NACIA Washington Update
December 3, 2009

We hope you and your loved ones had a wonderful Thanksgiving Holiday last week. Congress was in recess for the holiday, so it was relatively quiet in Washington. In fact, it was quiet enough that the big news was the ability of two uninvited guests to crash President Obama’s White House dinner. It now appears that Congress will seek to hold hearings on the subject, in addition to the ongoing investigations. With all this, we hope at least the food was good. 

This week has not been as quiet. The Senate had begun consideration of Majority Leader Reid’s (D-NV) health care bill, which he drafted from the bills reported earlier from the Finance Committee and the Health, Education, Labor, and Pensions Committee.  Currently the Senate is in the process of considering amendments to the bill, and is expected to take the rest of the year for the debate. There are even reports of Senator Reid possibly calling the Senate back into session after Christmas if necessary.

In the crop insurance world, both the SRA renegotiation issues and USDA activities have been the most important.  RMA has stated that they will present the first draft of the SRA to the companies on December 10th. Subsequently additional meetings will be held, including a possible briefing by RMA to Congressional staff on their proposal. The industry will have approximately a month to submit its comments on the first draft. The general schedule currently remains as RMA submitting a second draft in mid-January, after which reportedly they do not expect to make significant changes. The intention is to have the whole SRA renegotiation process completed by April.  While there has not been an announced number, we continue to expect RMA to seek to save $500 million over ten years. Some of this money will come from underwriting gains, and other provisions mentioned include addressing, alignment of A&O with commodity prices, a rebalancing of A&O, simplification of risk, enhancement of program integrity, examining the rate of return, removal or lessening the volatility in the program, and focusing on outputs rather than inputs. As always, we need to remember that no one has seen the draft yet, and we will not know for sure until December 10th. 

RMA has also briefed Congressional staff regarding the Milliman Report, which was released several weeks ago. However, since its release, this historical rate of return report has been determined to not truly reflect accurate numbers.  NACIA and others in the crop insurance industry have been in discussions regarding the possibility of RMA asking for a revised report, so as to prevent inaccurate information being used to paint the program in a negative light. The report has been updated to reflect more accurate 2008 numbers, but other inaccuracies remain. Report.

In USDA news, the following items may be of interest:

• RMA has relesed two Claims Advisories, one for Sugar Beet Acreage and one for Local Market Price for Settling Corn Claims. Details.
• RMA has released the results of their review of the premium rating methodology. From the announcement: “Over the past several years, RMA has engaged contractors and conducted internal assessments of various elements of its premium rating methodology. In 2009, RMA undertook a comprehensive review of all aspects of the Actual Production History and revenue rating methodologies.”  Details.
• USDA urged qualified applicants to apply for value-added commodity grants before the November 30, 2009 deadline.  Grants of up to $100,000 for planning and $300,000 for capital will be awarded. For more information on the grants, qualifications, and submissions, click here.
• USDA announced November 24 the appointment of two members to the National Fluid Milk Processor Promotion Board: Christopher S. Ross, Beverly, Massachusetts (Region 2) and Michael A. Bell, San Antonio, Texas (Region 8). Ross and Bell will begin serving immediately, and their terms will expire June 30, 2011.
• As a part of their 2008 Farm and Ranch Survey, USDA released findings from the NASS Irrigation Survey showing that farmers and ranchers are irrigating around 54.9 million acres of land, a nearly 5 percent increase since 2003.  The survey also showed a trend toward more efficient irrigation methods, including an increase in sprinkler systems and a decrease in gravity irrigation. The complete Irrigation Survey can be found here.
• For those of you that know of aspiring aggies Secretary Vilsack announced that USDA/1890 National Scholars Program applications for the 2010 academic school year now are being accepted. Aspiring high school seniors and rising college sophomores and juniors are encouraged to apply before the Feb. 1, 2010 deadline. Details.

As always, please let us know if you have any questions.

Brent W. Gattis
NACIA Washington Representative

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