National Crop Insurance Services (NCIS) has issued a counterproposal to the 2011 Standard Reinsurance Agreement (SRA) issued by USDA/Risk Management Agency (RMA) on Dec. 4, 2009.

NCIS says it offered the rebuttal to the SRA—the contract under which the private insurance companies agree to deliver the federal crop insurance program to the nation’s farm producers—due to the cuts called for by the RMA. Specifically, the RMA proposal would reduce funding by approximately$4 billion over the next five years. 

“These are pretty dramatic cuts based on little or no supporting research and data,” said Bob Parkerson, president of National Crop Insurance Service, noting the $4 billion cut is in addition to the $6.4 billion cut mandated by the 2008 Farm Bill. “The industry supports thinking about change, but it has to make sense for the Government, industry and producers.”

NCIS complains the lack of subsidies will lead to further consolidation in the industry, and reduce industry returns well below the long-term average, thereby sharply reducing the incentives companies have to maintain investments in the industry and serve producers.

“We truly hope that USDA and RMA will be willing to sit down with us soon and go through a true negotiation process for this SRA, “said Parkerson. “The industry has many good ideas to offer based on years of analysis—much of it by third-party accounting firms. I know we can work this out to the benefit of all interested parties without wreaking havoc with a public/private partnership that has been working the way Congress intended for it to work for the last 30 years.”

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