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Crop insurance, payments in limbo?

As promised, the USDA's website is offline, one effect on agriculture from the shutdown of the federal government today. Most farmers can do just fine without that, but a few may feel other effects.

USDA's Risk Management Agency "won't process anything, including insurance," Senator Chuck Grassley (R-IA), a member of the Senate Agriculture Committee, told reporters Tuesday.

Claims above $500,000 are automatically reviewed by RMA, but the industry group, National Crop Insurance Services, was trying to find out the details of the shutdown's effect Tuesday morning.

Art Barnaby, a Kansas State University economist and authority on crop insurance, told that he expects most claims to be paid by companies "without delay."

"Loss adjustment is done by the private companies," he said in an email this morning. "The private companies pay the farmer and then get reimbursed for the government's share at a later date. It is a negative cash flow line of insurance for the AIP [Approved Insurance Provider], and this is not normal. These fund transfers are all internal bookkeeping activities."

Other services from USDA will also be affected, Grassley said. Because Farm Service Agency offices are closed, direct payments might be delayed. 

Government reports could also be delayed, he said. Grain inspections that are financed by user fees will continue.

A memo to Farm Service Agency staffers from administrator Juan Garcia confirms Grassley's assertion about direct payments.

FSA staff can't work until funding is restored, he said. " . . . this means that many services will be delayed or interrupted for farmers, ranchers, and associated customers. For example, this includes but is not limited to FSA's commodity price support activities and commodity loans, farm loans, disaster assistance, and conservation programs." 

Grassley said that he's still confident that a farm bill can be negotiated between the House and Senate this fall.

"I hope the situation is resolved quickly," he said of the shutdown. "Congress has a lot to do this fall, including reauthorizing a farm bill." 

Crop insurance isn't directly affected by the farm bill, either, since it has its own authorizing legislation. Some farm bill programs in the commodity title of the pending farm legislation are tied to crop insurance. 

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