Risk Management Agency
Program Announcement
CROP INSURANCE BENEFITS ON FAST TRACK
Contact: Eric
Edgington (202) 690-2539
Eric.Edgington@rma.usda.gov
WASHINGTON, Jun 30, 2000 - Days after President Clinton
signed the Agricultural
Risk Protection Act of 2000 (2000 Act) into law, Risk Management
Administrator Ken Ackerman highlighted a package of administrative
and regulatory actions that will lower premiums, increase coverage,
and reduce administrative costs. In total, the changes will make
90 percent of the new benefits immediately available to farmers.
"We"re enacting the bulk of the new provisions in time
for farmers planting fall crops to benefit from higher levels
of protection at less cost," said Ackerman. "Revenue
insurance will be much more affordable and a new coverage
option will help producers suffering multiple years of losses
retain a reasonable amount of insurance protection."
| Coverage Level |
Old Subsidy* |
New Subsidy** |
| 50/100 |
55% |
67% |
| 55/100 |
46% |
64% |
| 60/100 |
38% |
64% |
| 65/100 |
42% |
59% |
| 70/100 |
32% |
59% |
| 75/100 |
24% |
55% |
| 80/100 |
17% |
48% |
| 85/100 |
13% |
38% |
- *Applied to major crops under APH
coverage plan. For revenue plans, subsidy applied to yield portion
of premium only. Rates of subsidy also could differ for price
elections less than 100%.
** Applies to all plans of insurance (except group risk-based
policies) and all price levels within a coverage level.
Surviving Multi-year Losses
Under current law, producers are required to report their actual
yields and all such yields are used in computing a yield guarantee
for the insured crop. Transitional yields (T-yields), based on
average county yields, are used when there is an insufficient
number of actual yields to establish the yield guarantee. Producers
suffering multiple years of severe losses often find themselves
with protection so low that they are unable to secure operating
loans.
The new rules allow producers to substitute 60 percent of the
applicable T-yields when their actual yields are lower than 60
percent of that T-yield. This change effectively increases yield
guarantees. Premiums are adjusted to reflect this additional risk.
A preliminary analysis indicates that as many as 40 to 50 percent
of insured producers in 1998 had losses in prior years that would
qualify them for the option of excluding actual yields.
Producers should contact a crop insurance agent for details.
A listing of crop insurance agents is at the local office of the
Farm Service Agency and at http://www.rma.usda.gov/tools/agents/
(Agent Locator).
Related items: Manager's Bulletin |
Interim Rule (PDF) | June 20, 2000,
Press Release | Brief Outline (PDF)
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