Crop insurance companies offered a new reinsurance agreement

USDA Risk Management Agency Administrator Bill Murphy said June 30 that his agency has sent crop insurance companies a revised final offer of a new standard reinsurance agreement and gives the companies until July 12 to sign it. The original deadline was June 30. After a Senate Agriculture Committee hearing Murphy said that he had made concessions to the companies on the structure of the agreement, but not made any changes in the proposal to cut $6 billion in the program or to put restrictions on agent commissions.

Crop Insurers Will ‘Withstand’ Severe Subsidy Cuts

Crop insurers said late Thursday the industry and the crop insurance program will be able to “withstand” the severe cuts in subsidies imposed on the program by the Agriculture Department. “Our hands are tied. The companies have no choice but to sign this new Standard Reinsurance Agreement,” said Bob Parkerson, president of National Crop Insurance Services, which represents the 16 crop insurers involved in the program. “If they don’t, they cease operating and the safety net that America’s farmers and ranchers rely on so heavily would be disrupted,” he said.

Crop Insurers Will ‘Withstand’ Severe Subsidy Cuts

Crop insurers said late Thursday the industry and the crop insurance program will be able to “withstand” the severe cuts in subsidies imposed on the program by the Agriculture Department. “Our hands are tied. The companies have no choice but to sign this new Standard Reinsurance Agreement,” said Bob Parkerson, president of National Crop Insurance Services, which represents the 16 crop insurers involved in the program. “If they don’t, they cease operating and the safety net that America’s farmers and ranchers rely on so heavily would be disrupted,” he said.

Negotiations May be Complete, but Industry Remains Vexed By the Funding Reductions in Final SRA

FOR IMMEDIATE RELEASE
July 1, 2010

OVERLAND PARK, KAN… The crop insurance industry and the program will withstand the $6 billion reduction in funding handed to them by the USDA’s final Standard Reinsurance Agreement (SRA) contract released on June 29, 2010.  Companies have until July 12th to sign the agreement.

“Our hands are tied,” said Bob Parkerson, president of National Crop Insurance Services.  “The companies have no choice but to sign this SRA because, if they don’t, they cease operating and the safety net that America’s farmers and ranchers rely on so heavily would be disrupted.”

Although the industry feels the negotiation process was generally handled reasonably well by USDA, there were terms and conditions added to the agreement very late in the process that gave companies very little time to react and negotiate a contract that was fair to all parties.  Constraints on legal recourse of companies and agents are particularly problematic.

“I think our definition of ‘negotiate’ was very different from USDA’s,” said Parkerson.  “They made a few concessions to some of the technical aspects of the agreement, but they didn’t budge on the $600 million a year cut in funding, despite the damage it will do to the financial foundation of the program.”

The private insurance companies will now need to evaluate how reductions will affect the quality of service they provide to producers, and scramble to maintain the financial reserves mandated by the SRA.

“I remember early on in this negotiation process reading that Secretary Vilsack said this is an easy product to sell,” said Parkerson.  “It reminds me of a quote from Dwight D. Eisenhower when he said …Farming looks mighty easy when your plow is a pencil, and you’re a thousand miles from the corn field.”(Dwight D. EisenhowerSeptember 11, 1956)

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Crop Insurance Industry Disappointed With USDA Agreement

The crop insurance industry is surprised that even after repeated requests by Congress, producers and the Industry, the Administration still plans to cut the crop insurance program by $6 billion over the next ten years. USDA’s Risk Management Agency released its final draft of the Standard Reinsurance Agreement this month.  “We negotiated this contract in good faith with USDA and we are frustrated that our concerns for the financial stability of this 30-year program were not adequately addressed,” said Bob Parkerson, President of National Crop Insurance Services.

Crop Insurers Hope to Convince USDA to Backtrack on Insurance Pact

The group that represents U.S. crop insurers is preparing for a June 18 meeting with officials of the U.S. Department of Agriculture to hash out some disagreements over the latest draft of the Standard Reinsurance Agreement — a draft the federal officials are calling final but that the insurers said they feel blindsided by. The National Crop Insurance Services — the Kansas-based association representing the insurers — said there are provisions in the long-negotiated agreement that they hadn’t seen before. “We are a little astounded by the fact that they’re calling this third draft a final draft.,” said Robert W. Parkerson, the association president. “There are several items in there that we never discussed.”

Crop Insurers Hope to Convince USDA to Backtrack on Insurance Pact

The group that represents U.S. crop insurers is preparing for a June 18 meeting with officials of the U.S. Department of Agriculture to hash out some disagreements over the latest draft of the Standard Reinsurance Agreement — a draft the federal officials are calling final but that the insurers said they feel blindsided by. The National Crop Insurance Services — the Kansas-based association representing the insurers — said there are provisions in the long-negotiated agreement that they hadn’t seen before. “We are a little astounded by the fact that they’re calling this third draft a final draft.,” said Robert W. Parkerson, the association president. “There are several items in there that we never discussed.”

