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Texan fights to enhance crop insurance

An add-on policy designed to cover shallow losses was part of the farm bill proposal that was being rushed to the failed deficit-cutting Super Committee, Representative Randy Neugebauer (R-TX) told today. And the Texan who serves on the House Agriculture Committee is hoping that it will be part of the final farm bill that Congress will work on in 2012.

“We’ve been working on this for a number of years now,” Neugebauer said. “We’ve been working on a program that was more flexible, that had more options and was cost effective.”

Neugebauer introduced his idea, called the Crop Risk Options Plan (CROP) as a separate bill in the House in October. It would allow producers to insure against shallow losses, which can be 25% to 30% of a farmer’s expected production. Under typical levels of coverage today, existing insurance doesn’t cover those losses.

Neugebauer’s program would be similar to today’s Group Risk programs, but farmers could add it to their existing coverage. Payments would be triggered if losses occur at the county level.

The program would have several improvements over current crop insurance. USDA’s Risk Management Agency (RMA) would determine a farm’s yield history using a seven-year Olympic Average (which throws out the high and low years). That’s a more accurate reflection of productivity on today’s farms, Neugebauer says. And the county-level yields would be derived from RMA data, not the National Agricultural Statistics Service.

Neugebauer said that his changes reflect conversations with producers about how crop insurance can be improved. And it’s a logical way to improve farm programs.

“People understand insurance better than they understand some of these other programs,” he said.

Neugebauer said he expects Congress to take up the farm bill again early in 2012 and that he thinks it will be a more open process that will included some farm bill hearings.

“I think that’s the right way to do it,” he said, although he understands why the process was done without open hearings in order to attempt to meet the Super Committee’s pre-Thanksgiving deadline for deficit cutting proposals.

The ag committees weren’t able to reach a consensus on what should be in the farm bill, but “we already saw a little bit of what will be on and off the table,” he said.

Exactly how much USDA would be able to subsidize something like Neugebauer’s CROP program will depend on how much funding is available for the next farm bill.

“It’s always about the money,” Neugebauer says.

The ag committees had hoped that they would not have to cut spending on the next farm bill by more than $23 billion over 10 years, which was one of the main reasons they were rushing to get a proposal to the Super Committee.

Neugebauer said that it’s possible that they’ll have less money to work with as they put together a farm bill next year.

“I think it is going to be an issue, because we’re running a huge deficit,” he said.

The Super Committee was charged with coming up with $1.2 trillion in reduced spending over ten years and the current federal deficit is $1.3 trillion. “We were basically trying to address 10% of the entire deficit.”

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