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John Shea, 202-690-0437

RMA RELEASES GRP/GRIP COUNTY PROGRAM DELETIONS FOR
2010 CORN, SOYBEANS, GRAIN SORGHUM, COTTON, PEANUTS

WASHINGTON, Dec 1, 2009 - RMA has released 2010 crop year actuarial material reflecting certain Group Risk Program (GRP) and Group Risk Income Protection (GRIP) county crop program deletions for corn, soybeans, grain sorghum, cotton, and peanuts for the 2010 crop year.

The county crop program deletions resulted, in part, from recently implemented modifications by the National Agricultural Statistics Service (NASS) to its publication standards for the county estimates program. NASS county and district estimates for a given crop must be supported by at least 30 reports where the respondent reported both harvested acreage and yield, or the production from reports with respondent reported yields must account for a minimum of 25 percent of the current year’s production estimate for that county or district. Implementation of these standards has increased the reliability of NASS’ published county level estimates, but has resulted in fewer publishable county estimates.

Although RMA has used county estimates provided by NASS that have not met NASS’ publication criteria, doing so requires RMA to rely on information not generally available to the public. In addition, as the result of an extensive program review, NASS has determined that in some cases they will no longer produce county estimates for a given crop and/or state, or cropping practice within a state. In order to ensure that the GRP/GRIP programs, especially the determination of the final county yields upon which indemnities are based, operate in a manner transparent to all affected policyholders, RMA reviewed the eligibility of all GRP/GRIP corn, grain sorghum, cotton, and peanuts county programs.

RMA considered several criteria in its review. These criteria include whether the most recent Census of Agriculture shows at least 50 farms in the counties producing the crop. In addition, concentration of acreage within the county, again based on the most recent Census of Agriculture, must score less than 1,000 on the Herfindahl-Hirschman Index, a measure of the concentration of acreage that assures that no single producer, or small group of producers, can unduly affect the county average yield and create indemnity payments. There also must be at least 30 of the most recent consecutive years of published NASS data available for the crop so that there is a sufficient basis to establish credible premium rates.

RMA also considered a minimum 15,000 planted acres in each of the last 10 years to assess if there is a reasonable likelihood of credible NASS county estimates being available on an ongoing basis. Recent significant shifts in planted acreage were also considered, as this can reflect changes in production practices that may not be accounted for in establishing expected county yield, the basis of the insurance guarantee.

Finally, RMA considered where policies have been sold and the resulting insurance experience. A significant proportion of counties have had no GRP or GRIP business in the last few years. The review resulted in RMA removing 1,062 counties, 752 of which have had no policies earning premium for the 2009 crop year. RMA deleted 469 counties for corn (137 with policies earning premium); 350 counties for soybeans (146 with policies earning premium); 75 counties for cotton (16 counties with policies earning premium); 125 counties for grain sorghum (11 with policies earning premium) and 43 counties for peanuts, none of which had policies earning premium.

In all counties where the GRP or GRIP program was deleted, other crop insurance programs remain available for the affected crops. In addition, the recently implemented Enterprise Unit pilot program, authorized by the 2008 Farm Bill, provides for an increased subsidy for producers choosing to insure their crop under the enterprise unit structure. Where available, the enterprise unit structure provides a county-level individualized type of coverage at a discount relative to the basic or optional unit coverage. Producers must apply by the sales closing date for the crop in the county to obtain coverage under the other available insurance programs.

While RMA strives to provide the widest available protection of insurance choices to insured producers, it must also be prudent in such determinations so that all insurance offers are sustainable, actuarially sound, and in the best interest of producers and the Federal crop insurance program.

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