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House Limits Discount Crop Insurance

In May the House of Representatives voted to extend the 2007 moratorium on the USDA's Premium Reduction Program, or discount crop insurance, through the 2008 crop season. Groups are now advocating the Senate reverse the action in their appropriations process.

The Premium Reduction Program was authorized in the Federal Crop Insurance Act of 1994 in order to allow farmers the opportunity to benefit when insurance companies are able to reduce their administrative and operating costs.

"This discount plan has been working since 2003, and has proven its value by returning more than $4 million to farmers," says Bruce Trost, executive vice president of property-casualty companies of FBL Financial Group, Inc., West Des Moines, Iowa. "The federal crop insurance program should benefit farmers. If proven innovative products like this are waylaid by the will of Congress, there will be no incentive for the development of new products to benefit farmers."

Trost adds, "The fact that Congress can come in and make changes to the farm bill sets a terrible precedent for farm policy. Farmers should be able to plan on the continuity of their risk management tools. If risk management tools to support the farm programs can be cut off in the middle of the farm bill, it means that the farm programs themselves may be next."

The bill is now in the Senate, and "We are hopeful that, like last year, the Senate will support farmers' rights to receive the discount. Then we will need to prevail in conference to protect farmers' rights," Trost says.

Trost suggests that everyone, but especially farmers, let their voices be heard by the senators who represent them in Congress. He says, "We urge farmers, to most immediately, contact their United States Senators - both of them - and urge them to oppose any provision in the Agriculture Appropriations measure to strip farmers of their rights to insurance discounts."

PRP is a federally approved insurance program that has the potential to put up to $120 million back into farmers' pockets annually in a time when escalating costs are making farming cost-prohibitive for some. Nine companies, representing 78% of the industry, were approved to offer the opportunity for a discount to farmers. If Congress again cuts off funding for PRP, thousands of farmers will lose the opportunity for a discount and savings on their crop insurance premium.