USDA officials indicated last week they would work with Congress to somehow preserve 2012 Farm Bill budget baseline that could potentially be lost through the renegotiation of the Standard Reinsurance Agreement (SRA). The comments, delivered to CongressDaily on the record by a USDA spokesperson and in less official terms to Capitol Hill leaders, came days after 10 commodity groups, including the National Association of Wheat Growers (NAWG), wrote Secretary of Agriculture Tom Vilsack, expressing “grave concern” about baseline losses from savings achieved through the process, which was called for in the 2008 Farm Bill.

The March 2010 budget baseline established by the Congressional Budget Office (CBO) assumed $3.9 billion in savings over 10 years that would likely result from cuts made in government reimbursement to crop insurance companies under a new SRA contract still under negotiation. The Obama administration budget proposal released earlier in the year assumed up to $8 billion in cuts, the same figure as in USDA’s first draft of a new agreement. A subsequent draft proposed $6.9 billion in cuts.

While agreement negotiations are ongoing, it is clear the current budget baseline does nothing to credit the eventual cut back to the budget for agricultural safety net programs. This could be devastating when Congress attempts to write the 2012 Farm Bill, particularly after deep cuts were already achieved in the 2008 Farm Bill process.

NAWG and other groups have been urging the Administration and crop insurance companies to negotiate in good faith to arrive at an agreement that achieves the goals of the crop insurance program and maintains or improves delivery and service to producers. However, groups maintain that this must be done in a manner that preserves the farm bill baseline.

The groups said, in part that if the situation is left unaddressed by USDA, “reasonable savings obtained in an SRA renegotiation cannot be properly credited to Congress to apply toward improving crop insurance for producers or to help meet potential reconciliation instructions. This does not bode well for any policies under the jurisdiction of the House and Senate Agriculture Committee.”

Signatories of the letter included NAWG, American Farm Bureau Federation, American Soybean Association, American Sugar Alliance, National Barley Growers Association, National Corn Growers Association, National Milk Producers Federation, Southern Peanut Farmers Federation, USA Rice Federation and Western Peanut Growers Association.

The full letter is available at www.wheatworld.org/riskmanagement.