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Crop insurance rate reform includes lower corn premium rates
WASHINGTON -- The U.S. Department of Agriculture’s (USDA) Risk Management Agency announced Nov. 28 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 the Risk Management Agency’s ongoing effort to improve the methodology of determining premium rates for crop insurance.
According to Risk Management Agency Adminis-trator William J. Murphy, “... on average, these new rates should reduce corn farmers’ rates by 7 percent and soybean farmers’ by 9 percent. As good stewards of taxpayers’ dollars, we welcome the opportunity to match premium rates more accurately with current risks.”
According to a Nov. 27 National Corn Growers Association press release, the Risk Management Agency said that an independent and peer-reviewed study recommended more weight be given to recent years, rather than the current approach of giving equal weight to all years back to 1975. This will help provide greater predictability for producers and crop insurance providers.
With the release by the Risk Management Agency, the corn growers voiced support for the USDA’s announcement that rate adjustments will be made to crop insurance premiums over the next two crop years.
The National Corn Growers Association “feels the Risk Management Agency’s announcement represents real reform in decreasing the widening gap between the loss ratio for corn and the premiums charged to growers for policy coverage,” said the group’s President Pam Johnson.
According to the Risk Management Agency press release, net farm income today 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. Strong agricultural exports are a positive contribution to the U.S. trade balance, support more than 1 million American jobs, and boost economic growth.
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