Crop insurance agreement released

Aiming to reform the federal crop insurance program, reduce the federal deficit, and maximize taxpayer dollars, the USDA has released the final draft of a new crop insurance agreement and, as a result, $6 billion in savings. Two-thirds of the savings will go toward paying down the federal deficit, and the remaining third will support high priority risk management and conservation programs. By containing program costs, these changes will also ensure the sustainability of the crop insurance program for America’s farmers and ranchers for years to come. USDA’s Risk Management Agency (RMA), which administers the federal crop insurance program, released the final draft version of a new Standard Reinsurance Agreement (SRA), which details the new terms, roles, and responsibilities for both the USDA and insurance companies that participate in the federal crop insurance program.

Final draft crop insurance agreement

Aiming to reform the federal crop insurance program, reduce the federal deficit, and maximize taxpayer dollars, the USDA has released the final draft of a new crop insurance agreement and, as a result, $6 billion in savings. Two-thirds of the savings will go toward paying down the federal deficit, and the remaining third will support high priority risk management and conservation programs. By containing program costs, these changes will also ensure the sustainability of the crop insurance program for America’s farmers and ranchers for years to come.

Final draft crop insurance agreement

Aiming to reform the federal crop insurance program, reduce the federal deficit, and maximize taxpayer dollars, the USDA has released the final draft of a new crop insurance agreement and, as a result, $6 billion in savings. Two-thirds of the savings will go toward paying down the federal deficit, and the remaining third will support high priority risk management and conservation programs. By containing program costs, these changes will also ensure the sustainability of the crop insurance program for America’s farmers and ranchers for years to come.

WINDMILL COUNTRY: Farmers call crop insurance vital

During the recent U.S. House Committee on Agriculture field hearing in Lubbock, several West Texas farmers who testified expressed a need to strengthen federal crop insurance when the next farm bill is written. The ag committee had its seventh in a series of hearings on the Texas Tech University campus to review U.S. agriculture policy as the committee begins the process of writing the 2012 Farm Bill. Ronnie Holt, a cotton, corn and grain sorghum farmer from Muleshoe, serves as chairman of the Crop Insurance Professionals Association. In his testimony, Holt’s plea was to strengthen crop insurance, “a particularly timely request in the wake of the U.S. Department of Agriculture’s efforts to slash crop insurance investments by billions — a proposal that has been widely criticized by Congress and the agricultural community.”

The search is on for better safety net in 2012 farm bill

House Agriculture Committee Chairman Collin Peterson (D-MN) wants to craft a better safety net for crop and livestock producers, but he faces an uphill battle on several fronts–cost, structure, actuarial soundness, delivery system, and producer attitudes, just to name a few. Still, he remains convinced that it might be possible to develop a more efficient system and perhaps even save some money in the process. During a series of farm bill field hearings this month, Peterson talked about developing a crop insurance system that covers all crops and suggested that one of the ways to do that is to eliminate spending on catastrophic (CAT) coverage and the noninsured crop assistance program (NAP). “We could pick up a lot of revenue by eliminating CAT coverage. It gives us extra money to fix the system,” Peterson explained.

The search is on for better safety net in 2012 farm bill

House Agriculture Committee Chairman Collin Peterson (D-MN) wants to craft a better safety net for crop and livestock producers, but he faces an uphill battle on several fronts–cost, structure, actuarial soundness, delivery system, and producer attitudes, just to name a few. Still, he remains convinced that it might be possible to develop a more efficient system and perhaps even save some money in the process. During a series of farm bill field hearings this month, Peterson talked about developing a crop insurance system that covers all crops and suggested that one of the ways to do that is to eliminate spending on catastrophic (CAT) coverage and the noninsured crop assistance program (NAP). “We could pick up a lot of revenue by eliminating CAT coverage. It gives us extra money to fix the system,” Peterson explained.

Direct Aid Program For Farmers Opposed By Crop Insurers

Officials from the crop insurance industry are voicing opposition to a proposal by an Iowa State University professor that the current system be replaced with a direct subsidy program. In testimony Friday before the House Agriculture Committee at a hearing on the proposed 2012 farm bill, Professor Bruce Babcock proposed the direct subsidy program as less costly than the current system. The professor said he believes that providing revenue protection to farmers from systemic risk by using an area-based revenue plan would be far less expensive than the current system. But officials of the National Crop Insurance Services, Overland Park, Kan., the trade group for the private insurers that operate the program, criticized Professor Babcock’s proposal.

NCIS Statement Regarding Professor Bruce Babcock’s ACRE Plan

FOR IMMEDIATE RELEASE
May 14, 2010

Testimony of Professor Bruce Babcock released in advance of the House Committee on Agriculture hearing scheduled for May 14, 2010, on the 2012 Farm Bill, raised the idea of providing protection to farmers from systemic risk by using an area-based revenue plan. The plan would presumably cover all producers, be 100% subsidized and make a payment when actual county revenue fell below a target county revenue, similar to ACRE. Farmers would use crop insurance to insure their individual risks beyond the risks covered by the area plan.

Professor Babcock’s idea for a county-level ACRE plan has been around for several years and still leaves many conceptual and operational questions unanswered. One question is how to pay for the substantial additional delivery costs involved in simply giving this program to every producer. Farmers consciously make a decision to manage their risks when they choose to participate financially in crop insurance, which is in great contrast to the Professor’s suggestion. Other major issues with area plans are that they don’t protect farmers from individual losses nor do they work well particularly for farmers who do not grow conventional field crops. Certainly, most lenders wouldn’t accept this program as adequate collateral when providing operating loans to farmers. It is also important to recognize that county-based revenue insurance (GRIP) is already available to many producers through the Federal crop insurance program. Whether an existing program, delivered through the private sector and cost-shared with producers, should become a fully subsidized farm program run by the government is very questionable. It is early in the 2012 Farm Bill process and this idea, like some others now surfacing, needs much more evaluation.

