Crop insurance industry pressured by funding cuts in final SRA
By Agri-Pulse Staff
© Copyright Agri-Pulse Communications, Inc.
Overland Park, KS, July 1 – The crop insurance industry predicts that the federally subsidized program “will withstand the $6 billion reduction in funding handed to them by the USDA’s final Standard Reinsurance Agreement (SRA) contract” released June 29. 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, the industry charges that USDA added terms and conditions to the agreement “very late in the process,” leaving companies “very little time to react and negotiate a contract that was fair to all parties.” The industry considers limits on legal recourse of companies and agents “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 say they need to evaluate how reductions will affect the quality of service they provide to producers and need to develop strategies 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 [Sept. 11, 1956] 'Farming looks mighty easy when your plow is a pencil, and you're a thousand miles from the corn field'.”
To read USDA's 46-page final June 30 Standard Reinsurance Agreement (SRA), go to: http://www.rma.usda.gov/news/2010/06/630sra.pdf
For Agri-Pulse news coverage of the final SRA, go to: www.agri-pulse.com/20100610S2_Crop_Insurance_Cuts.asp
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