Fargo, N.D. - The Risk Management Agency (RMA) announced Tuesday that the prevent plant payment factor for corn will be reduced from 60% to 55% effective for the 2017 crop season. The announcement culminates a review by RMA of the prevent plant program for seven crops, of which only corn was determined to have reduced coverage starting in 2017. RMA’s review of the prevent plant policy was a follow-up of a 2013 government audit whereby it was indicated from a report completed by Agralytica, that several crops prevent plant payment factor should be reduced, with corn recommended having a reduction from 60% to 50%. RMA was considering that change effective for the 2016 crop year.
The North Dakota Corn Growers Association (NDCGA), working along with the National Corn Growers Association (NCGA), responded to the RMA study’s proposed changes to prevented planting coverage, by contracting for a study by agriculture economists from the University of Illinois (IFAR) to evaluate the analysis conducted for RMA by Agralytica. The IFAR study conducted in 2015 showed that the prevented planting coverage levels and the program as a whole, are working as intended without significantly high loss ratios. After reviewing comments from NCGA and other organizations, in 2015, RMA decided additional time and consideration was needed before taking final action to address the OIG report’s recommendations.
The NDCGA has continued to work with NCGA and the North Dakota congressional offices to ensure that RMA took a measured review of the proposed prevent plant payment factor change. Just in North Dakota alone, in a year of significant prevent plant corn acres, producers could have risk protection reduced by several million dollars.
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Carson Klosterman, North Dakota Corn Growers Association president, had this to say about the announcement from RMA: “We are disappointed in the decision by USDA’s RMA to reduce risk management protection for our corn farmers. In wet years, the prevent plant provision is a worthwhile risk tool and reducing coverage adds additional concern to farmers as we look into our 2017 farm operations. RMA’s decision to retain the 1 in 4 rule and allow the 5% to 10% buy-up provisions will be helpful. The work by our congressional members and NCGA helped delay the RMA decision and we believe helped alleviate further cuts in the program. Lastly, this is one more move to reduce the value of the crop insurance program, something that we will continue to fight for in the new farm bill.”