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Ask the ACRE Specialists

I know academics don’t all have “skin” in the game like you real farmers, but most land grant university economists who’ve put the Average Crop Revenue Election program under the microscope conclude that you get a lot of protection for the money when you enroll. Giving up 20 percent of your direct payment (typically about $2 to $5 per acre for wheat, corn and soybean producers) buys you roughly $519 per acre in corn revenue protection in 2010 based on national averages, versus $339 per acre for the traditional Counter Cyclical Program. For soybeans it’s $368 under ACRE, vs. $230 under CCP. For wheat it’s $219 vs. $148. If you’re in a high yield state, you can up the ante.

Ask the ACRE Specialists

I know academics don’t all have “skin” in the game like you real farmers, but most land grant university economists who’ve put the Average Crop Revenue Election program under the microscope conclude that you get a lot of protection for the money when you enroll. Giving up 20 percent of your direct payment (typically about $2 to $5 per acre for wheat, corn and soybean producers) buys you roughly $519 per acre in corn revenue protection in 2010 based on national averages, versus $339 per acre for the traditional Counter Cyclical Program. For soybeans it’s $368 under ACRE, vs. $230 under CCP. For wheat it’s $219 vs. $148. If you’re in a high yield state, you can up the ante.

FSA: Report Prevented, Failed Acreage & Crop Losses

Prevented planting acreage, or acreage that could not be planted because of wet field conditions or other natural disaster, should be reported to your local Farm Service Agency office within 15 days of the final planting date of the crop. The agency says crops covered by crop insurance or the Non-insured Assistance Program and crops without insurance coverage need to be reported to the FSA or crop insurance agent to verify final planting dates for all crops since they vary among counties and crop types.

Groups: Stop crop insurance negotiations

Farm groups have expressed concern that the Obama administration’s negotiations with crop insurance companies to cut their subsidies could produce budget savings that would reduce the amount of money available for the next farm bill, but a spokesman for Agriculture Secretary Tom Vilsack said April 12 the administration is willing to work with Congress to address those concerns. Reacting to a letter from a coalition of farm groups sent April 9 urging Vilsack to stop the negotiations and let Congress handle the issue, Justin De Jong, a Vilsack spokesman, said in an e-mail, “USDA remains open and willing to engage with the relevant congressional committees to achieve crop insurance reform in a way that addresses the baseline concerns expressed by the signatories of the letter.”

Work on new farm bill to begin shortly

The newest farm bill may be less than two years old – and is yet to even be fully implemented – but the House Agriculture Committee is already set to take on the next. During an April 16 press conference, Minnesota Rep. Collin Peterson, chairman of the House Agriculture Committee, said a handful of pressing issues had moved him to push those with an interest in the coming legislation to begin thinking about the “broad picture of how they perceive the current (farm) bill working, or not, trends they see in the future and things we should be considering. … One of the reasons to kick this off early is to get people thinking ahead of time.”

Work on new farm bill to begin shortly

The newest farm bill may be less than two years old – and is yet to even be fully implemented – but the House Agriculture Committee is already set to take on the next. During an April 16 press conference, Minnesota Rep. Collin Peterson, chairman of the House Agriculture Committee, said a handful of pressing issues had moved him to push those with an interest in the coming legislation to begin thinking about the “broad picture of how they perceive the current (farm) bill working, or not, trends they see in the future and things we should be considering. … One of the reasons to kick this off early is to get people thinking ahead of time.”

USDA To Work With Congress On Budget Baseline

USDA officials indicated last week they would work with Congress to somehow preserve 2012 Farm Bill budget baseline that could potentially be lost through the renegotiation of theStandard Reinsurance Agreement (SRA). The comments, delivered to CongressDaily on the record by a USDA spokesperson and in less official terms to Capitol Hill leaders, came days after 10 commodity groups, including the National Association of Wheat Growers(NAWG), wrote Secretary of Agriculture Tom Vilsack, expressing “grave concern” about baseline losses from savings achieved through the process, which was called for in the 2008 Farm Bill.

USDA To Work With Congress On Budget Baseline

USDA officials indicated last week they would work with Congress to somehow preserve 2012 Farm Bill budget baseline that could potentially be lost through the renegotiation of theStandard Reinsurance Agreement (SRA). The comments, delivered to CongressDaily on the record by a USDA spokesperson and in less official terms to Capitol Hill leaders, came days after 10 commodity groups, including the National Association of Wheat Growers(NAWG), wrote Secretary of Agriculture Tom Vilsack, expressing “grave concern” about baseline losses from savings achieved through the process, which was called for in the 2008 Farm Bill.

Rural Mutual: Crop Hail Insurance is Good Risk Management

With spring storm season underway, farmers may want to consider crop hail insurance as part of their risk management program, especially if they did not enroll in multi-peril crop insurance before the March 15 deadline. That’s according to Tom Thieding of Rural Mutual Insurance Company. He says each year, some farmers in the state are hit by localized storms that put their profit at risk. “For example, one storm front in July did an estimated $8-10 million in crop damage mainly in Grant and Lafayette Counties,” Thieding said. “Rural Mutual Insurance, the largest insurer of Wisconsin farms in state, paid $2.5 million in crop hail claims from that one storm.”

