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.

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.

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.

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.”

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 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.

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.”

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.

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.

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.”

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’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.

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 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.

A 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.”

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.