Chris: Good point on Senator Blanche Lincoln. She is doing everything she can to reconcile with her electorate in Arkansas, a somewhat conservative state. She has strayed from them on so many issues, I expect her to run a campaign to the right of Atilla the Hun in the coming months. I do believe that whole carbon and climate change issue has met its death, given the research scandals and such. Hello Senator Lincoln, have you finally heard your electorate?

Now that corporations have unlimited power in buying votes she better get with the agenda! Corporate America has no time for change, the GOP reflects this attitude and the recent supreme court decision should put to rest anything that interferes with their money making! The "tea carpetbaggers" have no problem with allowing the wealthiest to take control and at the same time ignore any solutions to our quickly dwindling energy. You will see many more congressmen and senators bought by the corporate clowns. Dem and Gop are all for sale, don't kid yourselves and farming is at the top of the list. We are all owned, just try to plant your own seeds! Who cares about the environment,,, as long as it makes money it has to be American and the right way,,, just look at how the Bush administration let the banks "do their own thing", that is what happens when you take out government regulations! $800 billion dollars given with no strings attached???? Sounds like corporations pull a few strings. Don't you think Tom and Chris????

Chris: Ag Secretary Vilsack's action to dumb the Animal ID program needed for food safety, back into the hands of state governments is just one more reason for the good citizens of Iowa and Minnesota to act in 2010! By simply culling Senator Grassley, House AG Chairman Collin Peterson and any member of Congress who has been their ten years or more. For how else can we deal with the rambling herd of Washington incompetence we are all responsible for, but todate have failed to send the message loud and clear, your out? Alan Roebke (REB-key) Alexandria Minnesota

Alan, I like people posting comments on the blog and appreciate your input. I only ask that people stick to the subject matter of the blog. We also cannot allow people to promote their political websites or campaigns through our blog portal. We know you have your opinion, but we also have a lot of other readers who would disagree. Thanks for following our policies.

Chris: Thanks for the update and the House bill. There's nothing like an election year to return some of the elected officials to sanity. It looks like Ben Nelson and Mary Landrieu are seeking indulgences for their transgressions in the health care bill. Oh how wise our founders were to give us the ability to sweep out the political barn every few years!

Good reporting Chris. Now see why they are willing to delay money. In Fiscal Year 2006 the Insurance companies received about $1.796 billion for their work with Crop Insurance, as in A&0 and Underwriting Gain. For Crop Year 2006 it amounted too $1.786 billion from the Risk Management Agency or RMA/USDA. Then in FY2008 it totaled $4.557 billion and in Crop year 2008 it totaled $4.647 billion from RMA. See guys, when insurance company revenue increases that much in 2 years. Congress needs to hide it's perks and payoff's. While insurance companies are no rush for the cash, for it will come. Yet the paper work on an election year sure looks better. Alan Roebke

Chris -- Never confuse budgeting with reality! Not sure where you got your numbers from. First, CBO did not publish A&O expenditures in its 2007 or 2008 baseline, so it is unclear where you get the $16.3 B number. If you compare the 2007 March CBO baseline to the 2008 March CBO baseline it shows total PREMIUM projections increased by roughly $16 B (2008 - 2017). But premium is not A&O payments. A&O payments are a percent of premium roughly 21% in 2007 and 2008. So saying A&O payments are up by $16.3 billion is not correct. Second, premium subsidy has nothing to do with underwriting gains. Premium subsidy is the subsidy paid on behalf of farmers to make the insurance more affordable. The loss ratio drives underwriting gains. The loss ratio is indemnities divided by premium (not premium subsidy). CBO assumes the loss ratio is equal to the statutory target, which was 1.0375 in 2007 and 2008. But this is just an assumption because as we all know, the loss ratio never equals the statutory loss ratio in the real world. So your math of adding premium (as A&O payment) plus premium subsidy (as underwriting gain) is factually incorrect and actually nonsensical. Third, the farm bill cut A&O payments by 2.3 percentage POINTS, not percent. Average A&O was around 21% in 2007 and 2008, after the farm bill cut is was roughly 18.5% in 2009. That is roughly a 12% cut. In 2009 on $8.9 billion in premium that works out to over a $100 million cut from the farm bill -- real dollars, not budget dollars. Fourth, timing shifts -- is this really a gimmick? Our federal government, like it or not, budgets on a cash basis. Timing shifts are a tried and true way for Congress to create savings by shifting expenditures outside the budget window (why you don't see the cost in FY 2013 in your statement). But don't confuse budgeting with reality. In reality, the crop insurance companies are paid up to 8 months later once the timing shift kicks in. Sure they still get paid, but now they have to borrow money to finance operations. That is a cost that will be born every year going forward. If the budget worked on a net present value basis, perhaps it would more accurately reflect those costs. The problem is the budget has nothing to do with industry costs, only federal impacts are considered and then only on a cash basis. Finally, to my initial comment, don't confuse the budget with reality. The CBO basline for crop insurance is put together by one individual analyst. It is based on a host of assumptions that are not correct from the start but represent that individual's best guess of future commodity prices, participation in the crop insurance program, rates etc. etc. To say the program is expected to grow by $16 billion in premium over 10 years is purely a conjecture. What matters most is the actual year (2008), which is known, and the next year which is fairly well known (2009). In that sense the farm bill cuts are real. If commodity prices come down, the cuts will be even more dramatic. Best of luck with your debate over the numbers.

