Wednesday, October 22, 2008

Crop Insurance Programs for Revenue

FCIC was initiating the revenue crop insurance programs just before I left USDA. Farmgate has an interesting piece on the current prospects for indemnity checks under them. What's most bothersome is this:
One of the uncontrollable issues is what the USDA’s Risk Management Agency does with the yield expectations. If your county yield is set too low, GRIP will never pay off. If it is set too high, GRIP is guaranteed income. Additionally, RMA's crop insurance ratings for some counties are not actuarially sound, and in some counties farmers will almost always get a payment and in others they almost always will never get a payment.
Too much chance for screwups here--hopefully this pessimistic picture is overdrawn.

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