Senate Agriculture Committee Chairman Blanche Lincoln (D-Ark.), ranking member Saxby Chambliss (R-Ga.) and 14 other senators have written to Agriculture Secretary Tom Vilsack to urge him to make additional changes in the final draft of the department's Standard Reinsurance Agreement.
They say that USDA's most recent draft proposal, which calls for spending cuts of $6 billion over the next ten years, would "severely constrain the [Congressional Budget Office] baseline for the next farm bill." In addition, they question the "appropriateness of capping commissions paid to crop insurance agents, who are independent contractors."
The letter says that since the crop insurance agents were not a party to the SRA negotiations, they should not be bound by any provisions the document contains. "We can think of no precedent for the government restricting how much companies can compensate a specific class of workers, whether they are direct employees or independent contractors, as is the case with most agents," they say.
Speaking recently with reporters during a conference call, Vilsack said he expects that most crop insurance providers would continue to participate in the federally subsidized program, even with the proposed changes. "We've been engaged in these negotiations for months, and a number of companies have worked with us," Vilsack said. "A substantial percentage of them — if not all of them — are going to sign this agreement."
The department's goal in renegotiating the SRA is to cut both the administrative and operating costs of the program which the Government Accountability Office says have almost tripled between 2000 and 2009. GAO also points out that during that period, there was not a proportional increase in the number of policies sold or acres covered or the coverage amounts.
The Crop Insurance Professionals Association claims that if the draft SRA goes into effect, the industry cannot withstand any additional funding cuts in the 2012 farm bill.
