. "Acreage Decisions under Marketing Quotas and Yield
    Uncertainty." [American Journal of Agricultural
    Economics]{.underline}, 72(1990):958-965.

45. Babcock, B. A., C. A. Carter, and A. Schmitz. "The Political Economy
    of U. S. Wheat Legislation." [Economic Inquiry]{.underline},
    28(1990):335‑352.

46. Babcock, B. A. "The Value of Weather Information in Market
    Equilibrium." [American Journal of Agricultural
    Economics]{.underline}, 72(1990):63‑72.

47. Foster, W. E., and B. A. Babcock. "The Effect of Government Policy
    on Flue‑Cured Tobacco Yields." [Tobacco Science]{.underline},
    34(1990):4‑8.

48. Babcock, B. A., and A. Schmitz. "Look for the Hidden Costs: Why
    Direct Subsidy Can Cost Us Less (And Benefit Us More) than a
    \'No‑Cost\' Trade Barrier." [Choices]{.underline}, 4th
    Quarter, 1986. Also included in [The Best of Choices:
    1986-1996]{.underline}, published by the AAEA.

49. Babcock, B. A., J. A. Chalfant, and R. N. Collender. "Simultaneous
    Input Demands and Land Allocation in Agricultural Production under
    Uncertainty." [Western Journal of Agricultural
    Economics]{.underline}, 12(1987)207‑215.

50. Babcock, B. A., M. E. Rister, R.D. Kay, and J. A. Wallers.
    "Identifying Least‑Cost Sources of Required Fertilizer Nutrients."
    [American Journal of Agricultural Economics]{.underline},
    66(1984):385‑391.

*Books Edited*

Babcock, B. A., R. W. Fraser, and J. N. Lekakis. [Risk Management and
the Environment: Agriculture in Perspective]{.underline}. Kluwer
Academic Publishers. 2003.

**Grants Activity:**

Co-PI: *Use of Weather Derivative for Underserved Crops.* \$220,000.
2003 --USDA-FCIC.

PI: *Revenue Insurance for Cattle and Hog Producers*. \$387,311, 2002
USDA-FCIC.

Co-PI: *Agricultural Marketing Resource Center*. \$5,000,000. 2001 USDA.

PI: *Livestock Insurance*. \$135,000, 2000. Iowa Department of Economic
Development, IGF Insurance Company, Iowa Farm Bureau Mutual Insurance
Company, American Agrisurance, Inc.

PI. *Cotton Exports to China*. \$96,462, 2000. USDA-NRI.

PI: *Economic Refuge Recommendations for Multiple Toxin Bt Corn and an
Assessment of Insurance Incentives for the Voluntary Adoption of Refuge
Recommendation*. \$18,000, with Richard Hellmich. 1998.

PI: *Baseline Estimates of Carbon Supply from Agricultural Soils*,
USDA-NRCS. \$50,000, 1998.

Co-PI: *An Economic Evaluation of Refuge for Resistance Management in Bt
Corn,* Monsanto, \$35,000 with Terry Hurley and Richard Hellmich. 1998.

**Consulting Projects**

American Agrisurance. 2002

Re-rating of Group Risk Income Protection

Asgrow Seed Company. 1995 to 1998

Seed inventory management calculator

NAU Insurance Company. 2003

Rating of GRIP-HRO

Cargill, Inc. 1999 to 2002.

Rating of Performance 90

Reinsurance Work

IGF Insurance Company. 1998 to 2001

Rating of Group Risk Income Protection

Agricultural Revenue Interruption Insurance

Sugar Beet Revenue

Timber Coverage

Iowa Farm Bureau Mutual Insurance Company. 1997 to 1998.

Rating of Revenue Assurance

American Farm Bureau Insurance Services. 1998 to 2003

Rating of Revenue Assurance

CNA Agriculture. 1998

Rating of AMPLE Yield Plus and AMPLE Price Plus

Steve Silveus Insurance Services, 2000.

Rating of Area Yield

Monsanto

Analysis of Roundup Ready soybeans and the environment

American Agrisurance and Iowa Farm Bureau Mutual Insurance Company

Rating and product development of Livestock Gross Margin product

Pew Center for Climate Change

Policy brief on agriculture's contribution to mitigating global warming

United States Department of Agriculture

Expert Reviewer for Federal Crop Insurance Corporation

**\
**

**Dermot J. Hayes**

**Pioneer Chair in Agribusiness**

**Iowa State University**

**Ames, IA 50010-9802**

**Work: (515) 294-6185**

**Home: (515) 233-4309**

**EDUCATION**:

UNIVERSITY OF CALIFORNIA, BERKELEY

Ph.D., 1986

Major Field: International Trade

Minor: Comparative Economic Systems

UNIVERSITY OF CALIFORNIA, BERKELEY

Masters in Agricultural Economics, June 1982

Fields: Econometrics, Economic Theory

UNIVERSITY COLLEGE, DUBLIN

First Class Honors in Agricultural Economics, June 1981

Fields: Agricultural Economics

Awards:

