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NAWG and other national commodity organizations wrote Secretary of Agriculture Tom Vilsack Monday to express concerns with a draft of the Standard Reinsurance Agreement (SRA) being negotiated between USDA's Risk Management Agency (RMA) and crop insurance companies that deliver service to producers.
A number of issues are at stake in the SRA renegotiation process, which was authorized in the 2008 Farm Bill. The handling of administrative and operating, or A and O, reimbursement rates is a particularly important area that, if cut inappropriately, could affect the level of coverage and service producers experience.
NAWG and other groups have been urging the Administration and crop insurance companies to continue negotiating in good faith to come out with an arrangement that will achieve the goals of the crop insurance program, not imperil service to producers and reinvest any savings in efforts to strengthen the program.
In the letter sent this week, the groups said, in part:
“We understand that the draft SRA contemplates $4 billion in additional cuts over five years to the crop insurance program. This concerns us because last year crop insurance sustained a cut of $6.4 billion over 10 years on top of $1.7 billion in cuts to other components of the farm safety net.
“While the full impact of the cuts to crop insurance is still unknown, there is already concern that these cuts could be problematic for both producers and companies when they are fully implemented.”
The groups asserted that cuts of the magnitude being discussed should be considered by Congress rather than the Administration, and noted that Congress debated and rejected additional cuts to the program during consideration of the last budget resolution and during the 2008 Farm Bill debate.
Just last week, 26 Senators told RMA Administrator Bill Murphy that his Agency should “refrain from making deep cuts to the federal crop insurance program” as part of the process, particularly following significant cuts to the crop insurance program in the 2008 Farm Bill.
The draft under consideration was released in December, with the goal of finalizing the agreement by April 1 in order to give the companies time to sign it prior to the beginning of the 2011 reinsurance year beginning July 1. The SRA process will not affect producer premiums or programs offered, and is not intended to address policy issues such as quality loss factors and actual production history.
The letter is available in full at www.wheatworld.org/riskmanagement
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