Crop Insurance Agents Suggest Alternatives to USDA Cuts

As the ag agency negotiates for a new program, trade group worries over how cost trimming will be carried out.

Published on: May 28, 2010

This week, U.S. farm organizations got a letter from crop insurance agents. The agents are suggesting an alternative to the potential funding cuts being considered at USDA that could trim as much as $8.4 billion from the program. The group says there are alternatives to the cuts, and that the negotiations aren't considering the benefits to the farmer.

The Crop Insurance Professionals Association sent that letter, and Ronnie Holt, chair of the group, offers an interesting suggestion: "If the government wants to shrink crop insurance costs or restrain company profits, then the USDA should consider lowering the premiums that farmers pay," he says, noting that USDA, not crop insurance companies, set the program rates.

Holt says cutting the premiums would actually save growers money and cut program costs. USDA and crop insurers are currently negotiating the contract, or Standard Reinsurance Agreement, that dictates the program for the next five years. CIPA says the negotiations are focuses solely on cuts to insurers, which the group says could harm future insurance offerings.

The group points to an article this week in Congress Daily noting that USDA made more money than crop insurance companies on underwriting gains since 2005, averaging $856 million per year.