Scholarship for 1st place in class of 80 in 1978, 25 in 1979, and 25 in
1980

1990 ISU Livestock Service Award, sponsored by Walnut Grove

**WORK HISTORY**:

> 2001-present Leader Policy Task Force, Plant Science Institute, ISU
>
> 1999-present Pioneer Chair in Agribusiness, Iowa State University
>
> 1999-present Professor of Finance, Iowa State University
>
> 1996-present Professor of Economics, Iowa State University
>
> 1991-1996 Associate Professor of Economics, Iowa State University
>
> 1986-1991 Assistant Professor of Economics, Iowa State University
>
> 1990-1998 Leader, Trade and Agricultural Policy Division,
>
> Center for Agricultural and Rural Development
>
> 1988-2000 Assistant Director, Meat Export Research Center
>
> 1981-1985 Research Assistant, University of California, Berkeley
>
> Fall 1984 Teaching Assistant, University of California, Berkeley
>
> Papers Published in Peer-Reviewed Journals
>
> H. Scott Hurd, Stephanie Doores, Dermot Hayes, Alan Mathew, John
> Maurer, Peter Silley, Randall S. Singer, and Ronald N. Jones "The
> Public Health Consequences of Macrolide Use in Food Animals: A
> Semi-Quantitative Risk Assessment" Forthcoming in the *Journal of Food
> Protection*.
>
> Babcock, Bruce A., Chad E. Hart and Dermot J. Hayes "Actuarial
> Fairness of Crop Insurance Rates with Constant Rate Relativities".
> Forthcoming in the *American Journal of Agricultural Economics.*

# 

# Hayes, Dermot J., and Helen H. Jensen, "Lessons from the Danish Ban on Feed-Grade Antibiotics," *Choices* Fall 2004*.*

# 

# Hayes, Dermot J., Sergio H. Lence, and Andrea Stoppa, "Farmer-Owned Brands?" Forthcoming in *Agribusiness: an International Journal.*

# 

# Lence, Sergio H., and Dermot J. Hayes. "Impact of Biotech Grains on Market Structure and Societal Welfare," *AgBioforum* Vol. 5 (3), 2002.

# 

# Hayes, Dermot J., Sergio H. Lence, and Chuck Mason, "Could the Government Manage Its Exposure to Crop Insurance Risk?" Forthcoming in *Agricultural Finance Review.* 

# 

# Mason, Chuck, Dermot J. Hayes, and Sergio H. Lence, "Systemic Risk in U.S. Crop Reinsurance Programs," pp. 23-39 *Agricultural Finance Review*, Vol. 63 (1), Spring 2003. 

# Hayes, Dermot, and Sergio Lence, "[**Farmer-Owned Brands?**](http://intranet.econ.iastate.edu/publications/entry.asp?t=bpcard&a=edit&pid=10053) *Choices* Fall 2002.

# 

# Fox, John, Dermot Hayes, and Jay Shogren, "[**Consumer Preferences for Food Irradiation: How Favorable and Unfavorable Descriptions Affect Preferences for Irradiated Pork in Experimental Auctions**](http://intranet.econ.iastate.edu/publications/entry.asp?t=ar&a=edit&pid=5207)," *Journal of Risk and Uncertainty* Vol. 24 (1), 2002, pp. 75-95.

# 

# Hayes, Dermot, John Fox, and Jason Shogren, "[**Experts and Activists: How Information Affects the Demand for Food Irradiation**](http://intranet.econ.iastate.edu/publications/entry.asp?t=ar&a=edit&pid=10105)," *Food Policy* Vol. 27 (2), 2002, pp. 185-193.

# 

# Hayes, Dermot, Helen Jensen, and Jay Fabiosa, "[**Technology Choice and the Economic Effects of a Ban on the Use of Antimicrobial Feed Additives in Swine Rations**](http://intranet.econ.iastate.edu/publications/entry.asp?t=ar&a=edit&pid=5177)," *Journal of Food Control* Vol. 13 (2), March 2002, pp. 97-101.

# 

# Shogren, Jason, Dermot Hayes, John Fox, and Todd Cherry, "[**Auctions 101: Lessons from a Decade in the Lab. What Am I Bid for \...Safer Food?"**](http://intranet.econ.iastate.edu/publications/entry.asp?t=ar&a=edit&pid=10106) *Choices*, Spring 2002, pp. 16-21.

# 

# Lence, Sergio H., and Dermot J. Hayes, "U.S. Farm Policy and the Variability of Commodity Prices and Farm Revenues," *American Journal of Agricultural Economics* Vol. 84 (2), May 2002, pp. 350-351.

# 

# Hart, Chad, Bruce Babcock, and Dermot Hayes, "Livestock Revenue Insurance," *Journal of Futures Markets* Vol. 21 (6), pp. 553-580.

# 

# Hayes, Dermot, Helen Jensen, Lennart Backstrom, and Jay Fabiosa, "Economic Impact of a Ban on the Use of Over the Counter Antibiotics in U.S. Swine Rations," *International Food and Agribusiness Management Review,* Vol. 3, 2001.

# 

# Hennessy, David A., and Dermot Hayes, "Competition and Tying in Agri Chemical and Seed Markets," *Review of Agricultural Economics* Vol. 22 (2), June 2000, pp. 389-406.

# 

# Shogren, Jason F., John A. List, and Dermot J. Hayes, "Preference Learning in Consecutive Experimental Auctions," *American Journal of Agricultural Economics,*" Vol. 82 (4), November 2000, pp. 1016-1021.

# 

# Fuller, Frank H., and Dermot J. Hayes, "Reconciling Chinese Meat Production and

# Consumption Data," *Economic Development and Cultural Change*, Volume 49 (1), October 2000, pp. 23-45.

# 

# Shogren, Jason F., John Fox, Dermot Hayes, and Jutta Roosen, "Observed Choices for Food Safety in Retail, Survey and Auction Markets," *American Journal of Agricultural Economics* Vol. 81 (5), 1999, pp. 1192-1199.

# 

# Hayes, Dermot J. "China's Role in World Livestock and Feed-Grain Markets," *Choices* First Quarter, 1999.

# 

# Hayes, Dermot J., "Costs of Eliminating Subtherapeutic Use of Antibiotics," In *The Use of Drugs in Food Animals: Benefits and Risks.* National Academy Press, Washington, D.C., 1999.

