Key Senators Urge USDA to Protect Crop Insurance Program

August 24, 2009

WASHINGTON (Aug. 24, 2009)—Ten U.S. Senators sent a bipartisan letter to the United States Department of Agriculture (USDA) last week urging its Risk Management Agency (RMA) to approach upcoming negotiations over the Federal Crop Insurance Program with great care.

Led by Senate Agriculture Committee Chairman Tom Harkin (D-IA) and Senator Saxby Chambliss (GA), the Committee’s top Republican, the letter was sent to precede the renegotiations over the Standard Reinsurance Agreement (SRA)—the contract responsible for governing the relationship between the USDA and the companies providing Federal Crop Insurance Program assistance to farmers.

“The Federal Crop Insurance Program is a key risk management tool for America’s farmers and ranchers,” the letter reads. “The foundation…is a fair and equitable Standard Reinsurance Agreement (SRA) achieved through substantive, mutual negotiations.”

Specifically, the letter focused on methods for determining reimbursement for administrative and operating costs, noting that RMA is expected to consider alternative approaches, but not obligated to adopt a new method. It also states that any possibilities explored should be subject to independent critique and analysis of impacts.

“Any new approach must provide fair and adequate compensation to support program delivery so that farmers and ranchers continue to have access to insurance,” the Senators observed.

In the letter, the Senators encouraged an open and transparent, back-and-forth negotiation, and asked that the RMA use the SRA negotiations as an opportunity to make improvements to the program that will benefit farmers and ranchers, such as reducing the amount of burdensome and unnecessary paperwork.

“I commend the leadership of these Senators for their ongoing commitment to a safety net without which many producers simply could not farm,” said Tim Dritz, a corn and soybean farmer from Hendricks, Minnesota. “We cannot afford to get things wrong on an insurance program that, last year alone, paid out nearly $9 billion in indemnities on both crop and revenue losses.”

Matt Huie, a cotton farmer from drought-stricken Beeville, Texas, agreed.

“It is absolutely essential to our family farm that nothing is done in this negotiation that would undermine the delivery system in states like Texas,” said Huie. “It would make the risks too great for a young farmer like myself to continue.”

“If the method for determining A&O reimbursements is mishandled, that’s going to affect delivery and access to farmers,” said Will Roehm, a Great Falls, Montana wheat farmer. “For me and other wheat growers, crop insurance is a critical part of the farm safety net, so it is important that USDA handle it with care.”

“We need to improve and grow access to quality coverage for all farmers,” said Frank Rehermann, a rice farmer from Live Oak, California. “Nothing in this negotiation should set back the main mission of crop insurance which must be to meet the risk management needs of all producers, regardless of what crop they grow or what region of the country they’re from.”

Bob Drake, a Londonderry, Ohio farmer is encouraged by the new leadership at RMA and USDA.

“The budget that came out early this year looked pretty ugly for both crop insurance and the farm bill,” Drake said. “Since then, I’ve been very impressed with the caliber of people the Administration has brought on both at RMA and in those positions with direct oversight over the crop insurance program. I think they know this program and how vital it really is.”

The letter was also signed by: Finance Committee Chairman Max Baucus (D-MT) and Ranking Member Chuck Grassley (D-IA); Budget Committee Chairman Kent Conrad (D-ND); and Senators Pat Roberts (R-KS), John Thune (R-SD), Ben Nelson (D-NE), Kay Bailey Hutchison (R-TX), and Michael Bennett (D-CO).