Risk Management

Date: 7/07
Position Number: II-A-3
Expires: 3/08

Background: Agricultural producers cannot control the dual risks of weather and price. However, with revenue-based risk management tools, producers can avoid the disastrous effects of low yields and low prices. The subsidy structure of the federal crop insurance program should encourage producers to insure adequate revenue to avoid devastating losses but must not artificially stimulate production.

Producers must have timely information to make appropriate risk management decisions. The Federal Crop Insurance Corporation (FCIC), the private crop insurance companies and their agents must make every effort to provide cost and coverage information to producers as early as possible.

Resolution/Position:

1. Support revenue-based risk management tools for all states with proportional federal subsidies for price and yield risks and progressive subsidies on increased levels of coverage.
2. Support the development of new and innovative risk management products to provide a wide array of tools to help producers manage price and yield risks.
3. Support risk management products that provide payment for actual losses, including losses incurred from delayed or prevented plantings, arising from disease or other natural causes.
4. Support the use of GPS and yield monitor systems for providing harvested yield and production reporting with hard production evidence.
5. Support contract provisions for full refund of farmer-paid premiums in the event Congress provides ad hoc crop loss assistance for the insured crop year.
6. Support a change in the base price discovery period for CRC spring-planted crops from February to January for policies with a March 15 sales closing date.
7. Support updating crop insurance to ensure equitable coverage for prevented planting losses.
8. Support a replant policy that will enable producers to replant with the crop of the producers' choice.
9. When considering production for crop insurance purposes, each farm number should stand on its own.
10. Encourage Congress to establish a new independent office of crop insurance oversight within USDA to oversee companies who receive Federal Crop Insurance subsidies. Furthermore, the office should be adequately staffed and funded.
11. Risk Management Agency should calculate premiums on an actuarially sound, regional basis.
12. Federal crop insurance rules regarding testing for mycotoxins should allow bin testing if the problem surfaces after harvest has begun in the area.
13. In order to receive disaster assistance payments from the federal government, farmers should be required to have purchased at least catastrophic federal crop insurance.
14. Support passage of the National Farm Security Act to provide more equitable aid for producers who have been hurt by natural losses.
15. Support the option of arbitration to settle crop insurance disputes.
16. Encourage development of innovative programs which would allow producers to insure higher value crops at reasonable values.
17. Encourage a review of the crop insurance program to assist producers who have had multi-year crop disasters and thus have lost the ability to adequately insure their crop.
18. Support requiring crop insurance companies to compensate producers for interest costs incurred while crop insurance claims are pending, under litigation or in arbitration, at similar interest rates to those producers are charged on premiums owed.
19. Support changes in the federal crop insurance premium subsidy structure to ensure equivalent dollar levels of subsidy for yield, revenue, and income protection policieis regardless of selected unit coverage: basic, optional, enterprise or whole farm.
20. Encourage the Risk Management Agency to revise the new policy regarding corn affected with aflatoxin and other mycotoxins, as “test strip” requirements and payments allowed are unreasonable.
21. Support review of current planting date limitations to better reflect modern agronomic practices.
22. Support the development and administration of a Corn Grower Risk Management education and certification program recognized by and RMA and FCIC to aid in the issuance of written agreements.
23. Crop insurance companies should be required to disclose justifications for denying a claim.
24. Support the annual updating of county t-yields.
25. Support changing the 10 year production window for calculating APH to 10 calendar years.
26. NCGA shall diligently work to ensure that crop losses caused by man-made spring rises on the Missouri River are covered by crop insurance policies for the crop year 2006 and beyond.
27. Support revising the corn and soybean replant maximum payment allowed, to more accurately reflect the actual cost of replanting.
28. Support a process that will allow increased producer input and advocacy in RMA program development and implementation.