# 

# Kyun, Kim Tae, and Dermot Hayes, "Input Demand and Producer Welfare Effects of Crop Revenue Insurance Schemes," *Journal of Rural Development* No. 22, Summer 1999, pp. 81-95. 

# 

# Wang, Qingbin, Frank Fuller, Catherine Halbrendt, and Dermot J. Hayes, "Chinese Consumer Demand for Animal Products and Implications for U.S. Pork and Poultry Exports," *Journal of Agricultural and Applied Economics*, Vol. 30, July 1998, pp. 127-140.

# 

# Fox, John A., Dermot J. Hayes, Jason Shogren, and James B. Kliebenstein, "CVM-X: Calibrating Contingent Values with Experimental Auction Markets," *American Journal of Agricultural Economics*, August 1998, pp. 455-465.

# 

# Lence, Sergio, and Dermot J. Hayes, "The Forward-Looking Competitive Firm Under Uncertainty," *American Journal of Agricultural Economics* May 1998, pp. 303-312.

# 

# Hennessy, David A., Bruce A. Babcock, and Dermot J. Hayes, "The Budgetary and Resource Allocation Effects of Revenue Assurance," *American Journal of Agricultural Economics*, Vol. 79, August 1997, pp. 1024-1034.

# 

# Shogren, Jason F., and Dermot J. Hayes, "Resolving Differences in Willingness to Pay and Willingness To Accept: Reply," *American Economic Review*, March 1997, pp. 241-244.

# 

# Fox, John A., Dermot J. Hayes, Jason F. Shogren, and James B. Kliebenstein, "Experimental Methods in Consumer Preference Studies," *Journal of Food Distribution Research,* Vol. 27, July 1996, pp. 1-7.

# 

# Hayes, Dermot J., Jason F. Shogren, John A. Fox, and James B. Kliebenstein, "Test Marketing New Food Products Using a Multi-Trial Nonhypothetical Experimental Auction with Market Discipline," *Journal of Psychology and Marketing*, Vol. 13 (4) July 1996, pp. 365-379.

# 

# Hayes, Dermot J., and Sergio H. Lence, "Optimal Hedging Under Forward-Looking Behavior," *Economic Record*, Vol. 71 (215), December 1995, pp. 329-342.

# 

# Lence, Sergio H., and Dermot J. Hayes. "Land Allocation in the Presence of Estimation Risk." *Journal of Agricultural and Resource Economics*, Vol. 20 (1), July 1995, pp. 49-62.

# 

# Hayes, Dermot J., Alexander Kumi, and Stanley R. Johnson, "Trade Impacts of Soviet Reform: A Heckscher-Ohlin-Vanek Approach," *Review of Agricultural Economics*, Vol. 17, May 1995, pp. 131-145.

# 

# Fox, John A., Brian L. Buhr, Jason F. Shogren, James B. Kliebenstein, and Dermot J. Hayes. "A Comparison of Preferences for Pork Sandwiches Produced from Animals With and Without Somatotropin Administration." *Journal of Animal Science,* Vol. 73, 1995, pp. 1048-1054.

# 

# Lence, Sergio H., Dermot J. Hayes, and William H. Meyers, "The Forward Looking Firms in the Very Short Run," *American Journal of Agricultural Economics*, Vol. 77, 1995, pp. 922-934.

# 

# Sakong, Yong, and Dermot J. Hayes, "Expected Utility Maximization with Truncated Distributions: An Application of the Mean-Value Theorem." *International Economic Journal*, Vol. 9 (3), Autumn 1995.

# 

# Hayes, Dermot J., Jason F. Shogren, Seung Youll Shin, and James B. Kliebenstein, "Valuing Food Safety in Experimental Auction Markets," *American Journal of Agricultural Economics*, Vol. 77, February 1995, pp. 40-53.

# 

# Shogren, Jason F., John A. Fox, Dermot J. Hayes, and James B. Kliebenstein, "Bid Sensitivity and the Structure of the Vickrey Auction," *American Journal of Agricultural Economics*, Vol. 76, December 1994, pp. 1089-1095.

# 

# Jensen, Helen J., Steven W. Voight, and Dermot J. Hayes, "Measuring International Competitiveness in the Pork Sector," *Agribusiness: An International Journal*, Vol. 11 (2), 1995, pp. 169-177.

# 

# Fox, John A., Dermot J. Hayes, James B. Kliebenstein, and Jason F. Shogren, "Consumer Acceptability of Milk from Cows Treated with Bovine Somatotropin," *Journal of Dairy Science,* 77, 1994, pp. 703-7.

# 

# Lence, Sergio H., Yong Sakong, and Dermot J. Hayes, "Multiperiod Production with Forward and Option Markets," *American Journal of Agricultural Economics,* Vol. 76, May 1994, pp. 286-95.

# 

# Bullock, David W., and Dermot J. Hayes, "The Private Value of Having Access to Derivative Securities: An Example Using Commodity Options," *International Review of Economics and Finance,* Vol. 2 (3), 1993, pp. 223-49.

# 

# Sakong, Yong, Dermot J. Hayes, and Arne Hallam, "Hedging Production Risk with Options," *American Journal of Agricultural Economics,* Vol. 75, May 1993, pp. 408-15.

# 

# Sankey, Lee, Dermot J. Hayes, and Roxanne L. Clemens, "A Comparative Analysis of Regional Production Costs of Fed Beef Produced for the U.S. and Japanese Markets." *Journal of Agribusiness,* Vol. 1 (11), Spring 1993, pp. 25-50.

# 

# Lence, Sergio H., and Dermot J. Hayes, "The Empirical Minimum-Variance Hedge," *American Journal of Agricultural Economics,* Vol. 76, February 1994, pp. 94-104.

