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Executive Summary

The evaluation's objective was to identify factors contributing to the citrus tree insurance program's poor loss experience. CFSA citrus tree insurance is available in three Texas counties. The citrus tree insurance program had the highest loss ratio (7.85) and the tenth highest net loss ($48 million) for the crops CFSA insured for the 1987 through 1991 crop years.


Producer participation in the citrus tree crop insurance program is high. Approximately 90% of the citrus tree acreage (for the three Texas counties) is covered by CFSA citrus tree insurance.

Freeze was the largest contributing factor on the loss experience. Citrus trees in Texas were severely damaged by two freezes (1983 and 1989) within the past ten years. This caused the yearly loss experience to fluctuate between total loss and no loss (high severity and low frequency). This variable loss pattern caused citrus trees to be unique from the majority of crops CFSA insures, yet CFSA uses the same catastrophic rating model for citrus trees as used in other crops with dissimilar loss patterns.

About half of the citrus trees insured have been dehorned (a process of cutting back the main limbs of the tree to a length that is not more than one-fourth the height of the tree) at least once or twice. This is an approved method to renovate an orchard and return it to production after a loss. A dehorned tree is not as structurally sound as a replacement tree. The more times a tree is dehorned the less sound it becomes. CFSA has no guideline for modifying citrus tree insurability based on dehorning. Therefore, despite how many times a tree has been dehorned, it is eligible for insurance with the same coverage as a replacement tree.

CFSA bases citrus tree coverage (amounts of insurance) on cost estimates to renovate the orchard using replacement trees. Renovating an orchard by dehorning trees costs approximately 50-90% less than it does to renovate the orchard using replacement trees (depending on the size of trees) yet CFSA indemnities are the same despite how the orchard is renovated. This causes indemnity payments to producers who dehorn rather than replace their trees to exceed the producer's actual costs.

Other topics covered in the evaluation include insurance by tree type, the value of CFSA obtaining additional tree statistics from the reporting organizations, microsprinklers, and water pouches.