USDA Releases First Draft of Proposed Crop Insurance Agreement to Protect Farmers From Higher Costs, Rein in Costs, and Improve Access to Crop Insurance Throughout the Country

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USDA’s Risk Management Agency (RMA), which administers the Federal crop insurance program, today released the first draft of a proposed new Standard Reinsurance Agreement between the Federal Crop Insurance Corporation and the crop insurance companies which deliver the program nationally. The 2008 Farm Bill authorized RMA to renegotiate the agreement which was last negotiated for 2005. The release of the first draft follows months of preparatory discussions within RMA and between RMA and the insurance companies to hear their concerns and gather information needed to renegotiate the agreement. RMA expects to notify the companies at the end of 2009 that the current agreement will be canceled as of June 30, 2010, paving the way for this new agreement to be signed by all parties.

Crop insurance agent: First contact after washout

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If there is one thing farmers should avoid at the end of this bleak crop season, it’s jumping the gun. Facing one of the biggest crop disasters in years, insured producers’ first priority should be to contact their insurance agent as to their options. “For insurance purposes, this late in the season, it’s possible they may require you to harvest your crops, if only to see what is out there,” says James Novak, an Alabama Cooperative Extension System economist and Auburn University professor of agricultural economics. “In the past, there have been situations in which a crop is a total loss and insurance adjustors have declared it as such,” he says. “But don’t do anything unless your insurance agent has checked it out.” A new Federal program known as Supplemental Revenue Assistance (SURE) covers some crop losses not handled by insurance. It may be an option for enrolled producers.

Crop insurance can salvage some loss

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Near-constant rains during harvest-time have cost Mississippi farmers an estimated $371 million in losses, and producers with crop insurance may be the only ones able to salvage much more from the fields this year. Cotton is expected to take the biggest hit, losing 43 percent of its potential value. Most corn was harvested before the rain, but only half the soybeans were harvested when the crop should have been nearly 80 percent complete.

Mississippi Farmers Could See 100 Percent Crop Losses

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The Mississippi State Fair isn’t the only thing suffering because of the state’s run of bad weather. The state is considering declaring entire Mississippi counties disaster areas because of enormous farming losses due to weather, said Mississippi Department of Agriculture spokesman Andy Prosser. “(Mississippi Department of Agriculture) Commissioner Lester Spell and Gov. Haley Barbour and the State Farm Service Agency—the federal government that works for USDA—we’ve requested they have their county boards make an assessment of crops to declare a disaster for some counties,” Prosser told the Jackson Free Press.

Cool summer weather means fall harvest is behind normal

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Cooler than normal temperatures during the growing season has resulted in slower than normal crop development. What that means to fall harvest is the possibility of some crop losses as normal freeze days occur. In addition, many areas experienced delayed planting and replanting issues during the wet spring, resulting in later than normal crop maturity, according to Dr. Mary Knapp, associate professor of agronomy and state climatologist, at Kansas State University.

Cool summer weather means fall harvest is behind normal

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Cooler than normal temperatures during the growing season has resulted in slower than normal crop development. What that means to fall harvest is the possibility of some crop losses as normal freeze days occur. In addition, many areas experienced delayed planting and replanting issues during the wet spring, resulting in later than normal crop maturity, according to Dr. Mary Knapp, associate professor of agronomy and state climatologist, at Kansas State University.

Idaho Producers Benefit from New Risk Management Insurance

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The U.S. Department of Agriculture’s Risk Management Agency announces that the Federal Crop Insurance Corporation’s board has approved revisions to the Pasture, Rangeland,  Forage Pasture, Forage and Apiculture Pilot programs for Idaho producers next year.

Idaho Producers Benefit from New Risk Management Insurance

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The U.S. Department of Agriculture’s Risk Management Agency announces that the Federal Crop Insurance Corporation’s board has approved revisions to the Pasture, Rangeland,  Forage Pasture, Forage and Apiculture Pilot programs for Idaho producers next year.

Pa. farmers are urged to get crop insurance

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Pennsylvania farmers can act now to protect their income against unexpected losses by purchasing crop insurance before Wednesday, said acting Agriculture Secretary Russell Redding. The Crop Revenue Coverage base fall price for winter wheat is set at $5.29 per bushel for the 2010 growing season. “Tools like crop insurance allow farmers to protect their paycheck, keeping their operation viable for the next growing season. I urge Pennsylvania wheat producers to take advantage of the revenue protection offered through CRC policies to minimize risks associated with quantity, quality and revenue fluctuations of wheat crops,” Redding said.

Quarantine Crop Insurance Now Available for Citrus, Avocados

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This fall, citrus and avocado growers looking to lessen the impact that a quarantine can have on their operations, can take advantage of a pilot quarantine crop insurance program soon to be offered through Mary Roach Insurance Agency Inc. The coverage will be available by late August or early September to cover the 2010-2011 crop year for all citrus-growing counties in California and most avocado-growing counties.

