Farmers who limit losses to get insurance refunds
MINNEAPOLIS (AP) -- The federal government proposed today to reward farmers who use crop insurance and demonstrate good management practices that limit their losses.
The awards under the Good Performance Refund plan would average about $1,000 per eligible farmer, and payments would go out in the first quarter, in time to help with spring planting. The government estimates that farmers and ranchers in over two-thirds of the nation's counties would benefit.
The plan will cost about $75 million, but the Federal Crop Insurance Corporation said the benefits will outweigh the costs by promoting sound farming practices that reduce losses, discouraging the filing of small claims and encouraging producers to keep using crop insurance. The agency also said the savings may allow for decreases in future premium rates, reducing costs to farmers and taxpayers who subsidize the federal crop insurance program.
Draft regulations for the program were published in the Federal Register on Thursday. The public comment period ends Jan. 21.
To be eligible, farmers already must be in the crop insurance program at the "buy-up" level -- a step above the lower cost catastrophic risk protection. To get a payment this year, farmers would need to have been in the program for seven to 10 years from 2000 through 2009 with not more than one year with a reported loss, or have gone four to six years during that period with no reported loss. They must have paid more in premiums than they've collected in claims.
Certain new and beginning producers who've demonstrated good performance for one to three years during that period also would be eligible.
The formula would change from year to year, but refunds cannot exceed 15 percent of premiums paid and will be capped at $25,000 with a minimum refund of $25, under the proposed regulations.
The FCIC is run by the U.S. Department of Agriculture's Risk Management Agency, which said the money is coming from the $6 billion in savings over the next 10 years achieved when the agency renegotiated its standard agreement with crop insurance companies last summer. The RMA sought the reductions because it contended the crop insurance companies were making excessive profits.