NSAC's Blog

Proposed “Good Performance” Rule Issued by RMA

January 7, 2011

On Thursday, January 6, USDA’s Risk Management Agency issued a proposed rule to provide “good performance” refunds to farmers with no or with a limited number of claims within a given period of time.  The rule includes very specific provisions for new or beginning farmers who were not primary operators of a farm for more than three years.

The proposed rule can be found in the Federal Register here.  The comment period is short – only 15 days.  All public comments must be received by close of business on January21, 2011.  The Federal Register notice provides all the details for the various options for submitting comments and recommendations.

Performance-based insurance premium discounts are authorized under Section 508(d0(3) of the Federal Crop Insurance Act.  The rule would implement a good performance refund (GPR) program at an initial cost of not to exceed $75 million.  The agency hopes the availability of the refunds will discourage producers from submitting claims for small losses in order to qualify for a refund later.

To qualify for the GPR, a producer with seven to 10 years of insurance program participation must have no more than one year with a reported loss and also have a positive net paid premium for the entire period.  Producers with four to six years of insurance participation must have no years with a reported loss.

New and beginning farmers with three or fewer years of participation in a farming operation, either as the primary operator or as a person with a substantial beneficial interest in the operation, must have participated in a federal crop insurance program for the most recent one to three years and have a positive net paid premium for that period of participation.

The refunded percentage of the net paid premium will be reduced by 50 percent for new and beginning farmers as defined by this regulation.  For instance, if the rate for non-beginning farmers in a given year is 10 percent, the rate for new and beginning farmers would be five percent.

Payments will not exceed 15 percent of paid premiums; hence the maximum possible rate for new and beginning farmers would be 7.5 percent.  No refund payments will be made unless they total at least $25, and no refunds to any entity will exceed $25,000.  If the $75 million set aside for GPR would be exceeded, the percentage refund for new and beginning farmers would be reduced.

For further information, contact Leiann Nelson at the Kansas City office of RMA at 816-926-7394.

Categories: General Interest

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