The USDA recently released the final draft of a new crop insurance agreement that it claims will save $6 billion in federal spending. However, the Crop Insurance Professionals Association opposes the draft and has proposed an alternative that it says “would save taxpayers and farmers money without crippling the crop insurance infrastructure and harming growers.”

The 2008 Farm Bill authorized USDA’s Risk Management Agency to renegotiate the Standard Reinsurance Agreement for the 2011 crop year. To prepare for the negotiations, the RMA contracted for a study of the crop insurance industry, which found that the companies averaged a 17% return over the past 21 years. The new standard agreement would lower average returns to about 14.5%.

As an alternative, the CIPA proposed that the USDA lower premium rates for all producers. In a letter to USDA Secretary Tom Vilsack, dated June 16, the association’s chairman wrote, “The Administration’s stated objectives of deficit reduction and reducing the cost of delivery can be achieved in another way that is not harmful. … Simply bringing down premiums that producers pay in lieu of an SRA renegotiation would achieve both objectives without injury to federal crop insurance.”

For more information about the CIPA’s position, visit cipatoday.org.