National Farmers Union (NFU) President Roger Johnson urged Members of Congress to reject the shortsighted budget deal that cuts crop insurance delivery rates. The deal released last night would reduce the rate of return for Approved Insurance Providers (AIPs) through the Standard Reinsurance Agreement (SRA).

“Attacks on crop insurance are increasing in frequency,” said Johnson. “As larger segments of the population are further and further removed from agriculture, the value of this safety net program is less and less understood” he said.

The public-private crop insurance framework allows farmers who have been negatively impacted to receive indemnity payments in less than thirty days, whereas previous ad hoc disaster assistance often took a year or more to provide assistance to farmers in need. For many family operations the difference between thirty days and a year, is the difference between continuing and shuttering an operation. The efficient delivery of services has continued to take place in spite of the 2008 Farm Bill and the 2011 SRA, which cut $12 billion over 10 years in reimbursement rates.

“More and more crop insurance providers are exiting the sector because these cuts have made it no longer profitable to be engaged in this business,” said Johnson. “Since 2013 we have witnessed the exit of five large crop insurance providers with additional providers teetering on the edge. NFU remains concerned about concentration in the marketplace and its impact on farmers and ranchers. These budget cuts would accelerate the consolidation of the crop insurance sector.

The budget deal would cut reimbursement rates from 14 percent to 8.9 percent. Previous budget proposals were set at 12 percent. However, since the SRA change was implemented, the average rate of return has been less than 4%. Since 2013, John Deere Insurance Company, John Deere Risk Protection, Inc., OneBeacon Insurance Group Ltd., Monsanto Co., ProAg, and The Goldman Sachs Group, Inc. (Global Atlantic Financial Group Ltd insurance unit) sold their crop insurance operations.

National Farmers Union has been working since 1902 to protect and enhance the economic well-being and quality of life for family farmers, ranchers and rural communities through advocating grassroots-driven policy positions adopted by its membership.