Senators Write RMA on Crop Insurance SRA Process

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Ten Senators wrote the head of the Risk Management Agency last week, urging cooperation as the Agency seeks to renegotiate the contract between the government and private companies that administer the federal crop insurance program.  The Standard Reinsurance Agreement (SRA), as the contract is known, is set to be rewritten under new rules laid out in the 2008 Farm Bill. Specifically at stake in the process is the handling of administrative and operating reimbursement rates that, if cut inappropriately, could affect the level of coverage and service producers experience.

North Dakota Farmers Receive Significant Crop Insurance Indemnity Payments

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The crop insurance industry has paid more than $825 million to the farmers in North Dakota for losses due to crop loss or decrease in commodity prices for 2008, according to the most recent summary of business data released by the Risk Management Agency. “The amount of indemnities paid may still continue to rise,” said Robert Parkerson, president of National Crop Insurance Services, a trade association for the crop insurance industry. “Not all losses have been paid yet because the Risk Management Agency just recently released the prices for the GRIP policies, and many still need to be finalized and paid.”

Summer rains leave area farmers with a mess

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Sam Hagest, of Valley View Farms in Borden, said he hoped to plant 300 to 400 more acres of corn and soybeans in addition to the 900 he managed to plant at the 1,300-acre farm, but the wet weather made that too risky.  “It costs so much now to plant crops, you have to be pretty much aware of what you are going to get back before you invest a lot in fertilizer and seed and things like that,” he said.

Summer rains leave area farmers with a mess

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Sam Hagest, of Valley View Farms in Borden, said he hoped to plant 300 to 400 more acres of corn and soybeans in addition to the 900 he managed to plant at the 1,300-acre farm, but the wet weather made that too risky.  “It costs so much now to plant crops, you have to be pretty much aware of what you are going to get back before you invest a lot in fertilizer and seed and things like that,” he said.

Quarantine Crop Insurance This Fall

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Beginning this fall, USDA will offer California citrus and avocado producers limited crop insurance for losses from quarantines for the 2011 crop year. The pilot quarantine endorsement that USDA’s Federal Crop Insurance Corporation Board of Directors has approved will cover certain types of losses due to quarantines that are imposed by a duly authorized regulatory body. This insurance is designed as an endorsement to existing citrus and avocado policies in California. Various commodity groups have expressed interest in an insurance program to cover losses due to quarantine for some time; however, the FCIC’s authority in this area is limited. While Federal crop insurance program policies may only cover losses due to natural causes, FCIC also has authority to pilot and test new insurance designs to evaluate whether a new risk management approach is suitable for the marketplace, and addresses the needs of producers of agricultural commodities.

AGRICULTURE SECRETARY VILSACK NAMES WILLIAM J. MURPHY ADMINISTRATOR OF THE RISK MANAGEMENT AGENCY

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Agriculture Secretary Tom Vilsack today named William J. Murphy as Administrator of USDA’s Risk Management Agency (RMA). “Bill has spent nearly three decades in the Federal crop insurance community and he brings valuable hands-on expertise and executive management to the USDA’s leadership team,” Vilsack said. “His expansive program experience and knowledge of the agency’s responsibilities will be invaluable as President Obama and I work to assure the soundness of the safety net for American farmers and ranchers.”

Who is best suited to provide crop insurance?

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A new report is likely to reignite the debate over who should deliver crop insurance policies to farmers and how those service providers should be compensated. Some say the federal government should stop paying so much in crop insurance subsidies, while others suggest that USDA employees could directly provide the same types of risk management tools. At the request of Rep. Henry Waxman (D-CA) and two other congressmen, the Government Accountability Office (GAO) issued a report that echoes what many industry officials have admitted: “Crop Insurance: Opportunities Exist to Reduce the Costs of Administering the Program.” Problem is, there is little agreement on exactly how the industry should cut costs while continuing to deliver quality service across all 50 states and stay profitable.

Who is best suited to provide crop insurance?

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A new report is likely to reignite the debate over who should deliver crop insurance policies to farmers and how those service providers should be compensated. Some say the federal government should stop paying so much in crop insurance subsidies, while others suggest that USDA employees could directly provide the same types of risk management tools. At the request of Rep. Henry Waxman (D-CA) and two other congressmen, the Government Accountability Office (GAO) issued a report that echoes what many industry officials have admitted: “Crop Insurance: Opportunities Exist to Reduce the Costs of Administering the Program.” Problem is, there is little agreement on exactly how the industry should cut costs while continuing to deliver quality service across all 50 states and stay profitable.