Stephen: Thanks for the info, interesting numbers and view. Now a little info I found on Stephen! MEMO Date: December 20, 2002 From: J. H. Joyce Chairman Subject: Stephen Frerichs We are pleased to announce that Mr. Stephen Frerichs will be joining the Rain and Hail team as a consultant beginning January 1, 2003. Given the ongoing importance of building and maintaining relationships in Washington, D.C., Stephen’s past experience will serve Rain and Hail well. Prior to forming his consulting company, AgVantage LLC, Stephen was with the Office of Management and Budget (OMB) where he focused on crop and agricultural insurance issues. More recently he was manager of the American Association of Crop Insurers in Washington, D.C., where he actively lobbied both Congress and the Administration on behalf of crop insurance companies and agents. In addition to helping represent Rain and Hail in Washington, Stephen will also help broaden Rain and Hail’s influence and contact with other agribusiness groups throughout the country. Many of us have had the opportunity to know and work with Stephen for a number of years and we are excited to have him join our team and look forward to the contributions he will make. Posted by Alan Roebke www.congressionalchange.com

By taking this stand Bob Stallman only reaffirms the stereotype people have of farmers, that they are stubborn conservatives that drive huge gas guzzling monster pick up trucks. As a fossil left over from the Bush administration Bob fits in well with the climate deniers and corporate owned lobbies. Like all the commodity/ farm organizations the FB represents the big boyz corporations more then the peon farmers. One must ask the question "who makes the most money from the status quo"? None of these groups have a solution to either rising oil/energy prices which are directly linked to climate change, the solutions are identical. DO nothing is their solution, let the "market" dictate the solution and at the same time they ignore the huge government support of big oil and big ag. As we become even more dependent on foreign oil and fossil fuel the FB writes off the resources that American farmers have to make all of us more independent. Biofuels, solar, wind, they all are right here. Stallmans solution,,,,, wear a silly cap that says "Dont cap our future" Our future is already capped by Monsanto, ADM, Pioneer, Cargill !!!! Just look at what happens when grain prices rise, who gets the money?

Good reporting Chris: Now some info on Crop Insurance Revenue changes for the Crop Insurance Companies 2006 compared to 2008 that I received from RMA. Sent: November 2009 From RMA Subject: Re: Cost disclosure info on Federal Crop Insurance To:******** From Alan Roebke (REB-key) A couple of things Please? Do you have any newer updated drafts for both Fiscal and Crop year costs for Crop Insurance that you can send that are different from the 10-*-09 numbers you sent? Then on the numbers you sent me, after my analysis, can you comfirm the following for me? See below: In Fiscal Year 2006 the Insurance companies received about $1.796 billion for their work with Crop Insurance, as in A&0 and Underwriting Gain. For Crop Year 2006 it amounted too $1.786 billion from the Risk Management Agency or RMA/USDA, right? Then in FY2008 it totaled $4.557 billion and in Crop year 2008 it totaled $4.647 billion from RMA, right? Alan Roebke Response: Alan, Yes, I agree with your numbers. Sorry, still no 2010 numbers that I know of.

Chris, your numbers only tell half of the story. You should go back and check the facts on the number of claims processed in 2008. The spike in commodity prices resulted in a dramatic increase in the revenue-based plans of insurance. Consequently, when the prices dropped, a record number of claims were filed. These claim payments helped producers cover some of the skyrocketing inputs costs and kept more than a few out of the auction barn. Overall, this would be a more honest discussion if the analysis spanned the past 10 or 20 years instead of focusing on the most recent 2 or 3 years. Finally - it's been my observation that countries all over the world are racing to emulate the crop insurance program we have in the US. There's room for improvement but we should be cautious no to change too much too quickly.