Insurance Industry Questions Profit Numbers

The battle over future billions of dollars for crop insurance continued on Monday, with the crop-insurance industry questioning USDA’s profit analysis, saying USDA’s Risk Management Agency “understands too well that conclusions can’t be drawn from data representing such a narrow timeframe. A long-term view is essential when analyzing a program based on a private insurance model, where any year’s returns can vary due to weather or fluctuating crop prices. In fact, when discussing the rating of crop insurance policies in a recent interview, USDA’s Risk Management Agency Administrator William Murphy indicated that a short timeframe is inappropriate when making crop risk-based policy decisions, adding that the analytical horizon had to extend back to the middle 1970’s to ensure the policies were correct.”

Industry Calls for Long Term Analysis in Judging Crop Insurance Market Performance

FOR IMMEDIATE RELEASE
April 5, 2010

OVERLAND PARK, KANSAS..USDA’s Risk Management Agency (RMA) released late last Friday an update of their disputed Millman study of returns to private crop insurers participating in the Federal Crop Insurance Program. While the report focuses on 2009 earnings, which indeed represent the second highest ever, it is more reflective of record-high crop yields than indicative of the future profitability of the crop insurance industry.

RMA understands too well that conclusions can’t be drawn from data representing such a narrow timeframe. A long-term view is essential when analyzing a program based on a private insurance model, where any year’s returns can vary due to weather or fluctuating crop prices. In fact, when discussing the rating of crop insurance policies in a recent interview, USDA’s Risk Management Agency Administrator William Murphy indicated that a short timeframe is inappropriate when making crop risk-based policy decisions, adding that the analytical horizon had to extend back to the middle 1970’s to ensure the policies were correct.

Corn and soybeans account for two-thirds of crop insurance business. In 2009 these crops each had record-highs in total production. But looking back to as recent as 2008, which was not a disaster year but featured corn and soybean yields close to trend values, RMA reports the rate of return on equity at 12.9%, less than half RMA’s estimate for 2009. If the country had growing conditions in 2009 closer to the severe flood conditions of 1993 or the severe drought conditions of 1988, and crop yields were dramatically below trend values and the return on equity in the crop insurance industry would have been sharply negative with companies losing billions of dollars.

Beyond the obvious concern with using one year of data to judge the financial performance of the industry, RMA’s analytical methods used to estimate rates of return on equity have been challenged by the crop insurance industry and are not a reasonable basis for estimating expected returns to the industry. In fact, Millman itself cautions, “against drawing any strong conclusions on the adequacy or excessiveness of the historical returns.” This is particularly relevant in this case, as their analysis also fails to take into account the $6.4 billion in funds that Congress already cut from the crop insurance program in the 2008 farm bill.

An independent analysis by the firm Grant Thornton compared the profitability of the crop insurance industry to that of the property and casualty industry, an appropriate benchmark for judging financial performance. Over a 17-year period (1992-2008), Grant Thornton found that the Federal Crop Insurance Program is significantly less profitable than the property and casualty industry while having consistently lower expense-to-premium ratios. And while there have been good years, and even very good years like 2009, the public-private crop insurance partnership leverages this period to invest capital and build its reserves so that the program can cover future expected losses.

The Federal Crop Insurance Program is a successful public-private partnership that has become the primary stabilizing force in U.S. farm policy and a key element of the farm policy safety net. And one of the main reasons it has thrived is due to the mandated reserves that invest returns from good years to protect farmers during difficult years. In fact, the companies in the Federal Crop Insurance program are required to hold reserves about twice the amount currently held by the property and casualty insurance sector.

The program has grown from roughly 84 million acres in 1993 to the record year of 265 million acres in 2009. This growth in the size and importance of the program has happened in large measure due to the private delivery system that allows the agents to offer tailored coverage to meet producer’s needs. Crop insurance is essential to making farmers credit worthy and otherwise able to secure loans from banks to operate and modernize their operations. The program has grown also in part because farmers know its value and they can afford to pay the premiums.

The crop insurance industry hopes RMA and others in the policy community will take the proper, longer term view of industry performance. Such a balanced perspective is essential not only to the health and sustainability of the private crop insurers but also to the public-private crop insurance partnership, the foundation of the U.S. farm program safety net today.

National Crop Insurance Services

National Crop Insurance Services National Crop Insurance Services (NCIS) is an international not-for-profit organization representing the interests of more than 20 crop insurance companies. NCIS member companies write Crop-Hail Insurance; Multiple Peril Crop Insurance (MPCI), the federally subsidized risk management program; and, privately developed crop insurance products totaling approximately $9 billion in premium, with liability totaling approximately $80 billion. These companies service all farmers participating in the federal program, including limited-resource and socially-disadvantaged farmers. In partnership with the government, these private companies are the safety net that equitably provides risk management to the American farmer. NCIS members range in size from one-state companies to national writers, as well as foreign company members.

