With corn insurance premiums falling by 7% and soybeans by 9%, farmers may have more to spend on equipment next year.
The U.S. Department of Agriculture's (USDA) Risk Management Agency (RMA) announced today that it will update the methodology to set crop insurance premiums, leading to lower insurance premium rates for many corn and soybean producers in the 2012 crop year. The rate adjustment is based on findings of an independent study and peer review process. The study is part of RMA's ongoing effort to improve the methodology of determining premium rates for crop insurance.
"We are improving the formulation of our rate-making methodology, and are moving to establish the most fair and appropriate premium rates for today's producers," said RMA Administrator William J. Murphy. "On average, these new rates should reduce corn farmers' rates by 7% and soybean farmers' by 9%. As good stewards of taxpayers' dollars, we welcome the opportunity to match premium rates more accurately with current risks."
RMA contracted for a study by Sumaria Systems Inc., which examined premium rates, and the rating process, starting with the United States' two major commodities: corn and soybeans. RMA then requested an independent expert peer review to provide feedback on the Sumaria study results. RMA will conduct further review and analysis of the study's recommendations along with comments and issues raised by peer reviewers, making additional adjustments as warranted and appropriate. Accordingly, RMA is taking action to implement adjustments to premium rates in a "phased in" approach that allows for any further adjustment pending additional analysis of peer review comments.
RMA periodically reviews premium rates and makes necessary adjustments for actuarial soundness, aiming to establish the most appropriate premium rates for today's producers. The current approach will make a concerted effort to adjust premium rates in a manner that recognizes the latest technology, weather, and program performance information. Updated data pertaining to prevented planting, replant payment, and quality adjustment loss experience, was also used in determining rates changes.
RMA will release actuarial documents by November 30 reflecting premium rates and other program information that will be effective for the 2012 spring crop season.
The Obama Administration, with Agriculture Secretary Vilsack's leadership, has worked tirelessly to strengthen rural America, implement the Farm Bill, maintain a strong farm safety net, and create opportunities for America's farmers and ranchers. U.S. agriculture is currently experiencing one of its best years in decades thanks to the productivity, resiliency, and resourcefulness of our producers.
Today, net farm income is at record levels while debt has been cut in half since the 1980s. Overall, American agriculture supports 1 in 12 jobs in the United States and provides American consumers with 86 percent of the food we consume, while maintaining affordability and choice. The Obama Administration has aggressively worked to expand export opportunities and reduce barriers to trade, helping to push agricultural exports to record levels in 2011 and beyond. Strong agricultural exports are a positive contribution to the U.S. trade balance, support more than 1 million American jobs and boost economic growth.