# 

# Buhr, Brian L., Dermot J. Hayes, Jason F. Shogren, and James B. Kliebenstein, "Valuing Ambiguity: The Case of Genetically Engineered Growth Enhancers." *Journal of Agricultural and Resource Economics* Vol. 18 (2), 1993, pp. 175-84.

# 

# Shogren, Jason F., Seung Y. Shin, Dermot J. Hayes, and James B. Kliebenstein, "Resolving Differences in Willingness to Pay and Willingness to Accept," *American Economic Review*, Vol. 84 (1), March 1994, pp. 255-70.

# 

# Lence, Sergio, and Dermot J. Hayes, "Parameter-Based Decision Making Under Estimation Risk: An Application to Futures Trading," *Journal of Finance*, Vol. 49 (1), March 1994, pp. 345-57.

# 

# Sakong, Yong, and Dermot J. Hayes, "Testing the Stability of Preferences: A Nonparametric Approach." *American Journal of Agricultural Economics,* Vol. 75, May 1993, pp. 269-77.

# 

# Shin, Seung-Youll, James Kliebenstein, Dermot J. Hayes, and Jason F. Shogren, "Consumer Willingness to Pay for Safer Food Products," *Journal of Food Safety,* Vol. 13, 1992, pp. 51-59.

# 

# Hayes, Dermot J., and Evert Van der Sluis, "An Assessment of the 1988 Japanese Beef Market Access Agreement on Beef and Feed-Grain Markets---Response," *Review of Agricultural Economics,* Vol. 14 (2), 1992, pp. 333-36.

# 

# Lence, Sergio H., Dermot J. Hayes, and William H. Meyers, "Futures Markets and Marketing Firms: The U.S. Soybean-Processing Industry," *American Journal of Agricultural Economics,* 74 (3), 1992, pp. 716-25.

# 

# Wahl, Thomas I., Dermot J. Hayes, and S.R. Johnson, "Impacts of Liberalizing the Japanese Pork Market," *Journal of Agricultural and Resource Economics,* Vol. 17 (1), 1992, pp. 121-37.

# 

# Hayes, Dermot J., Thomas I. Wahl, and Stanley R. Johnson, "A Proposal for the Reduction of Domestic Price Variability during the Phase-In Period of Trade Liberalization," *Agricultural Economics,* Vol. 7, 1992, pp. 55-64.

# 

# Bullock, David W., and Dermot J. Hayes, "Speculation and Hedging in Commodity Options: A Modification of Wolf's Portfolio Model," *Journal of Economics and Business,* Vol. 44, 1992, pp. 201-21.

# 

# Kim, Tae-Kyun, Dermot J. Hayes, and J. Arne Hallam, "Technology Adoption under Price Uncertainty." *Journal of Development Economics,* Vol. 38, 1992, pp. 245-53.

# 

# Kim, Tae-Kyun, Dermot J. Hayes, and C. Phillip Baumel, "The Factor Bias of Technical Change under Production Uncertainty," *Journal of Rural Development,* Vol. 14, 1991, pp. 79-90.

# 

# Hayes, Dermot J., Adrienne Erbach, Helen H. Jensen, and John R. Green, "Measuring International Competitiveness in the Beef Sector," *Agribusiness: An International Journal,* Vol. 7 (4), 1991, pp. 357-74.

# 

# Van der Sluis, Evert, Dermot J. Hayes, and Greg Hertzler, "An Assessment of the 1988 Japanese Beef Market Access Agreement on Beef and Feed-Grain Markets," *Review of Agricultural Economics,* Vol. 13 (1), 1991, pp. 45-58.

# 

# Hayes, Dermot J., Hyungdo Ahn, and C. Phillip Baumel, "Meat Demand in South Korea: A Systems Estimate and Policy Projections, *Agribusiness: An International Journal,* Vol. 1 (4), 1991.

# 

# Wahl, Thomas I., Dermot J. Hayes, and Gary W. Williams, "Dynamic Adjustment in the Japanese Beef Industry under Beef Import Liberalization," *American Journal of Agricultural Economics,* Vol. 73 (1), 1991, pp. 45-78.

# 

# Hayes, Dermot J. "The Economics of Feeding, Processing, and Marketing Animals for Export," *Canadian Journal of Agricultural Economics,* 38, 1990, pp. 899-909.

# 

# Gautam, Virender G., and Dermot J. Hayes, "An Assessment of the Indian Beef Industry," *Quarterly Journal of International Agriculture,* Vol. 29 (3), 1990, pp. 274-90.

# 

# Wahl, Thomas I., and Dermot J. Hayes, "Demand System Estimation with Upward-Sloping Supply," *Canadian Journal of Agricultural Economics,* Vol. 38, March 1990, pp. 107-22.

# 

# Hayes, Dermot J., Thomas I. Wahl, and Gary W. Williams, "Testing Restrictions on a Model of Japanese Meat Demand," *American Journal of Agricultural Economics,* Vol. 72 (3), 1990, pp. 556-66.

# 

# Hayes, Dermot J., "The Offal Trade in the United States and the European Community: Consumption Patterns, Valorization, Hormone Use, and Policy Projections," *Agribusiness: An International Journal,* Vol. 5 (6), 1989, pp. 633-55.

# 

# Wahl, Thomas I., Gary W. Williams, and Dermot J. Hayes, "The 1988 Japanese Beef Market Access Agreement: A Forecast Simulation Analysis," *Agribusiness: An International Journal,* Vol. 5 (4), 1989, pp. 347-60.

# 

# Hayes, Dermot J., "Incorporating Credit in Demand Analysis," *Journal of Consumer Affairs,* Vol. 23, Summer 1989, pp. 1-20.

# 

# Hayes, Dermot J., and Andrew Schmitz, "Hog Cycles and Countercyclical Production Response," *American Journal of Agricultural Economics,* Vol. 69, 1987, pp. 762-70.

