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Report: USDA Over Pays Producers with Crop Insurance
USAgNet - 09/24/2013

A new report from USDA's Inspector General concludes that prevented planting coverage provided through the federal crop insurance system pays farmers too much and discourages them from planting second crops.

According to the American Soybean Association, the report says that the Risk Management Agency has set current prevented planting coverage levels above the percentages of guarantees that insureds needed to cover average preplanting costs, potentially overpaying by $480 million from 2008-2011.

Further, the report concludes that RMA's decision not to apply an assigned yield to prevented planting acreage has created a disincentive to planting a second crop and indirectly penalizes those that do plant.

"Under the current policy, producers planted a second crop on only 0.1 percent of prevented planting acres," the report says. RMA generally agreed with the eight recommendations made by the Inspector General.

ASA says it will follow and report on proposed changes to the program, which are likely to take effect for the 2015 crop.

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