To A Reader, I plan to flush out these numbers more, but I'm going to demand a lot more from the industry because I'm not taking the line that they have suffered a cut any longer.

Guys: In 2006 the Crop Insurance Companies Insured 242 million acres of crops and received $1.79 billion for their work and investment! For the 2008 crop they insured 272 million acres and received $4.65 billion for their work and investment. 2.6 times more money to insure 30 million more acres or a 12% workload increase for 30 million more acres! A nice little increase, right boys or windfall is maybe a better term? Please credit your source. Alan Roebke (REB-key)

A reader who did not wish to be named sent me the comments below. I thought it was good food for thought. Chris, I appreciate your reporting on the all important topic of crop insurance. I have a few mental vitamins for you and your analysis. There are some items on the expense side of crop insurance delivery that really need to be counted in your analysis. Disclaimer: I used to work as a Marketing Rep. for a large crop insurance company for 5 years and have been a crop insurance agent for over 7 years. I am also a taxpaying citizen and I would agree with anyone who wants to make sure that our crop insurance system is not unduly subsidizing companies, agents, farmers, etc. There does need to be enough skin in the game to allow for innovation, proper sales and service to the farmers, etc. Here are some items to add to your analysis: 1. Advent of the Biotechnology Endorsement (corn premium discount of approx. 5%-8% in MO to over 20% in some cases in other states) A lot of extra work and time spent in educating crop ins. industry staff and farmers. 2. Additional subsidy applied to Enterprise Units starting in 2009 caused many more acres to switch to that causing even more work for less premium/comm. This generated a discount to gross premiums of (avg. of at least 20%; range of approx. 12%-45%) 3. RMA is in 2010 requiring a certain percentage of policies to report acres on a field-by-field basis which requires GIS mapping. The cost associated with programming, education, printing, processing and staffing is significant to both companies and agencies. 4. Specialty soybean types; For 2010, agents must ask each insured if they have planted and are going to plant speciality soybeans. If so, they must be insured as separate types and split out APH databases. They are also offered different covg. options on the speciality soybeans. This requires education, time and extra processing expense. 5. 2008 Farm Bill Privacy; This has created extra Non-Disclosure forms that must be signed annually by agency and company staff that may have access to any private farm info. This takes additional time and followup in addition to Conflict of Interest forms that must be completed and signed for each company each year. Controlled business forms must also be completed with each company each year. 6. 2008 was the largest year for premiums of major crops because most farmers purchased revenue ins. and commodity prices were high. These high prices in the spring resulted in low prices in the fall/harvest timeframe which created most farmers to have a revenue loss. Many many addtional overtime hours were required of agents, adjusters, company processing staff, etc. just to get these claims worked as timely and accurately as possible. Why do we not hear of that in any discussions? To be honest, we woud have to staff up significantly in our office (and so would other agencies and companies) if every year were anything like 2008 claims. I would not wish that on anyone again. 7. With the advent of higher comm. prices, comes much higher volatility. This is likely to cause more significant revenue losses in years to come which could signal less underwriting gains and higher loss adjustment and processing expense. Agents also experience higher probability of E&O expense and occurrance. I have not once heard these items taken into consideration even though they have added great expense post-2006. I am not sure comparing all of these numbers with 2008 is necessarily accurate either. 2008 was here and is now gone. Also factor in that the industry A&O dropped from approx. 21.1 avg. to 18.3 (a 13% cut)from 2008 to 2009. We may want to be careful demonizing the crop ins. industry as they do not control the markets and have taken on extremely large and difficult tasks over the past few years as a result of the items mentioned above which is not all-inclusive. Everyone in the industry I have talked to agrees that a cut is justified with the higher comm. prices and premiums. It's just an instant 40% drop in A&O (following last year's 13% cut) coupled with a setback in underwriting gain potential that may cause some layoffs and industry consolidation. It is not wise in my opinion to consider either side as "wrong" from the start. Much is being reported on with GRIP/GRP plans that were dropped recently by RMA. GRIP/GRP would be the exception to the extra workload as there is very minimal work in educating agents or farmers with GRIP. No adjuster/claims expense. In my opinion, with respect to GRIP/GRP policies, we agents could take a per policy fee with a slight % comm. as the agents' mapping and processing expense is greater for a 5,000 acre farmer vs. a 500 acre farmer. There is no comparison between the agents and companies complexity and expense of non-GRIP/GRP plans vs. GRIP/GRP plans. Again, I applaud you for your reporting as well as other DTN editorial staff. Please let me know if you would like any more perspective.