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Senate budget chairman proposes streamlined crop insurance

FARGO, N.D. -- Federal crop insurance is essential to U.S. agriculture, but the insurance can be made simpler and easier to use, said Sen. Kent Conrad, D-N.D.

Conrad proposes to combine the Supplemental Revenue Assurance and Average Crop Revenue Election programs into a single, streamlined program that protects against what he called "shallow losses."

Conrad spoke earlier this month at a conference on crop insurance in Fargo, N.D.

"Crop insurance forms the base" of farmers' risk protection, Conrad said. Typically, crop insurance protects against catastrophic loss. More is needed to protect against smaller, or shallow, losses, he said.

Both the Average Crop Revenue Election and Supplemental Revenue Assurance programs have been widely criticized by farmers as too complicated.

Supplemental Revenue Assurance provides financial assistance for crop production and or quality losses due to a natural disaster.

Under Average Crop Revenue Election, producers may receive revenue-based payments as an alternative to receiving price-based counter-cyclical payments. Counter-cyclical payments are a "safety net" payment made only in years when market prices fall below a set target price.

ACRE payments are revenue-based payments -- a calculation that includes production acres and average yields as well as prices -- and not strictly tied to whether prices rise or fall in a given year.

The U.S. farm bill, which is the federal government's main agricultural and food policy tool, is up for reauthorization, and many in ag fear that federal crop insurance could see big spending cuts.

Conrad, Senate Budget Committee chairman and a frequent critic of the growing federal deficit, said that massive cuts to the federal crop program would be a big mistake. Federal crop insurance is a partnership of private companies that deliver the insurance products and services and the federal government which subsidizes the cost of the insurance premium.

U.S, agriculture provides both a secure supply of affordable food and badly needed exports, Conrad said. He urged people in agriculture to stick together against critics.

"We have a lot of folks who aren't for us: the East and West Coast media elites who are after us almost every day. And of course you have a ton of lobbyists who are after us almost every day," Conrad said.

Last year, North Dakota farmers insured crops worth about $6 billion, on which claims of about $1.5 billion were paid, according to information presented at the conference. In contrast, farmers in the state in 2010 insured crops worth about $4 billion, on which claims of $442.3 million were paid. Claims skyrocketed in 2011 because of the extremely wet spring that prevented many fields from being planted and hurt many of the crops that were planted.

The higher value of insured crops in 2011 reflects that crop prices generally were substantially higher that year than in 2010.

Jonathan Knutson writes for Grand Forks, N.D.-based Agweek, which is owned by Forum Communications Co.