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USDA urged to reconsider crop insurance changes

U.S. Senate Agriculture, Nutrition and Forestry Committee Chairman Blanche Lincoln, D-Ark., and Ranking Member Saxby Chambliss, R-Ga., along with 28 U.S. senators, have expressed appreciation for the Risk Management Agency’s (RMA) willingness to reconsider its previous proposals as the Standard Reinsurance Agreement (SRA) renegotiation proceeds. Despite a modest reduction in the size of the proposed cuts between the first and second drafts, the senators expressed their concerns with RMA’s proposals that may undermine the crop insurance program, reduce the quality of service and availability of the program, and harm rural America through job loss. The senators also noted concern with RMA’s approach of proposing significant cuts to the program prior to the completion of a study of program delivery costs.

USDA urged to reconsider crop insurance changes

U.S. Senate Agriculture, Nutrition and Forestry Committee Chairman Blanche Lincoln, D-Ark., and Ranking Member Saxby Chambliss, R-Ga., along with 28 U.S. senators, have expressed appreciation for the Risk Management Agency’s (RMA) willingness to reconsider its previous proposals as the Standard Reinsurance Agreement (SRA) renegotiation proceeds. Despite a modest reduction in the size of the proposed cuts between the first and second drafts, the senators expressed their concerns with RMA’s proposals that may undermine the crop insurance program, reduce the quality of service and availability of the program, and harm rural America through job loss. The senators also noted concern with RMA’s approach of proposing significant cuts to the program prior to the completion of a study of program delivery costs.

Check crop insurance before abandoning wheat

Cold, wet conditions at planting reduced emergence. Cooler than normal temperatures throughout the fall and winter have reduced tillering. Yield potential for this year’s wheat crop has been reduced and some growers are considering abandoning their wheat and moving acreage to cotton or full-season soybeans.

Saying ‘no’ isn’t enough

There are times when just saying “no” isn’t enough. We hope that’s where the House Agriculture Committee is coming from. Last week the committee rejected a package of cost-saving policy changes proposed in the Obama administration budget. The changes would have modified the current Farm Bill. In fact, there’s a lot of merit to considering all of those ideas when hearings begin later this spring on a 2012 Farm Bill. In its budget message to Congress, the administration asked for fewer federal dollars to go toward underwriting crop insurance, for a new and lower cap on the maximum amount of payments awarded to an individual recipient and for a new way to calculate eligibility for many payments made through programs in the farm bill.

Saying ‘no’ isn’t enough

There are times when just saying “no” isn’t enough. We hope that’s where the House Agriculture Committee is coming from. Last week the committee rejected a package of cost-saving policy changes proposed in the Obama administration budget. The changes would have modified the current Farm Bill. In fact, there’s a lot of merit to considering all of those ideas when hearings begin later this spring on a 2012 Farm Bill. In its budget message to Congress, the administration asked for fewer federal dollars to go toward underwriting crop insurance, for a new and lower cap on the maximum amount of payments awarded to an individual recipient and for a new way to calculate eligibility for many payments made through programs in the farm bill.

Crop insurance coverage pays for Texas farmers

Hill County, Texas, farmer Albert Sulak admits that about 10 years ago he was a bit skeptical about the value of crop insurance. “I thought about insuring my vehicles, my house and I knew I needed health insurance,” he said. He decided to try crop insurance and still was not impressed for two or three years. “I didn’t need it,” Sulak said, during the Blackland Income Growth (BIG) conference in Waco. “Then I had two or three dry years.” And last spring made a believer out of him. “We had a late freeze that hurt our wheat crop. Crop insurance kept some of us in business after that loss. With the expenses involved in making a crop these days, we need crop insurance.”

Crop insurance coverage pays for Texas farmers

Hill County, Texas, farmer Albert Sulak admits that about 10 years ago he was a bit skeptical about the value of crop insurance. “I thought about insuring my vehicles, my house and I knew I needed health insurance,” he said. He decided to try crop insurance and still was not impressed for two or three years. “I didn’t need it,” Sulak said, during the Blackland Income Growth (BIG) conference in Waco. “Then I had two or three dry years.” And last spring made a believer out of him. “We had a late freeze that hurt our wheat crop. Crop insurance kept some of us in business after that loss. With the expenses involved in making a crop these days, we need crop insurance.”

USDA announces risk protection for specialty types of barley

Effective for the 2010 Crop Year, the Risk Management Agency (RMA) is offering insurance coverage based on contract prices for all practices of certain specialty types of barley (as reflected in the Special Provisions of Insurance). Specialty barley includes malting, waxy hulled, waxy hulless, and hulless types, available in all MPCI barley counties in Idaho, Oregon and Washington except the seven counties with a fall sales closing date for winter damage protection on winter barley. Those seven counties: Cassia, Nez Perce and Payette of Idaho; and Wasco and Umatilla of Oregon; and Klickitat and Yakima of Washington, will have this new coverage for specialty barley types for the 2011 crop year.

USDA announces risk protection for specialty types of barley

Effective for the 2010 Crop Year, the Risk Management Agency (RMA) is offering insurance coverage based on contract prices for all practices of certain specialty types of barley (as reflected in the Special Provisions of Insurance). Specialty barley includes malting, waxy hulled, waxy hulless, and hulless types, available in all MPCI barley counties in Idaho, Oregon and Washington except the seven counties with a fall sales closing date for winter damage protection on winter barley. Those seven counties: Cassia, Nez Perce and Payette of Idaho; and Wasco and Umatilla of Oregon; and Klickitat and Yakima of Washington, will have this new coverage for specialty barley types for the 2011 crop year.