# 

#  

***Chad E. Hart***

**Address**

Work: Home:

569 Heady Hall 5112 Todd Drive

Department of Economics Ames IA 50014

Iowa State University (515) 292-6805

Ames IA 50011-1070

\(515\) 294-9911

chart@iastate.edu

**Education**

Iowa State University, Ames, Iowa

> Doctor of Philosophy, May 1999
>
> Co-majors: Economics and Statistics
>
> Fields of Interest: Econometrics, Consumption and Demand Analysis, and
> International Economics
>
> Major Professors: Dr. Sergio H. Lence and Dr. Alicia L. Carriquiry
>
> Dissertation Topic: Analysis of agricultural investment and the
> influence of internal financial variables.

Southwest Missouri State University, Springfield, Missouri

> Bachelor of Science, May 1991
>
> Major: Economics
>
> Minors: Astronomy, History, and Mathematics

**Experience**

Scientist, March 2002 -- present

Center for Agricultural and Rural Development

Iowa State University, Ames, Iowa

> Under the direction of Dr. Bruce A. Babcock.
>
> Maintain the CARD loan deficiency payment web site and conduct
> empirical research in agricultural policy and crop insurance.
>
> Duties include presenting analysis results to Congressional staff;
> writing grant proposals; obtaining, organizing, and analyzing data;
> writing econometric programs using SAS, TSP, S-plus, and C++; forming
> simulation spreadsheet models; and presenting material over the
> Internet.

U.S. Policy and Insurance Specialist, May 1996 - present

Food and Agricultural Policy Research Institute

Iowa State University, Ames, Iowa

> Under the direction of Dr. Bruce A. Babcock and Dr. John Beghin.
>
> Maintain the FAPRI crop insurance model and conduct empirical research
> in agricultural policy and crop insurance.
>
> Duties include presenting analysis results to Congressional staff;
> writing grant proposals; obtaining, organizing, and analyzing data;
> writing econometric programs using SAS, TSP, S-plus, and C++; forming
> simulation spreadsheet models; and presenting material over the
> Internet.

Associate Scientist, March 2000 - March 2002

Center for Agricultural and Rural Development

Iowa State University, Ames, Iowa

> Under the direction of Dr. Bruce A. Babcock.
>
> Conduct empirical research in agricultural policy and crop insurance.
>
> Duties include obtaining, organizing, and analyzing data; writing
> econometric programs using SAS, TSP, S-plus, and C++; forming
> simulation spreadsheet models; and presenting material over the
> Internet.

Consultant, May 1996 - August 1996

Farm Bureau Financial Services, West Des Moines, Iowa

> With Dr. Dermot J. Hayes and Dr. Bruce A. Babcock, Department of
> Economics, Iowa State University, Ames, Iowa.
>
> Conducted empirical research for the revenue assurance crop insurance
> proposal.
>
> Duties included obtaining, organizing, and analyzing data; and writing
> econometric programs using SAS (pc based) and TSP (pc based).
>
> Co-authored the Revenue Assurance crop insurance proposal.

**Publications**

*Articles in Academic Journals*

(with Bruce A. Babcock and Dermot J. Hayes). "Actuarial Fairness of Crop
Insurance Rates with Constant Rate Relativities." *American Journal of
Agricultural Economics*, forthcoming.

(with Sergio H. Lence). "Financial Constraints and Farm Investment: A
Bayesian Examination." *Journal of Business and Economic Statistics*,
forthcoming.

(with Bruce A. Babcock). "U.S. Farm Policy and the WTO: How Do They
Match Up?" *The Estey Centre Journal of International Law and Trade
Policy* 3(2002):119-139.

(with Bruce A. Babcock and Dermot J. Hayes). "Livestock Revenue
Insurance." *The Journal of Futures Markets* 21(2001):553-580.

(with Sergio H. Lence). "Index Models and Land Allocation Reconsidered."
*Canadian Journal of Agricultural Economics* 45(1997):267-284.

*Articles Submitted to Academic Journals*

(with Dermot J. Hayes and Bruce A. Babcock). "Insuring Eggs in Baskets."
Submitted to the *American Journal of Agricultural Economics*, July
2003.

*Book Chapters*

(with William H. Meyers and Michael D. Helmar). "Modelling the Outcomes
of CAP Reform." Chapter 5 in *The Reform of the Common Agricultural
Policy*. Edited by K. A. Ingersent, A. J. Rayner, and R. C. Hine.
London: Macmillan Press. 1998.

*Proceedings Papers*

(with Samarendu Mohanty and Darnell B. Smith). "Estimating Expected Per
Acre Indemnities of Yield and Revenue Insurance Products." *Proceedings
of the NCR-134 Conference: Applied Commodity Price Analysis,
Forecasting, and Market Risk Management*. B. Wade Brorsen, editor,
Oklahoma State University, Stillwater, Oklahoma, 1997, p. 84-93.

(with Darnell B. Smith and John R. Kruse). "The Dynamics of Flex."
*Proceedings of the NCR-134 Conference: Applied Commodity Price
Analysis, Forecasting, and Market Risk Management*. B. Wade Brorsen,
editor, Oklahoma State University, Stillwater, Oklahoma, 1995, p. 78-96.

*Other Articles and Papers*

Also numerous non-peer-reviewed articles including 19 *Iowa Ag Review*
articles, 9 CARD Working Papers, and 7 CARD Briefing Papers.

**Presentations**

Several presentations to Congressional staff members on FAPRI analysis.

"A Review of Livestock Insurance Programs in the United States."
Presented at the American Agricultural Economics Association Annual
Meetings, Montreal, Canada, July 2003.

