December 23, 2011

Podcast: Re-rating crop insurance premiums is a good move

In this podcast, Tom Nathan, a farmer from Meadow Grove and member of the Nebraska Corn Grower Association, said the U.S. Department of Agriculture's Risk Management Agency decision to re-rate crop insurance premiums for corn for the 2012 crop year was a positive move by the agency.

"This was a big announcement because it is an issue that corn farmers and their membership associations, like the Nebraska Corn Growers and National Corn Growers, have emphasized to USDA for a number of years," Nathan said.

Crop insurance is supposed to be a roughly 1 to 1 ratio. In other words for every dollar paid in, one dollar is paid out. For corn farmers, though, that has not been the case for a number of years, as farmers were paying in more in premiums than what was being paid out in benefits.

Nathan said RMA was dropping rates 7 percent for corn farmers and 9 percent for soybean farmers.

RMA said it was improving the formulation of its rate-making methodology to establish a more fair premium rate for farmers. The methodology is based on findings from an independent study and peer review process. "We are pleased farmers will not face a widening gap between losses paid to corn farmers and premiums charged to growers for coverage," Nathan said.

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