The National Corn
Growers Association (NCGA) along with 10 other organizations Monday
encouraged the U.S. Department of Agriculture (USDA) to consider recommendations
on disaster assistance benefits. The letter to USDA Secretary Ann
Veneman urges the agency to use the net crop insurance indemnity payment
to compute benefits as well as alternate options to determine crop
values and disaster payments.
“Crop insurance
premiums paid by the farmer are not part of the value of his or her
crop and reduce the amount of indemnity he or she receives for losses,”
stated the letter. “If the indemnity amount used for the calculation
were not reduced by the premium amount paid, the farmer would in essence
be paying for the crop insurance twice, as that amount would be lowering
the farmer’s disaster payment.”
The net crop insurance
payment uses a calculation of indemnity, less producer paid premiums
and fees.
According to the
letter, “Depending on how the crop is valued, producers with
qualifying losses who purchased higher levels of crop insurance coverage
and revenue products in 2001 or 2002 may not receive a disaster payment
at all due to the benefit cap. This would send the wrong message to
the producer, especially when the farmer is required to purchase crop
insurance in the future.”
The letter warns
of producers being less likely to purchase crop insurance providing
higher levels of coverage if the value used for benefits is not appropriately
considered.
The organizations
propose the higher of the following be used to value the crop:
(1) season average
price;
(2) established marketing loan rate; or
(3) the highest guaranteed price in effect under the crop insurance
policy, which the producer held on the crop in the year of the loss.
“By providing
the producer with these options to value their crops, producers with
higher crop insurance coverage would not be excluded from disaster
assistance,” concluded the letter.