WASHINGTON, February 15, 2012 -Armed with a study showing the potential for about $2 billion in annual budget savings, the National Association of Farm Service Agency County Office Employees (NASCOE) fanned out across Capitol Hill last week to brief lawmakers on their ideas for taking over the servicing of federal crop insurance and functions currently handled by private insurers.
NASCOE President John Lohr termed the feedback as “positive,” citing requests by a “few dozen” offices for additional information.
It’s unlikely that Sen. Pat Roberts’ office was among them. The top Republican on the Senate Agriculture Committee and long-time crop insurance champion, described NASCOE’s plan as “looney” and “dead on arrival” in remarks to the 2012 Crop Insurance and Reinsurance Bureau meeting in Phoenix at the end of the week.
In an interview with Agri-Pulse, Lohr countered that other Ag Committee leaders on the Hill were taking a “serious look” at the proposal, but he did not name any specific members. The employee’s union has worked hard to build influence on Capitol Hill. In the past, the group has also made a case for taking over administration of more conservation programs.
In 2011, NASCOE’s PAC donated to the campaign coffers of three members of the Senate Ag panel – Chairman Debbie Stabenow, D-Mich., Kent Conrad, D-N.D., and Saxby Chambliss, R-Ga.; and House Ag members, Reps. Martha Roby, D-Ala., David Scott, D-Ga., Terri Sewell, D-Ala., Bill Owens, D-N.Y, and Larry Kissell, D-N.C.
Federal crop insurance has been operated and managed by the Risk Management Agency since 1996. Early last year, NASCOE hired Informa Economics to quantify the potential cost and efficiency benefits that might be realized if certain insurance administrative activities functions were shifted to USDA’s Farm Service Agency (FSA).
The Informa study found that through only the servicing functions of crop insurance being completed by FSA, which includes the mandate to use the FSA crop report and the collection and processing of annual crop yield data, a savings of $1.9 billion to $2.1 billion was possible. Under the scenario, private agents would continue to sell the insurance and provide loss adjustment services, but nearly $200 million in annual payouts to insurance companies solely for crop reporting would be eliminated, the study said.
“It does not make sense nor is it fiscally responsible to pay insurance companies for work that is, at best, redundant, and at worst, incomplete,” NASCOE said, arguing that local FSA offices have the capability to collect and process production data for crop insurance participants “more efficiently and accurately.”
NASCOE’s desire to assume a larger role in crop insurance delivery stems from expectations that traditional farm price-support programs administered by FSA will be phased out in the next farm bill and replaced by a revenue-based safety net anchored by crop insurance.
The organization is also looking for a way to boost job opportunities and memberships. According to a NASCOE document obtained by Agri-Pulse, half of FSA’s workforce is eligible to retire in 5 to 7 years. “Many benefits will be taken away after the employee has left the agency and is no longer having dues taken from their paycheck,” they noted.
“One of the really important questions that nobody really wants to say out loud…is whether we’re talking about delivery of (future) farm programs through the Risk Management Agency or the Farm Service Agency,” Keith Coble, an agricultural economist at Mississippi State University, told an agribusiness conference in Arkansas last week.
The 2012 farm bill debate comes as the Obama Administration pursues the closure or consolidation of 131 local FSA offices nationwide by July as part of a broader USDA downsizing effort. Thirty-five of the offices have no permanent employees.
“We have to begin making brick and mortar cuts,” Lohr quoted FSA Administrator Bruce Nelson as telling him and other NASCOE officers last month. More than 2100 FSA field offices will remain after the cuts are implemented.
Fewer employees will be needed, too. The agency has been directed to reduce its overall workforce by 12.5%, Lohr said, and has offered early retirement and voluntary buy-outs as incentives. The administration’s FY 2013 budget proposal calls for 8,197 FSA non-federal positions, down from an actual count of 9,003 at the end of fiscal 2011. Lohr estimated current county level staffing at 7,800 and predicted that farmers and ranchers will likely face service disruptions.
“You don’t take one in eight employees out of an organization and not have some slippage in terms of the service folks have come to expect,” he said, while acknowledging that implementation of the agency’s IT modernization, called MIDAS, starting this fall would soften the blow.
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Original story printed in February 15, 2012 Agri-Pulse Newsletter.
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