NCGA
Expresses Concern over Federal Crop Insurance SRA (5-7-04)
In a letter addressed to members
of the Senate and House Agricultural Committees, the National Corn Growers
Association (NCGA) and 10 other leading commodity
organizations voiced concern over the U.S. Department of Agriculture’s
(USDA) second draft of the Standard Reinsurance Agreement (SRA).
The draft SRA for 2005 outlines
how the federal government will reimburse companies for their administrative
and operating costs and how it will share
the risk of insuring farmers’ crops against drought and other disasters.
The second iteration of the draft SRA proposes reducing the funding for private
companies that deliver crop insurance by $41 million.
Crop insurance is USDA’s principal means of helping farmers survive
a crop loss, said Ron Litterer, chairman of NCGA’s Public Policy Action
Team. He noted the program provides American farmers with more than $41 billion
in risk protection on approximately 220 million acres through about 1.2 million
policies. The letter states that without crop insurance, many farmers would
have difficulty obtaining operating loans to plant a crop. Crop insurance has
become an integral thread of the financial safety net for rural America, Litterer
said.
“We are obviously concerned about this draft and its potential impact
on growers and commodity programs,” Litterer said. “Adequate funding
for delivery of federal crop insurance and farm programs enables producers
and their lenders to plan for the long term.”
Options to reduce funding for the private crop insurance companies either
this year or next pose a problem for future funding of USDA programs, Litterer
said. NCGA believes that if a budget reconciliation bill is a necessity to
reduce the federal debt, spending cuts for federal crop insurance may have
an adverse impact on overall spending for U.S. agriculture programs.
The coalition letter also urges the administration to adopt a budget-neutral
SRA this year and wait to discuss the reductions to that program if and when
there is a budget reconciliation bill in 2005. Negotiations with the Risk Management
Agency are ongoing and a third draft is due in mid-May. A final draft for the
companies to consider is expected within 30 to 60 days after the third draft
is released.
To view the letter in its entirety,
click here.