Avtar Gill Awarded the Crop Insurance Industry Outstanding Service Award

FOR IMMEDIATE RELEASE
February 24, 2010

OVERLAND PARK, KANSAS…Avtar Gill, Gill Insurance, Caruthers, Calif., is the recipient of the Crop Insurance Industry Outstanding Service Award in recognition for outstanding service and outreach to small, limited resource, and socially disadvantaged farmers. Steve Harms, Chairman of the National Crop Insurance Services (NCIS) Board of Directors, and Robert Parkerson, President of NCIS, presented the award at the 2010 Crop Insurance Industry Annual Convention.

Avtar Gill moved from India to the United States in 1980. In 1982 he began his crop insurance career with an agency located in Fresno, California. In 1988 Mr. Gill purchased the entire book of business from this agency, moved his office to Caruthers, California where he formed Gill Insurance. Mr. Gill services each policy in person by scheduling a date and time to meet with his insureds throughout the Southern Tejon area to Northern Redding. He is best known by his colleagues and clients for his extensive knowledge in multiple-peril crop insurance as well as various aspects of the farming industry.

Mr. Gill is an active member of Congressman George Radonovich’s Ag Committee to discuss crucial water and agriculture related issues in the Central Valley. He has also accepted invitations by Senator Barbara Boxer, Congressman Jim Costa and Congressman Devin Nunes to address issues local farmers face today. Mr. Gill is an advocate for the crop insurance, calling Congressman and Senators stressing the urgency of continuing to protect farmers against nature’s disasters.

As well as Gill Insurance, Mr. Gill and his family also own a large farming operation and three retail businesses in Caruthers.

Presenting the award to Avtar Gill was Robert Parkerson, President of National Crop Insurance Services (NCIS), and, Steve Harms, Rain and Hail Insurance L.L.C. and Chairman of the NCIS Board of Directors.

Photo Caption: Presenting the award to Avtar Gill (center) was (left) Robert Parkerson, President of National Crop Insurance Services (NCIS), and, Steve Harms (right), Rain and Hail Insurance L.L.C. and Chairman of the NCIS Board of Directors.

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USDA releases crop insurance agreement

USDA’s Risk Management Agency (RMA), which administers the Federal crop insurance program, has released a second draft of a proposed new Standard Reinsurance Agreement (SRA), which establishes the terms, roles, and responsibilities for both the USDA and insurance companies that participate in the Federal crop insurance program. The first draft was released Dec. 4, 2009. The new draft includes a series of significant changes, including many discussed during negotiations between the RMA and the participating crop insurance companies.

USDA releases crop insurance agreement

USDA’s Risk Management Agency (RMA), which administers the Federal crop insurance program, has released a second draft of a proposed new Standard Reinsurance Agreement (SRA), which establishes the terms, roles, and responsibilities for both the USDA and insurance companies that participate in the Federal crop insurance program. The first draft was released Dec. 4, 2009. The new draft includes a series of significant changes, including many discussed during negotiations between the RMA and the participating crop insurance companies.

Polk Farmers Get Federal Help for Freeze Damages

In the face of a ballooning federal deficit, Uncle Sam will come to the rescue of Florida farmers struggling to recover from last month’s brutal freezing weather. “This will certainly help,” said David Boozer, executive director of the Florida Tropical Fish Farm Association Inc. in Winter Haven, responding to the U.S. Department of Agriculture recently designating 60 Florida counties as federal disaster areas. The list includes Polk and every neighboring county. The declaration opens up several low-interest loan programs to freeze-stricken farmers in those counties. Tropical fish farmers centered in Hillsborough and Polk counties suffered the biggest losses from the record-breaking streak of cold weather that hit most of the state in the first two weeks of the year. Boozer estimated a 75 percent loss of Florida’s tropical fish stocks.

Polk Farmers Get Federal Help for Freeze Damages

In the face of a ballooning federal deficit, Uncle Sam will come to the rescue of Florida farmers struggling to recover from last month’s brutal freezing weather. “This will certainly help,” said David Boozer, executive director of the Florida Tropical Fish Farm Association Inc. in Winter Haven, responding to the U.S. Department of Agriculture recently designating 60 Florida counties as federal disaster areas. The list includes Polk and every neighboring county. The declaration opens up several low-interest loan programs to freeze-stricken farmers in those counties. Tropical fish farmers centered in Hillsborough and Polk counties suffered the biggest losses from the record-breaking streak of cold weather that hit most of the state in the first two weeks of the year. Boozer estimated a 75 percent loss of Florida’s tropical fish stocks.

Crop insurers resist USDA’s proposed cuts

Crop insurers say USDA’s proposed funding cuts to its crop-insurance program will cause their industry to downsize and shed jobs. USDA’s Risk Management Agency introduced a proposal in December for altering the agreement by which insurers deliver government-backed crop insurance. National Crop Insurance Services, an industry association, released its counter-proposal on Jan. 20, along with a critique of the cuts that RMA wants. “The industry is deeply concerned with RMA’s initial draft of the 2011 (Standard Reinsurance Agreement) and is proposing a number of changes to reduce the highly detrimental impacts of the RMA proposal,” the association said in a statement.

