No change in crop insurance delivery

WASHINGTON -- Agriculture Secretary Tom Vilsack said Feb. 17 he has no plans to turn the crop insurance program over to the Farm Service Agency county offices, although the cost of the program and the future of the county offices came up repeated...

WASHINGTON -- Agriculture Secretary Tom Vilsack said Feb. 17 he has no plans to turn the crop insurance program over to the Farm Service Agency county offices, although the cost of the program and the future of the county offices came up repeatedly at the secretary's annual appearance before the House Agriculture Appropriations Subcommittee.

"There is no conversation I've been engaged in about (FSA county offices) taking over the crop insurance program in terms of management. I do not expect to have that conversation," Vilsack told the appropriators in response to a question from Rep. Tom Latham, R-Iowa.

Vilsack was referring to a study released by the National Association of FSA County Office Employees that said the government could save up to $2.5 billion per year by taking the crop insurance program away from crop insurance companies and agents and turning it over to FSA and the county offices.

Vilsack noted that Risk Management Agency administrator Bill Murphy said recently that he could see no reason to change management when the current delivery system is working.

The cost of crop insurance came up when House Appropriations Committee chairman Hal Rogers, R-Ky., asked why the Obama administration's budget proposal calls for a $5 billion increase in discretionary programs when mandatory spending makes up 85 percent of USDA spending.


The administration's discretionary spending budget request of $18 billion "appears to be heading in some ways in the right direction," House Agriculture Appropriations Subcommittee chairman Jack Kingston, R-Ga., said, because it included $932 million in increases and $470 million in program decreases. But the $122 billion mandatory request, he said, "is headed in the wrong direction. This escalation of uncontrolled spending is weighing heavily on the taxpayers of our country."

Vilsack explained that the percentage of the USDA budget devoted to nutrition spending will decline from 75 to 72 percent because food stamp participation is expected to go down as people find jobs.

The increase was a result of a slight increase in direct payments, he said, but noted that most of the increase is due to a provision in the 2008 farm bill that requires that an unusual amount of underwriting gain payments to crop insurance companies be included in fiscal year 2013.

Vilsack said his justification for the crop insurance budget increase was that "Congress obviously has directed this."

Cost savings

But he also explained to the committee that the administration thinks the government could save $7.7 billion over 10 years by recalculating the premiums for catastrophic premiums, capping the cost of payments for administration and operations, reducing premium subsidies 2 percent on policies for which the government pays more than 50 percent of the premium, and making sure that company underwriting gains are only 12 percent rather than the 14 percent that the government believes companies are making at the present time.

Rep. Sanford Bishop, D-Ga., asked Vilsack if the elimination of direct payments would mean the FSA county offices would not have much work, but the secretary responded that FSA offices would still have to administer disaster programs, credit programs and other programs, possibly one to replace direct payments.

"It depends on Congress, but I think there is still going to be plenty of work," Vilsack said.


Rep. Cynthia Lummis, R-Wyo., suggested that some data collection done by crop insurance companies and FSA could be consolidated under FSA, and that FSA computers could be made compatible with those at crop insurance companies.

Vilsack also told the subcommittee that:

• The national animal identification system for meat exports would not overburden producers while it would satisfy foreign buyers that worry about the safety of U.S. meat. Vilsack noted that the U.S. government would like to restore beef sales to China that have been canceled since the discovery of mad cow disease in the U.S. in 2003, and that Chinese officials told him recently that they are concerned about the ability of the U.S. to trace back disease. Vilsack said he is looking at ways to finance the technology that would be required to implement an animal identification system.

• The development of agriculture in Afghanistan will take a long time compared with Iraq, where the work consists mostly of rebuilding agriculture. "We are making progress," Vilsack said, but added that it will be a long time before Afghan pomegranates are easily shipped to India, partly because there is a question of whether the government of Pakistan will let them move through that country. Poppy production has been popular in Afghanistan, Vilsack said, because there is a ready market for it.

• USDA has asked retiring employees if they would be interested in volunteering their agricultural expertise overseas if a foundation would pay their expenses. Vilsack said he has asked former President Bill Clinton's foundation to match retirees with demand, and several hundred retiring employees have already expressed an interest.

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