NCGA Reacts to RMA Proposal to Crop Insurance Policies (10-30-06)

In comments to the U.S. Department of Agriculture Risk Management Agency (RMA), the National Corn Growers Association (NCGA) noted RMA is taking steps in the right direction in efforts to combine revenue and yield protection but cautioned more adjustments in current premium discounts must be made to reflect corresponding reductions in risk exposure.

NCGA sent the comments regarding the Federal Crop Insurance Corporation’s (FCIC) proposed rule combining the Crop Revenue Coverage, Revenue Insurance and Income Protection programs. The goal is to provide a better crop insurance program for producers.

NCGA noted the proposed rule will simplify product selection, reduce unnecessary documents and facilitate producers’ understanding of coverage options. While strongly supporting the provision to provide premium discounts to producers who aggregate their acreage into the larger basic and enterprise units, NCGA President Ken McCauley said growers are concerned about the proposed changes that could diminish the protection and overall value of coverage.

“The provision that would limit the harvest price option (HPO) to crops with revenue protection, in our view, is overly restrictive,” McCauley said. “To enhance a producer’s ability to better compliment his crop insurance coverage with other farm program support and private risk management tools, NCGA recommends the insured be allowed the flexibility to select the HPO with the option to purchase an upside price replacement coverage endorsement.”

NCGA also cited serious concerns on the change of the new limit on Revenue Assurance Harvest Price Option coverage and urged the FCIC to consider the consequences of the change.

“Given the considerable volatility in the corn market over the past year, a limit on price increases at 160 percent would place an unreasonable constraint on producers who wish to maintain a hedge position,” McCauley said.

The comments also questioned a provision to reduce the projected price discovery period from 30 days to 15 days. NCGA commended the FCIC for proposing changes to improve the clarification and flexibility of the prevented planting provisions in the Common Crop Insurance Regulations.

To view the comments in their entirety, click here.