Standard Reinsurance Agreement Cuts Considered

Standard Reinsurance Agreement Cuts Considered

Several Senators are concerned about impact of program cuts.

USDA's Risk Management Agency has reconsidered its previous proposals as the Standard Reinsurance Agreement renegotiation proceeds. But at least 30 U.S. Senators have voiced concern to the agency. In a letter they wrote that despite a modest reduction in the size of the proposed cuts between the first and second drafts, they believe RMA's proposals may undermine the crop insurance program, reduce the quality of service and availability of the program, and harm rural America through job loss.

The Senators said while they believe there may be some efficiencies to be identified through the
renegotiation process, they are concerned that the level of program cuts in the second draft will seriously and negatively affect several insurance companies' ability to continue to offer much-needed risk management products in many areas of the country.

The Senators, including Ag Committee Chairman Blanche Lincoln, D-Ark., and Ranking Member Saxby Chambliss, R-Ga., also expressed concern about the magnitude of the nearly $7 billion in proposed cuts over the next ten years to the program. By comparison, the 2005
SRA was estimated to save $410 million over ten years and the 2008 farm bill included savings of $5.6 billion over ten years.

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