USDA currently is in the process of renegotiating its standard reinsurance agreement (SRA) with the nation's crop insurance companies, and the heads of the Senate Agriculture Committee want to be certain that any changes will not affect "the viability of the industry and the quality of service in delivering the program to producers."
In a letter to William Murphy, administrator of USDA's Risk Management Agency, Chairman Blanche Lincoln (D-Ark.) and Saxby Chambliss (R-Ga.) say, "We are concerned the proposed cuts to the crop insurance industry, in addition to cuts made as part of the 2008 farm bill, could force some companies out of business." The letter also points out that:
"Congress carefully negotiated the 2008 farm bill, including $5.6 billion in net savings from the crop insurance program over the ten-year period of 2008-2017 as compared to the March 2007 CBO baseline. It was a difficult process, and already represents significant modifications in the reimbursement of delivery expenses to [approved insurance providers]. These cuts should be taken into account as you work toward a final version of the SRA. Even though your agency was authorized in the farm bill to consider alternative reimbursement mechanisms in the SRA and the companies expected to face some revenue reduction from the process, the depth of these proposed cuts came as quite a shock, and combined with the cuts from the farm bill could force some companies out of business."
The comment period on the SRA for 2011 closed Tuesday, Jan. 19.