Crop insurers resist USDA’s proposed cuts

Crop insurers say USDA’s proposed funding cuts to its crop-insurance program will cause their industry to downsize and shed jobs. USDA’s Risk Management Agency introduced a proposal in December for altering the agreement by which insurers deliver government-backed crop insurance. National Crop Insurance Services, an industry association, released its counter-proposal on Jan. 20, along with a critique of the cuts that RMA wants. “The industry is deeply concerned with RMA’s initial draft of the 2011 (Standard Reinsurance Agreement) and is proposing a number of changes to reduce the highly detrimental impacts of the RMA proposal,” the association said in a statement.

The Farm Bill, A Spending “Freeze,” and the Federal Debt; Jobs Agenda and Climate Change; and Crop Insurance

news release issued on Monday by the National Farmers Union stated that, “Today, the National Farmers Union (NFU), in alliance with nine other national agricultural organizations, sent a letter to United States Department of Agriculture Secretary Tom Vilsack on the draft Standard Reinsurance Agreement (SRA). “‘The consideration of a $4 billion cut to the crop insurance program over five years on top of several substantial cuts made last year concerns both producers and businesses,’ said Roger Johnson, NFU president. “The letter highlights the importance of prioritizing the protection of farmers’ viability, emphasizing that changes made should not negatively impact farmers and ranchers’ ability to access insurance products that are vital to their operations.”

Private Crop Insurers Oppose Funding Cuts

The private crop insurance industry is blasting a proposed restructuring in the crop insurance program they say would cut $4 billion — or $800 million a year — over the next five years. The proposal, by the U.S. Department of Agriculture and the Risk Management Agency (RMA), which manages the federal insurance program, would also impose as much as $100 million in additional costs on private insurers, according to the National Crop Insurance Services, which represents the 15 insurers participating in the public-private cooperative program.

Fundamental Problems Exist with the USDA’s Proposed 2011 Standard Reinsurance Agreement; Private Industry Seeks Solutions

FOR IMMEDIATE RELEASE
January 20, 2010

OVERLAND PARK, KANSAS..The private crop insurance industry today released a proposal for the 2011 Standard Reinsurance Agreement (SRA). The SRA is the contract under which the private insurance companies agree to deliver the federal crop insurance program to the nation’s farm producers.

The industry’s proposal is in response to a proposed 2011 SRA released by the USDA/Risk Management Agency (RMA) on December 4, 2009.  The industry is deeply concerned with RMA’s initial draft of the 2011 SRA and is proposing a number of changes to reduce the highly detrimental impacts of the RMA proposal.

The RMA proposal would substantially change the structure of the crop insurance program, resulting in an estimated reduction in funding of approximately $800 million per year over the next five years. This $4 billion cut is in addition to the $6.4 billion cut mandated by the 2008 Farm Bill.

“These are pretty dramatic cuts based on little or no supporting research and data,” said Bob Parkerson, President of National Crop Insurance Services. “The industry supports thinking about change, but it has to make sense for the Government, industry and producers.”

NCIS, which represents the private companies who sell and service crop insurance policies to America’s farmers and ranchers, presented their comments to the USDA/RMA today.

There are several areas of concern for the industry:

  1. Overall funding reductions implied by the draft 2011 SRA are excessive and unacceptable to the industry. Various proposals to reduce Federal spending on crop insurance have been made over the past few years, including the President’s 2010 Fiscal Year budget reduction of $5.2 billion, which was rejected by Congress. Now, through discretionary action, RMA proposes to implement the largest funding cuts ever for the industry.
  2. Cuts in payments to deliver the program and in underwriting gains are excessive and will reduce industry returns well below the long-term average, sharply reducing the incentives companies have to maintain investments in the industry in order to adequately service all producers.
  3. Severe funding reductions will impair many of the 15 private insurance companies, especially the small and medium-sized ones. This is likely to lead to more consolidation among the already shrinking industry and cause many of the 18,000+ jobs associated with this industry, many in rural America, to be lost.

In addition to the proposed cuts, the private industry has estimated, on a preliminary basis, additional costs of over $100 million to comply with RMA’s new program initiatives and information technology requirements.

  1. RMA proposed cuts also apply to the USDA-designated “Underserved States.” The cuts in delivery payments will more than offset the RMA proposed underwriting gain in those 16 states, thus reducing incentives to write and service producers there. Companies already operating in these states have low returns there and would now have a powerful incentive to withdraw. There is no mandate to keep taking losses in these states, thus opening the door to a lack of service in these areas.

“We truly hope that USDA and RMA will be willing to sit down with us soon and go through a true negotiation process for this SRA, “said Parkerson. “The Industry has many good ideas to offer, based on years of analysis, much of it by third party accounting firms. I know we can work this out to the benefit of all interested parties without wreaking havoc with a public/private partnership that has been working the way Congress intended for it to work for the last 30 years.”

The Federal Crop Insurance Program:

The crop insurance industry insures over 272 million acres and protects $90 billion in America’s food supply.  Over 80 percent of the insurable acres are protected.  Crop insurance is the key to financial stability for farmers, enabling farmers and ranchers to supply food and fiber to our country despite severe weather and other challenges that impact their business.