"A Review of U.S. Farm Programs for Risk Management." Presented at the
American Agricultural Economics Association Annual Meetings, Montreal,
Canada, July 2003.

"Livestock Insurance: Existing Products and Future Research." Presented
at the Livestock Insurance Products International Conference and Forum,
USDA-APHIS and Colorado State University, Fort Collins, Colorado,
November 2002.

"WTO Probabilities and the 2002 Farm Bill." Presented at the American
Agricultural Economics Association Annual Meetings, Long Beach,
California, July 2002.

"FAPRI\'s Role in the 2002 Farm Bill." Presented at the American
Agricultural Economics Association Annual Meetings, Long Beach,
California, July 2002.

"U.S. Farm Policy and the WTO." Presented at the Congressional Research
Service, Washington, D.C., May 2002.

"The Future of U.S. Farm Policy." Presented at the 2002 Commodity
Classic, Nashville, Tennessee, February 2002.

"U.S. Farm Policy and the WTO: How Do They Match Up?" Presented at the
Southern Agricultural Economics Association Meetings, Orlando, Florida,
February 2002.

"The 2000 FAPRI Crop Insurance Baseline." Presented at the Food and
Agricultural Policy Research Institute Baseline Review, Kansas City,
Missouri, January 2000.

"Net Farm Income Impacts of Alternative Risk Management Bills."
Presented to the staff of the U.S. Senate Agriculture Committee,
Washington, D.C., October 1999.

"The FAPRI Crop Insurance Baseline." Presented at the Food and
Agricultural Policy Research Institute Baseline Review, Kansas City,
Missouri, January 1999.

"Estimating Crop Losses and Indemnity Payments." Presented at the
American Agricultural Economics Association Annual Meetings, Salt Lake
City, Utah, August 1998.

"Crop Insurance Issues." Presented at the Food and Agricultural Policy
Research Institute Baseline Review, Kansas City, Missouri, January 1997.

"Computing Average Per Acre Indemnity Payments for Corn in Iowa."
Presented at the Federal Crop Insurance Corporation, Kansas City,
Missouri, September 1996.

**Consulting**

AgRisk Management

> Rating and Maintainence of Revenue Assurance, 2001-present
>
> Rating of Timber Coverage, 2001-2002
>
> Rating of Sugar Beet Revenue, 2000-2001
>
> Construction of Farm Bill Calculator, 2002
>
> Review of Corn Silage Option, 2003
>
> Review of Crop1 Insurance, 2003
>
> Review of Sugar Beet Stage Option, 2003

FarmRisk

> Rating and Maintainence of Livestock Gross Margin, 2000-present
>
> Construction and Maintainence of Hog Rater Program, 2002
>
> Feasibility Study on Buckwheat, 2003

**Grants**

Co-Principal Investigator: FeedRisk OnLine: A Risk Management Tool for
Livestock Producers. \$190,687. USDA-RMA, 2003.

**Reviews**

Articles reviewed for *American Journal of Agricultural Economics* and
*Western Economics Forum*.

**Honors**

USDA Secretary\'s Group Honor Award for Excellence (as part of FAPRI),
2002

T. W. Schultz Fellowship Award, Fall 1991

Presidential Scholarship, 1987-1991

Missouri CBHE Scholarship, 1987-1991

Omicron Delta Epsilon (International Economics Honor Society)

**Todd Campbell**

*Position title and description:*

Programmer and computer administrator.

Design and write software applications, databases and web pages.

*Brief description of previous/concurrent position title held:*

Systems Analyst

*Education:*

Bachelor of Science, May 1986, Iowa State University, Major: Computer
Science

Over the past six years, Todd has conducted programming for several crop
insurance products and produced high quality rating software.

*Work history in chronological order:*

Programmer/Analyst, Center for Agricultural and Rural Development at
Iowa State University, 1986 to present. Job duties include the design,
development, testing, and maintenance of modeling systems for the
evaluation of economic policy. Supervisor Bruce Babcock (515) 294-5764.

*Experience History:*

November 1997 to April 1998: As a consultant for AgRisk Management,
wrote crop insurance premium calculator software for Ample Yield Plus
under contract to CNA Agriculture. Supervisor Bruce Babcock (515)
292-3285

May to November 1998: As a consultant for AgRisk Management, wrote AgRI
premium calculator software for IGF Insurance Company. Supervisor Bruce
Babcock (515) 292-3285

November 1997 to present: As a consultant for AgRisk Management, wrote
RA premium calculator software for American Farm Bureau Insurance
Services, Inc. and Farm Bureau Mutual Insurance Company. Supervisor
Bruce Babcock (515) 292-3285

August 2000 to present: As a consultant for AgRisk Management, wrote
GRIP premium calculator software for IGF Insurance Company. Supervisor
Bruce Babcock (515) 292-3285

May 2002 to August 2002: Wrote Farm Bill Calculator for NCGA. Supervisor
Chad Hart (515) 292-6805

May 2002 to January 2003: Wrote Online Hog Insurance Rater for American
Farm Bureau Insurance Services, Inc. and American Agrisurance.
Supervisor Chad Hart (515) 292-6805

**Section 2. Specific Organizational Experience of FarmRisk and Key
Personnel in Last Two Years**

Short descriptions of some of the projects that FarmRisk and its key
personnel have been involved with in the last two years will demonstrate
the capabilities of FarmRisk to carry out the proposed tasks.

**LGM --** FarmRisk, Inc is part owner of Iowa Agricultural Insurance
Innovations, LLC, the company that developed and rated Livestock Gross
Margin (LGM) Insurance. FarmRisk is responsible for developing rating
methods, calculation of projected and actual gross margins, and
translation of commodity futures and options data into per-hog premiums.
The rating procedures that were developed for LGM demonstrate FarmRisk's
ability to propose new rating methods and formulae that 1) are
comprehensible by RMA staff; 2) are based on sound statistical methods
and economic logic; and 3) can pass muster with the expert reviewers of
the FCIC Board of Directors.

