Crop Insurance- Standard Reinsurance Agreement (SRA)
Dan Looker reported earlier this week at AgricultureOnline that, “Last week members of the crop insurance industry met with USDA officials to try to understand the Obama Administration’s latest proposed reinsurance agreement with the industry. Tuesday, National Crop Insurance Services President Bob Parkerson said the industry has no choice but to accept the $6 billion cut in federal reimbursements for administrative costs over the next 10 years, if certain technical issues can be worked out.
“‘This is an extremely large cut,’ Parkerson said at a press conference Tuesday. It comes on top of $6.4 billion in cuts in the 2008 Farm Bill. Annually, the latest cut amounts to $600 million a year.”
The article added that, “‘A big part of the reduction is going to happen with the agent workforce,’ said Keith Collins, former USDA Chief Economist and now a consultant with NCIS.
“USDA says its reimbursement to the industry for 2009 is likely to be $3.8 billion. Collins and Parkerson said the cuts to the industry might not affect farmers directly yet. Indemnity payments are guaranteed by USDA. But service to farmers might suffer. And, Collins said, the lower returns could affect the industry when another widespread loss occurs.
“‘It limits the ability to build surplus for a really bad year,’ Collins said.”