The Senate’s agriculture leaders have joined the debate about the ongoing Standard Reinsurance Agreement (SRA) negotiations, telling the USDA Risk Management Agency (RMA) in a letter that it should “refrain from making deep cuts to the federal crop insurance program” as part of the process.

Senate Agriculture, Nutrition and Forestry Committee Chairman Blanche Lincoln (D-AR) and Ranking Member Saxby Chambliss (R-GA) wrote in a joint letter signed by 24 other Senators that such cuts, particularly following significant cuts to the crop insurance program in the 2008 Farm Bill, could force some companies out of business and endanger some of the 18,000 jobs crop insurance supports, mostly in rural areas.

The 2008 Farm Bill authorized a renegotiation of the SRA, which is the agreement between the Federal Crop Insurance Corporation and the crop insurance companies that serve farmers throughout the country. A first draft of the proposal was released in December, with the goal of finalizing the agreement by April 1 in order to give the companies time to sign it prior to the beginning of the 2011 reinsurance year beginning July 1.

A number of issues are at stake in the process, including the handling of administrative and operating reimbursement rates that, if cut inappropriately, could affect the level of coverage and service producers experience. The SRA process will not affect producer premiums or programs offered and is not intended to address policy issues such as quality loss factors and actual production history.

The ag committee letter indicated that the amount of proposed cuts in a first draft released by RMA “came as quite a shock” and reminded RMA that Congress achieved $5.6 billion in savings from the crop insurance program over the 10-year 2008-2017 period during the 2008 Farm Bill process. They told RMA Administrator Bill Murphy, to whom the letter was addressed, that “these cuts should be taken into account.”

National Association of Wheat Growers (NAWG) and other groups have been urging the Obama administration and crop insurance companies to continue negotiating in good faith to come out with an arrangement that will achieve the goals of the program.
The full letter from Lincoln and Chambliss is available online at http://ag.senate.gov/site/news.html.