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Published July 06, 2010, 10:10 AM

Crop insurance companies offered a new reinsurance agreement

WASHINGTON — USDA Risk Management Agency Administrator Bill Murphy said June 30 that his agency has sent crop insurance companies a revised final offer of a new standard reinsurance agreement and gives the companies until July 12 to sign it.

By: Jerry Hagstrom, Special to Agweek

WASHINGTON — USDA Risk Management Agency Administrator Bill Murphy said June 30 that his agency has sent crop insurance companies a revised final offer of a new standard reinsurance agreement and gives the companies until July 12 to sign it.

The original deadline was June 30.

After a Senate Agriculture Committee hearing Murphy said that he had made concessions to the companies on the structure of the agreement, but not made any changes in the proposal to cut $6 billion in the program or to put restrictions on agent commissions.

The companies and the agents have said the cuts the Obama administration has made using authority given to RMA in the 2008 farm bill may lead to delivery service problems, but the companies are expected to sign the agreement.

Agriculture Secretary Tom Vilsack told the Senate Agriculture Committee that he thinks the new agreement is fair and that the new commission structure will give agents “a fair return for their work.”

National Farmers Union President Roger Johnson, who earlier had said he feared RMA’s proposal would lead to a decline in service, said that USDA had improved its offer through the negotiations. Johnson noted that agent commissions, which rise along with premiums when commodity prices rise, had gotten so high in 2008 that many people in farm communities were offended by them. Johnson stressed that he thinks crop insurance needs to remain a key part of the farm program.

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