WASHINGTON – The U.S. Department of Agriculture’s Risk Management Agency (RMA) announced Nov. 28 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.
Risk Management Agency Administrator William J. Murphy said, on average, these new rates should reduce corn farmers’ rates by 7 percent and soybean farmers’ by 9 percent.
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.
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 Nov. 30 reflecting premium rates and other program information that will be effective for the 2012 spring crop season.
U.S. Sen. Sherrod Brown, D-Ohio, had championed the revision, coordinating a letter sent by nine senators, including Ohio’s other U.S. senator, Rob Portman, to the USDA, urging it to follow the recommendations of the independent study.
“Midwest producers have been shouldering more than their fair share of the burden for too long,” Brown said. “Beginning to update how crop insurance premiums are calculated is a huge win for Ohio farmers, but the USDA’s Risk Management Agency can and must do more. The recommendations of the independent study should be implemented promptly and in full.”
Full implementation of the independent study’s recommendations would result in even greater reductions to premiums, lowering Ohio annual insurance costs for corn producers by 11 percent and for soybean producers by 13 percent.