NCC submitted comments to the USDA Risk Management Agency’s (RMA) proposed rule for a Good Producer Refund (GPR).
Program eligibility under the proposed rule requires a farm with seven to 10 years in the crop insurance program to not have more than one year of a reported loss and to have paid a net positive premium amount during that time to qualify. Producers with four to six years of program participation during the base period must not have any years with a reported loss.
Under the proposed program, payment amounts would vary by producer and based on each qualified producer's history in the program.
The RMA estimates that the average refund amount per producer this year will be about $1,000 and is intended to be available prior to the spring planting season. The program has a proposed maximum limit of $25,000 and a minimum payment of $25. The first year of the proposed program will use data from 2000-2009 because not all 2010 data is finalized.
In its comments, the NCC noted that the proposed rule would seem to most benefit homogenous operations in very low risk areas of the country. The provision to only allow one loss in a ten-year period to be eligible for the refund would make it almost impossible for producers of large and especially diversified operations to be eligible for the refund.
The NCC urged the RMA to modify and simplify the program by eliminating the requirement that producers only have a loss in no years or one year and simply provide refunds to all producers whose net premiums paid exceeds the indemnities received over the seven to 10 year period. Another approach could be to provide refunds at varying levels to producers whose loss experience is significantly better than the county average.
The NCC also suggested that RMA should use this opportunity to create a method of differential rating for producers who have continuous losses that are inconsistent with area experience –- an action that would benefit other insured growers by lowering their rates.
The NCC will continue to work with RMA as the final rule is prepared.