**GRIP-HRO --** Two of FarmRisk's key personnel, Bruce Babcock and
Dermot Hayes, worked with NAU Country Insurance Company, to develop an
optional endorsement to Group Risk Income Protection (GRIP). The
endorsement, called Group Risk Income Protection -- Harvest Revenue
Option (GRIP-HRO) was approved in October, 2003 by the Board of
Directors of the FCIC and will be sold in seven states in 2004. Babcock
and Hayes were responsible for the design and rating of the endorsement
and with working with RMA staff to streamline the implementation of the
product. Approval of this new product further demonstrates the ability
of FarmRisk's key personnel to develop rating methods and formulae that
are based on sound statistical methods that are acceptable to FCIC
expert reviews. In addition, Babcock and Hayes worked closely with RMA
staff to design the FCI-35s to ensure that GRIP-HRO premium calculations
could be easily incorporated into all RMA data systems.

**GRIP --** Babcock and Hayes also worked closely with RMA staff to
update GRIP and GRIP-HRO rates and to expand GRIP and GRIP-HRO to two
new states. The FCIC Board of Directors approved GRIP-HRO and the
expansion of GRIP on October 29, 2003. All rates and documents for GRIP
needed to be delivered to RMA staff before the end of November to meet
contract change date requirements. Babcock and Hayes delivered updated
and new rates for both GRIP and GRIP-HRO on November 20, 2003. Final
revisions to the GRIP-HRO endorsement language were delivered on
November 26, 2003. Meeting such a tight deadline demonstrates that the
key personnel of FarmRisk have the capability of dramatically ramping up
their work output to meet required deadlines without sacrificing work
quality.

**Buckwheat --** FarmRisk was a subcontractor to IGF insurance, who was
approved as a federal contractor to bid on RMA research and development
contracts. We obtained a contract to develop an insurance policy for
buckwheat. FarmRisk had the responsibility for developing crop insurance
rates for buckwheat. The difficulty with developing buckwheat insurance
rates was that there was inadequate buckwheat yield data on which to
estimate rates. The alternative was to find a related crop to buckwheat
for which insurance rates were available and to base the buckwheat rates
on the rates for the related crops. This is the path we followed with
buckwheat. The rating work that FarmRisk was asked to do by the
contractor was accepted by RMA staff. This demonstrates FarmRisk's
capability of doing contract work that is accepted by RMA.

**Rate Relativities Paper --** The paper "Actuarial Fairness of Crop
Insurance Rates Based on Constant Rate Relativities" written by Babcock,
Hart and Hayes, demonstrates that the key personnel of FarmRisk have the
technical capability to fulfill the required work tasks. The objectives
of the proposed work plan are to estimate how crop insurance rates
should change as a farmers' APH yield relative to the county reference
yield varies. As discussed in our accompanying Technical Proposal, to
accomplish this task requires a thorough understanding of the current
APH rating methods, an ability to reconcile these rating methods with a
conceptual model of the underlying data-generating mechanism that
determines how APH yields and actual yields vary across farmers, and the
ability to estimate key parameters using historical rate, yield and loss
data from RMA. These research abilities are all demonstrated in the
referred-to research paper, in which we demonstrated how APH rating
methods that adjust crop insurance rates as coverage levels change were
not consistent with the statistical underpinnings of how random yields
are generated. The proposed work is simply another dimension of the same
problem that we have already demonstrated the capability of solving. In
solving the problem, we showed that we are quite familiar with sound
statistical methods, crop insurance data, participation rates, coverage
levels, and APH rating methods. These are exactly the traits that are
required to solve the objectives of this work. The paper has been
accepted for publication in the *American Journal of Agricultural
Economics*, which is the most prestigious journal for publishing crop
insurance research.

**Response to Board Review of RA, APH and CRC --** In 2002, the Board of
Directors of FCIC funded a study to look at the underlying rate making
procedures of RA, APH, and CRC. The authors of the study (Ker, Coble,
Knight, and Goodwin) are four of the best people working in this field.
Two of FarmRisk's key personnel (Babcock and Hayes) are responsible for
ensuring that RA rates are based on sound statistical underpinning.
Thus, we were given the opportunity to review and replicate the
statistical work of this team. One part of the study used large
unit-level data sets provide by RMA that measure yields and losses. This
is the fundamental data set that FarmRisk proposes to use to help
estimate how rates should vary across farmers with different APH yields
in a county. Our review of the findings of the Ker team involved
accessing these large data sets, manipulating the data, and estimating
statistical relationships from the data. We conducted original analysis
of the data and demonstrated the sensitivity of the study's findings to
alternative assumptions. This review of the study demonstrates that
FarmRisk has the technical capability of accessing the datasets,
manipulating the data, and estimating key statistical relationships that
will be required to accomplish the objectives of the work plan.

In summary, the recent experience of FarmRisk and the key personnel of
FarmRisk shows that FarmRisk possesses the technical, intellectual, and
work volume capabilities that are required to meet the objectives of
this work project.

**Section 3. Overall Past Performance**

Below are the significant contracts that FarmRisk and its key personnel
have fulfilled over the last five years.

**Buckwheat Federal Contract**

Contract No.: 53-3151-1-00008

*Buckwheat Task Order RMA-PDD-02-005*

Project Description:

Provide background information and an insurance feasibility study on
buckwheat. Draft insurance and loss adjustment standards for buckwheat.
Calculate premium rates and price elections for a possible buckwheat
insurance product. As a subcontractor on this contract, FarmRisk
contributed to the background information and feasibility study and
created a rating methodology for buckwheat.

