Ag Policy Blog
Chris Clayton DTN Ag Policy Editor

Tuesday 03/16/10
Scuse on Crop Insurance Negotiations

Michael Scuse, deputy undersecretary for Farm and Foreign Agricultural Service, spoke Monday to the National Farmers Union convention in Rapid City, S.D., explaining that USDA is expected to release its third contract offer to the crop-insurance industry on the Standard Reinsurance Agreement within the next couple of weeks. Insurers rejected the first two proposals that would have cut $8.4 billion in the first proposal or $6.9 billion in the second proposal, over 10 years. Scuse said he expects a contract to be signed by June so it would be in effect in 2011.

"We have negotiated in good faith," Scuse said. "We have listened to the concerns. We have met with producers, companies, agents, and other stakeholders to make sure we have an SRA that benefits the taxpayers, the farmers and the companies alike."

Scuse said there were "numerous meetings" just last week about the contract talks. "We will have a new SRA in the not-too-distant future."

Scuse told NFU members that crop-insurance administrative and operating expenses rose from $1.8 billion in 2006 to $3.8 billion in 2008 "while the number of policies has essentially gone unchanged."

One NFU pointed out the organization sells crop insurance and "it's a mess," adding that if the commissions are reduced any more that some agents will leave the business. "How are you going to implement this program if the agents are so stressed and not getting enough money to do the paperwork.

Scuse countered that agents went from receiving $600 per policy in 2006 to about $1,400 per policy in 2009. Scuse said USDA is working to upgrade the computer programs for the Farm Service Agency and Risk Management Agency to share data that would make it easier for agents to do their jobs.

"We are aware there are some issues for the agent, but we are also looking at ways we can reduce some of the workload for those agents at the same time," Scuse said.

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Posted at 8:11AM CDT 03/16/10 by Chris Clayton
Comments (4)
I am a farmer and a crop insurance agent. The statement that agents recieved $600 per policy compared to $1400 per policy in 2009 is not a fair comparison> In 2006 in my county it cost $21.68 for a GRIP policy on corn and $13.16 for a GRIP policy on soybeans and in 2009 corn GRIP cost $58.68 and $43.74 for soybeans> these are a per acre costs. The prices of corn and beans has gone up considerable in that time. The agent has to carry Errors and Ommision Insurance to protect himself for a claim against him, and the amounts of guaranteed revenue for the for the farmer are much larger now. The increase paid the agents per policy should increase as the cost for the farmer increased, and the guaranteed coverage increased. The government has not decreased the workload on the agents in that time, if anything they have increased the workload.
Posted by Ronald Nelson at 10:10AM CDT 03/16/10
To add to this, let's compare what the commissions will be for 2010. The 2010 base price for winter wheat is 39% less than 2009, the base price for 2010 corn is 2% less and rates are approximately 25% less than 2009 due to a decreased volatility factor. Now, this $1,400 per policy is nearly down to the $600 paid in 2006.
Posted by Glenn BRANDS at 11:43AM CDT 03/16/10
I bet there are a number of good people willing to take on the workload of those wanting to leave.
Posted by James Stover at 5:09PM CDT 03/16/10
Mr. Roebke, I have tolerated some of your comments in the past but now I will delete each one posted, regardless of whether you remain on subject or you are brief. You are not welcome to comment here any longer. For everyone else, I appreciate the commentary and feedback.
Posted by Chris Clayton at 9:16PM CDT 03/16/10
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