WASHINGTON, July 7, 2016 – USDA’s Risk Management Agency is trumpeting success in its management of the crop insurance program, including increased offerings and a decreased error rate.
In a release, RMA Administrator Brandon Willis said the agency has worked “painstakingly” to administer the growing programs.
“We are seeing those efforts pay dividends with a very diverse crop insurance program that is meeting the needs of farmers nationwide,” he said.
Since 2009, the total crop insurance liability – the payout if all policies suffered a complete loss – has risen almost $23 billion to $102.4 billion in 2016, RMA said. In the same period, coverage options in the federal crop insurance program have almost doubled, to 118,000 for 543 different crops.
Willis added that the agency has “redoubled our efforts to ensure that the crop insurance program is free of abuse” as evidenced by the programs improper payment rate being cut in half. In 2014, the error rate was 5.6 percent, and it dropped to 2.2 percent in 2015. The government-wide improper payment rate averages 4.39 percent.
In an interview with Agri-Pulse, an RMA official said the change in the error rate was aided by a new and more comprehensive methodology. The old system of assessing the error rate was only looking at indemnity payments, but a new method also looks at other payments like premium payments and administrative and operating expense payments. Had the new methodology been used in 2014, the decrease in error rate could have been even bigger.
The 2017 sampling will be “even more robust,” the official said, adding that the tripled sample size will lead to a more complete picture of what the error rate really looks like. Identified errors were just that, and no cases of widespread fraud were observed.
The increased offerings led to a higher amount of participation in terms of coverage, but not necessarily in terms of participants. The increased use of the crop insurance program can, in part, be attributed to coverage of fruit, vegetable, and specialty crop acres that has jumped about 600,000 acres since 2009.
“We have been able to expand into crops that people wouldn’t normally think about,” a second RMA official said.
Coverage of organic production also increased, topping 1 million acres in 2015 after coming in at 576,700 acres in 2009. Overall, RMA estimates that 85 percent of major crops and 73 percent of specialty crop planted acreage, which together totaled about 297 million acres in the 2015 crop year, is covered by crop insurance.
The figures include the first set of data reflecting changes brought about by the 2014 farm bill. Overall, RMA had 1.2 million policies with premiums in the 2015 crop year. The agency says those policies paid out just under $6.2 billion in indemnities as of the beginning of July.
RMA is planning a roundtable conversation on crop insurance in the coming weeks. An agency spokesman says that conversation will be covering management of crop insurance “and a whole lot more.”
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