Period of Performance:

2003 - present

Dollar Amount:

\$19,200 to date

Client Identification:

Peter Gutgsell

AgQuest, L.L.C.

\(515\) 306-1609

pgutgsell@agquestllc.com

**Revenue Assurance**

Contract No.: *None*

Project Description:

Design and rate the Revenue Assurance insurance product for states and
crops, including coverage across several crops (whole-farm coverage).
Support submission of the product through the Risk Management Agency\'s
review and approval processes. Provide rating methodology and a
prototype rating program to crop insurance companies.

Period of Performance:

1997 -- present

Dollar Amount:

More than \$600,000

Client Identification:

Farm Bureau Mutual Insurance Company

5400 University Avenue

West Des Moines IA 50266

American Farm Bureau Insurance Services, Inc.

225 Touhy Avenue

Park Ridge IL 60068

Contracting officer:

John Bednarik/Roger Swartz

American Farm Bureau Insurance Services, Inc.

225 Touhy Avenue

Park Ridge IL 60068

\(847\) 685-8600

**Group Risk Income Protection**

Contract No.: *None*

Project Description:

Rate Group Risk Income Protection insurance product for corn and
soybeans in Illinois, Indiana, and Iowa. Support submission of the
product through the Risk Management Agency\'s review and approval
processes. Provide rating methodology and a rating program to IGF
Insurance Company. Rate expansions of GRIP in Wisconsin, Texas,
Michigan, and Ohio. Periodically update GRIP rates using new yield data
and price-yield correlations as they become available.

Period of Performance:

1998 - present

Dollar Amount:

\$100,000 for original GRIP rating work

\$85,000 for subsequent updates and expansion work

Client Identification:

For current updating work:

Richard Anderson

USDA-RMA staff

For past work:

Peter Gutgsell

AgQuest, L.L.C.

\(515\) 306-1609

pgutgsell@agquestllc.com

**AgRI**

Contract No.: *None*

Project Description:

Rate AgRI insurance product for corn and soybeans in Iowa and Illinois.
Provide rating methodology and a rating program to IGF Insurance
Company. This program provided insurance to agribusinesses against drops
in the aggregate quantity of grain produced in their business areas.

Period of Performance:

1999

Dollar Amount:

\$102,000 for original GRIP rating work

\$85,000 for subsequent updates and expansion work

Client Identification:

Steve Griffin

IGF Insurance Company

6000 Grand Avenue

Des Moines IA 50312

\(800\) 274-2766

Please note that IGF is no longer in existence and we do not have
contact information for Steve Griffin.

**AMPLE Yield Plus and Price Plus**

Contract No.: *None*

Project Description:

Rate AMPLE Yield Plus and Price Plus insurance product for several crops
in 15 midwestern states. Provide rating methodology and a rating program
to CNA.

Period of Performance:

1998

Dollar Amount:

\$320,000

Client Identification:

CNA Plaza\
Chicago, IL 60685

\(312\) 822-5000

Carol Pierce

Now with American Re-insurance

**Performance 90**

Contract No.: *None*

Project Description:

Rate the Performance 90 insurance product for corn in six midwestern
states. Provide rating structure and methodology to Cargill. Explore
reinsurance methods for the product.

Period of Performance:

1999-2002

Dollar Amount:

\$76,000 cumulative amount

Client Identification:

Cargill

PO Box 9300

Minneapolis MN 55440-9300

Frank Remley

952-742-5893

**Livestock Gross Margin**

Contract No.: *None*

Project Description:

Design and rate a new livestock insurance product. Document rating
methods and coordinate response to expert reviewers for the FCIC Board
of Directors.

Period of Performance:

2001 - present

Dollar Amount:

Approximately \$120,000 to date plus a \$125,000 research project funded
through Iowa State University

Client Identification:

Iowa Agricultural Insurance Innovations

Dale Chuha

Iowa Farm Bureau Mutual Insurance Company

5400 University Avenue

West Des Moines IA 50266

**Whole-Farm Revenue Insurance for Cattle and Hogs**

Contract No.: 01IE0831114

Partnership Agreement with FCIC

Project Description:

Develop methods for rating whole-farm revenue insurance products that
include cattle and hogs. Estimate premiums and determine the producer
willingness to pay for the insurance contract.

Period of Performance:

2002 - present

Dollar Amount:

\$352,101

Client Identification:

RMA and FCIC

Contract Officer:

Maureen Flood

USDA, RMA, RED

6501 Beacon Drive/Stop 0813/Room412

Kansas City, MO 64133-4676

**Use of Weather Station Data to Create Yield Insurance for Underserved
Commodities**

Contract No.: 02IE08310176

Partnership Agreement with FCIC

Project Description:

Develop methods to smooth weather data to accurately calculate
probabilities of particular weather events in particular locations.
Choose underserved commodities, obtain production and background
information for these commodities, and target proposed risk management
tools at these commodities. Calculate impacts of particular weather
events on the profitability of these commodities. Calculate an "optimal
hedge," i.e. the optimal amount of insurance for that producer for each
one-point movement in the weather measure, for each commodity and use
this optimal hedge analysis to propose a structure for a weather risk
management tool. Present simulation results to show that producers who
would purchase these weather products have residual risk profiles that
are poolable.

Period of Performance:

2003 - present

Dollar Amount:

\$244,188

Client Identification:

RMA and FCIC

Contract Officer:

Terrence S. Katzer

Research and Evaluation Division

Risk Management Agency, USDA

6501 Beacon Dr    STOP 0813

Kansas City, MO 64133-4676

Telephone:  (816) 926-6343, 6237

FAX:  (816) 926-7343

E-Mail:  <Terrence.Katzer@rm.fcic.usda.gov>