NCC Says Budget Bill Provision Harmful To Crop Insurance
NCC President/CEO Gary Adams sent a letter to Congressional Members on Oct. 27 stating that the NCC is strongly opposed to a provision included in the just announced two-year budget agreement that would have devastating impacts on the private sector delivery of crop insurance. He urged Members to work with the House and Senate agriculture committees' leadership to either strike the provision (Section 201) from the budget agreement or oppose the agreement if it remains in the bill.
October 27, 2015
Dear Member of Congress:
The National Cotton Council is strongly opposed to a provision included in the just announced 2-year budget agreement that would have devastating impacts on the private sector delivery of crop insurance. Section 201 of the bill mandates that USDA renegotiate the Standard Reinsurance Agreement (SRA) by December 31, 2016, and reduce the target rate of return to 8.9%. Simply put, this provision will cripple the private sector delivery system, likely cause massive consolidation within the crop insurance industry, and ultimately hurt farmers by reducing competition and quality of service. If this provision becomes law, it is certainly possible that private companies will no longer view offering crop insurance as a viable part of their business, which would lead to the federal government becoming the de facto crop insurance company.
Passage of the 2014 farm bill brought major changes to farm policy for the cotton industry with the elimination of direct payments and cotton lint not being eligible for the new price and revenue safety net programs. Cotton producers, more so than any other major row crop, are heavily dependent on crop insurance for their risk management needs. Any change to the crop insurance industry and delivery system is especially damaging to cotton producers as the cornerstone of their safety net is now crop insurance.
When Congress passed the 2014 farm bill, the Congressional Budget Office estimated that the bill would save $23 billion over 10 years. The agriculture committees and the agriculture community have stepped up to the plate to offer budget savings, but forcing private insurance companies to renegotiate a contract and taking more funds from agriculture by reducing their target rate of return will have lasting negative impacts. We urge you to oppose these and any other cuts to the crop insurance program.
In short, please work with the House and Senate Agriculture Committee leadership to either strike this provision (Section 201) from the budget agreement, or oppose the agreement all together if this provision remains in the bill.
As always, thank you for your time and consideration of our views.
Dr. Gary M. Adams
President & CEO
National Cotton Council of America