Capital Press

Crop insurers say USDA's proposed funding cuts to its crop-insurance program will cause their industry to downsize and shed jobs.

USDA's Risk Management Agency introduced a proposal in December for altering the agreement by which insurers deliver government-backed crop insurance.

National Crop Insurance Services, an industry association, released its counter-proposal on Jan. 20, along with a critique of the cuts that RMA wants.

"The industry is deeply concerned with RMA's initial draft of the 2011 (Standard Reinsurance Agreement) and is proposing a number of changes to reduce the highly detrimental impacts of the RMA proposal," the association said in a statement.

RMA, which administers the federal crop insurance program, announced late in 2009 that it was beginning the process of updating its contract, which was last reworked in 2005. The 2008 Farm Bill authorized RMA to rework it again.

U.S. Agriculture Secretary Tom Vilsack said RMA's proposed changes will help expand availability and effectiveness of insurance while reducing costs to farmers and taxpayers.

RMA says that under the existing agreement, industry payments have doubled from $1.8 billion in 2006 to an estimated $3.8 billion in 2009. From 2000 to 2008, the total number of policies dropped from 1.3 million to 1.1 million, the agency says.

But the industry association says RMA's proposal would reduce the program's funding by $4 billion over the next five years, which adds to the several billion dollars' worth of reductions mandated by the 2008 Farm Bill.

Senate agriculture committee chair Blanche Lincoln, D-Ark., and ranking member Saxby Chambliss, R-Ga., sent a letter to RMA manager William Murphy asking the agency to step back from the program cuts.

The letter was signed by 24 other senators.

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