Options In Crop Insurance
The crop insurance industry has been in an uproar over USDA’s proposed $6 billion cuts to the Standard Reinsurance Agreement (SRA) under federal crop insurance. But as of July 12, the battle is over, with USDA’s Risk Management Agency (RMA) receiving signed SRAs from all 16 private insurance companies who participated in the federal crop insurance program during the 2010 crop year. This formalizes the negotiation process that has been underway since last December. The SRA is a contract between the government and private industry that dictates terms of insurance policies for five years.
According to USDA, the new SRA is projected to achieve $6 billion in savings over the next 10 years, two-thirds of which will help pay down the federal deficit while the remaining third will support high-priority risk management and conservation programs.
“The new agreement lays the foundation for a more sustainable federal crop insurance program, reduces the federal deficit, and improves the farm safety net for producers by providing incentives for companies to sell policies in all areas so farmers across the country can access these critical risk management tools,” said Agriculture Secretary Tom Vilsack in a July 13 release. “USDA appreciates the efforts of the companies to negotiate a new agreement in good faith, with straightforward and constructive dialogue to develop an agreement that works for the companies, producers, and taxpayers.”
These cuts come in addition to the $6 billion in cuts to crop insurance sustained in the 2008 Farm Bill, some of which have yet to be implemented, including the looming problems of delayed compensation to companies and early payment of premiums by producers, according to the Crop Insurance Professionals Association (CIPA), a national organization of agents.
The Silver Lining
optimistic that we can do this.”
CIPA Concerns