Parties meet tomorrow on USDA's final draft of crop insurance agreement

Farm and Ranch June 17, 2010 USDA and the crop insurance industry are meeting tomorrow to go over the government’s Final Draft Crop Insurance Agreement. The new Standard Reinsurance Agreement, or SRA, details the new terms, roles and responsibilities for both the USDA and insurance companies that participate in the Federal crop insurance program.

Agriculture Secretary Tom Vilsack says the agreement allows insurance companies to make 14.5 percent return on investment.

Vilsack: “Slightly less than what it has been in the past on average, but slightly more than what the industry generally has been recovering. By industry I mean the insurance industry has generally been recovering. So we think it is a fair balance.”

Commissions to crop insurance agents would likely be a little less than current commissions but are linked to inflation.

Vilsack says overall the agreement would save the government six billion dollars over ten years.

Vilsack: “Four billion of the six billion is dedicated to deficit reduction.”

The rest would go to expanding and improving crop insurance and adding acres to the Conservation Reserve.

The Crop Insurance Professionals Association expressed disappointment in the final draft of the five-year agreement and noted that the six billion dollar proposed cut is nearly three times as large as one overwhelmingly rejected by Congress in the 2008 Farm Bill debate for being too crippling to the safety net. The association is still hopeful some changes can be made.

I’m Bob Hoff and that’s the Northwest Farm and Ranch Report on Northwest Aginfo Net.