The federal crop insurance program is a public-private partnership, the industry and federal government work hand in hand.  The crop insurance program is available to all producers on an equal basis and provides the financial stability for farmers and ranchers, including access to capital.

National Crop Insurance Services

National Crop Insurance Services National Crop Insurance Services (NCIS) is an international not-for-profit organization representing the interests of more than 20 crop insurance companies. NCIS member companies write Crop-Hail Insurance; Multiple Peril Crop Insurance (MPCI), the federally subsidized risk management program; and, privately developed crop insurance products totaling approximately $9 billion in premium, with liability totaling approximately $80 billion. These companies service all farmers participating in the federal program, including limited-resource and socially-disadvantaged farmers. In partnership with the government, these private companies are the safety net that equitably provides risk management to the American farmer. NCIS members range in size from one-state companies to national writers, as well as foreign company members.

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Concern mounting about crop damage

Florida’s agriculture industry continues to evaluate the impact of a two-week freeze on fruit and vegetables. Commissioner of Agriculture Charles Bronson estimates about one-third of the crop worth hundreds of millions of dollars has been lost. The Florida Farm Bureau Federation is advising farmers who have sustained crop damage to document damage by taking photographs, contact the USDA Farm Service Agency in their counties, and prepare to file a claim, if they have crop insurance.

Concern mounting about crop damage

Florida’s agriculture industry continues to evaluate the impact of a two-week freeze on fruit and vegetables. Commissioner of Agriculture Charles Bronson estimates about one-third of the crop worth hundreds of millions of dollars has been lost. The Florida Farm Bureau Federation is advising farmers who have sustained crop damage to document damage by taking photographs, contact the USDA Farm Service Agency in their counties, and prepare to file a claim, if they have crop insurance.

Freeze Grips US South, Causes Millions in Insured Losses

From Texas to Florida, recent freezing temperatures left damages in a part of the country unaccustomed to cold weather. Georgia Commissioner John W. Oxendine said that with more than 4,500 claims reported, he thinks the insurance industry can expect $25 million in losses from ice and snowstorms, which lasted from Jan. 4 to Jan. 10. “The snow and ice during that latter part of the week caused numerous auto accidents,” he said. “There were some pile-ups.” Homeowners claims were for frozen pipes. “The week was just consistently cold,” Oxendine said. “It froze the ground and then it penetrated the pipes.” State Farm spokesman Justin Tomczak from Georgia said the insurer expects to exceed $5 million in losses. Claims received are nearing 1,000, he said.

Freeze Grips US South, Causes Millions in Insured Losses

From Texas to Florida, recent freezing temperatures left damages in a part of the country unaccustomed to cold weather. Georgia Commissioner John W. Oxendine said that with more than 4,500 claims reported, he thinks the insurance industry can expect $25 million in losses from ice and snowstorms, which lasted from Jan. 4 to Jan. 10. “The snow and ice during that latter part of the week caused numerous auto accidents,” he said. “There were some pile-ups.” Homeowners claims were for frozen pipes. “The week was just consistently cold,” Oxendine said. “It froze the ground and then it penetrated the pipes.” State Farm spokesman Justin Tomczak from Georgia said the insurer expects to exceed $5 million in losses. Claims received are nearing 1,000, he said.

Crop Insurance Protects Freeze-Damaged Crops in Florida Against Coldest Temperatures in 20 Years

FOR IMMEDIATE RELEASE
January 12, 2010

Producers with damage urged to contact agent

 

OVERLAND PARK, KANSAS..Florida has just over $3 billion in liability in crop insurance on crops ranging from citrus and citrus trees to nursery and fresh market tomatoes. “All of it is protected against the record freeze that hit this past weekend, and those producers who suffered losses can rest assured that crop insurance indemnities will be paid timely,” said Bob Parkerson, President of National Crop Insurance Services.

If producers think they have a loss on an insured crop, they must:

  1. Notify their crop insurance agent within 72 hours of the initial discovery of damage;
  2. Continue to care for the crop and protect it against further damage, if possible; and,
  3. Obtain consent from the insurance company prior to destroying any of the insured crop.

“There are other requirements that insureds need to follow that can be found in their specific policy,” said Parkerson. “But these three are key for right now.”

The Federal Crop Insurance Program:

The crop insurance industry insures over 272 million acres and protects $90 billion in America’s food supply.  Over 80 percent of the insurable acres are protected.  Crop insurance is the key to financial stability for farmers, enabling farmers and ranchers to supply food and fiber to our country despite severe weather and other challenges that impact their business.

The federal crop insurance program is a public-private partnership, the industry and federal government work hand in hand.  The crop insurance program is available to all producers on an equal basis and provides the financial stability for farmers and ranchers, including access to capital.

National Crop Insurance Services

National Crop Insurance Services National Crop Insurance Services (NCIS) is an international not-for-profit organization representing the interests of more than 20 crop insurance companies. NCIS member companies write Crop-Hail Insurance; Multiple Peril Crop Insurance (MPCI), the federally subsidized risk management program; and, privately developed crop insurance products totaling approximately $9 billion in premium, with liability totaling approximately $80 billion. These companies service all farmers participating in the federal program, including limited-resource and socially-disadvantaged farmers. In partnership with the government, these private companies are the safety net that equitably provides risk management to the American farmer. NCIS members range in size from one-state companies to national writers, as well as foreign company members.

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