Vilsack: Revitalize rural America

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Secretary of Agriculture Tom Vilsack visited the Delta Center in Portageville, Mo., recently for a rural community forum to discuss USDA plans to revitalize and rebuild rural America. “President Obama and I are committed to investing in and revitalizing rural communities, in part because they play an important role in our national and international food delivery system,” Vilsack said.

Vilsack: Revitalize rural America

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Secretary of Agriculture Tom Vilsack visited the Delta Center in Portageville, Mo., recently for a rural community forum to discuss USDA plans to revitalize and rebuild rural America. “President Obama and I are committed to investing in and revitalizing rural communities, in part because they play an important role in our national and international food delivery system,” Vilsack said.

Statement before the subcommittee on conservation, credit, energy and research

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Statement by Mr. Bob Frazee, President and CEO
MidAtlantic Farm Credit, Westminster, Maryland
Before the Subcommittee on Conservation, Credit, Energy and Research
House Committee on Agriculture
June 11, 2009

Mr. Chairman and members of the subcommittee, thank you for the opportunity to testify today on behalf of the Farm Credit System. My name is Bob Frazee, and I am President and CEO of MidAtlantic Farm Credit. MidAtlantic is a part of the nationwide Farm Credit System. My remarks today will provide some background on the Farm Credit System, comments on current credit conditions and the impact of recent financial market disruptions, and discuss how we are working to meet the credit needs of agriculture in the geographic area served by my institution.

Indiana farmers receive crop insurance payments

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The crop insurance industry has paid more than $512 million to the farmers in Indiana for losses due to crop loss or decrease in commodity prices for 2008, according to the most recent summary of business data released by the Risk Management Agency. “The amount of indemnities paid may still continue to rise,” said Robert Parkerson, president of National Crop Insurance Services, a trade association for the crop insurance industry. “Not all losses have been paid yet because the Risk Management Agency just recently released the prices for the GRIP policies, and many still need to be finalized and paid.”

2008 crop insurance indemnity payments near $6.5 billion

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Because of droughts and flooding in parts of the country along with substantial price declines for corn and soybeans, indemnity payments on crop losses during the 2008 growing season reached nearly $6.5 billion in mid February with more claims yet to be processed. “All losses haven’t been paid yet either,” said Bob Parkerson, president of National Crop Insurance Services (NCIS), the nonprofit industry trade association in Kansas City. “There are still many losses yet to be finalized by the companies, and GRIP payments won’t be made until RMA approves the county yields for those policies, which doesn’t usually happen until April.” The private insurance industry has had thousands of adjusters working these losses since crops were harvested, and won’t quit until the last loss is processed.

Crop insurance coverage for land emerging from CRP important

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Federal crop insurance policies require that acreage must have been planted and harvested in at least one of the three previous crop years unless such acreage was left unplanted in order to comply with any other USDA program. Therefore, acreage coming out of a Conservation Reserve Program contract would be insurable. To establish a production guarantee for the acreage emerging from CRP, the policyholder may provide acceptable production history for the year(s) the crop was grown prior to the acreage’s enrollment in CRP. If the crop was grown prior to enrollment in CRP; but, acceptable production history is not provided, yields are established differently based on whether the CRP acres are a separate unit.

Extra crop insurance homework paid off last year

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Falling yields, combined with falling crop prices, usually paint a disastrous profit picture. But in 2008, many farmers were able to lock in favorable prices for their crops, knowing that their crop insurance policies would help cover revenue losses. In some cases, Nebraska farmers experienced little or no yield loss, marketed soybeans for between $12 to $15 per bushel and still received crop insurance payments of $95 per acre or more, says Ruth Gerdes, a crop insurance agent with the Auburn Agency, Auburn, Neb. Gerdes says that the payouts vary, but 99 percent of her customers in the nine states she serves buy some type of revenue-based policies and reaped the benefits this year.

Crop Insurance Questions

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February has barely begun, but farmers across the state are already looking towards spring planting. But this year won`t be as easy to figure out what crops to put in the ground. And that`s making it harder for farmers to figure out what they should get crop insurance for. Some are attending meetings to learn about the changes in coverage this year. Every year, farmers need to submit applications for crop insurance. The deadline is March 15. But that`s just six weeks away, and with some farmers looking at six feet of snow in their fields, this year`s crop insurance is sure to be more of a gamble than ever.

Volatility makes risk management critical

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Change was the watchword of the political season, but volatility may be the best description of agriculture, says Nueces County, Texas, farmer Jimmy Dodson. And that volatility may alter the way farmers look at risk. “We now have to do just as good a job managing risks as we do in managing yields,” says Dodson. “Our risk profile has changed and volatility (in both production costs and commodity prices) is a bigger factor.” The volatility in markets has even disrupted risk planning for professionals, he says. “Strategies that have worked in the past have not worked recently, and may be less reliable in the future. Historic high basis levels caused grain prices received on hedge-to-arrive contracts to be more than a dollar a bushel less than expected.