The United States Department of Agriculture (USDA) is working with crop insurance companies to negotiate a new deal after a year of big profits in 2009.
The government wants to spend less of taxpayers money on crop insurance. Crop insurance helps farmers pay for failed crops and crop losses. It also provides credit to producers for spring planting. Farmers pay premiums and government subsidies pay for the rest. Last year crop insurance agencies paid out $3.8 million to producers across America.
“The federal crop insurance program is an important part of the farm safety net, but costs have escalated to an unsustainable level and we need to take steps to protect tax payers,” USDA Secretary Tom Vilsack explained.
The USDA proposed cutting $8.4 billion over the next 10 years from crop insurance subsidies. However, the proposal was revised to $6.9 billion. The third draft is expected in early May according to the USDA’s Risk Management Agency.
A survey conducted by the USDA Risk Management Agency found that last year’s profits were the second highest in crop insurance’s 21 year history. According to the survey, many companies are earning double for most claims and the USDA wants to protect taxpayers from paying more than necessary for crop losses while keeping farmers’ income afloat.
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