(DTN) -- Reacting to a passage in the Republican Party platform that expresses concern that farm programs interfere with markets, the head of the Agriculture Department's Risk Management Agency said late last week that the crop insurance program does not interfere with market signals.
"We have worked very hard to make sure farmers plant based on market signals," said Brandon Willis, a political appointee.
The occasion was a roundtable for journalists last Thursday organized to provide an update on the growth of the federal crop insurance program over the past seven years, and a forecast of where the Obama administration expects the program to grow.
"If market prices drop, crop insurance prices drop. We have been confident farmers have not planted for the crop insurance program," Willis said.
The Hagstrom Report asked Willis to react to a section in the Republican platform passed last week in Cleveland that says, "Farming and ranching remain high-risk endeavors, and they cannot be isolated from market forces.
"No segment of agriculture can expect treatment so favorable that it seriously disadvantages workers in other trades," the GOP platform said. "Federal programs to assist farmers in managing risk must be as cost-effective as they are functional, offering tools that can improve producers' ability to operate when times are tough while remaining affordable to the taxpayers."
The crop insurance program is costing less than the Congressional Budget Office estimated and is operating on an actuarially sound basis, Willis said. The amount of money that flows into the program from government subsidies and farm premium subsidies is supposed to equal payments and a reserve over time, and the 20-year crop insurance loss ratio is at 0.87.
That performance "speaks volumes" about the performance of the 480 permanent employees that make up the RMA team, he said.
Willis also emphasized that the Obama administration is continuing its program of oversight so that the program will be defensible in Congress when it is attacked.
The improper payment rate -- payments to farmers that are too high or too low -- has been reduced from 5.6% in 2014 to 2.2% in 2015, well below the government-wide improper payment average of 4.39%.
"We have redoubled our efforts to ensure that the crop insurance program is free of abuse," Willis said. "Cutting our improper payment rate in half demonstrates our commitment to operating a well-run program that protects both taxpayers and farmers."
RMA has long spot-checked farmers and companies for improper claims and errors, but the agency is now figuring out an improper payment rate for each of the 17 insurance companies that write policies. Those rates will not be released publicly, Willis said, but will be used to analyze problems that lead to inefficiency.
The agency has used data mining to ferret out farmers and companies that have unusual patterns of crop insurance activity and computer programs will now be used to spot check the nation's 15,000 crop insurance agents and the crop adjusters who determine levels of losses to "identify things that look out of the ordinary," he said.
The information on agents and adjusters will also be used to improve program efficiency, Willis said.
During the Obama years, Willis said, RMA has broadly expanded the program to cover more crops and "to help small and diverse farm operations, organic producers, beginning farmers and ranchers, and those struggling with years of repeated drought and providing the protections they need to continue farming."
In 2016, the federal crop insurance program includes more than 118,000 coverage options for 543 varieties of crops, nearly doubling from the from roughly 64,000 different coverage options that were available in 2009, RMA said in a news release. The total crop insurance liability rose from $79.5 billion to $102.4 billion over the same period, the agency said.
RMA also said:
-- In 2015 alone, the agency was able to help 13,719 beginning farmers and ranchers working more than 3.5 million acres get their operations off the ground and save more than $14 million through reduced premiums and waived fees.
-- RMA estimates that 85% of planted acreage for major crops is now covered by crop insurance, while 73% of planted acreage for eligible specialty crops is covered.
-- The number of acres covered by crop insurance increased from 264.7 million for 2009 to 297 million for 2015.
-- Coverage for fruit, vegetables, and other specialty crops alone has grown from 7.7 million acres in 2009 to nearly 8.3 million acres in 2015.
-- The Supplemental Coverage Option and the APH Yield Exclusion mandated by the 2014 farm bill have expanded quickly to include fruit, vegetables, and other specialty crops.
-- The number of crops eligible for organic premium pricing went from four in 2011 to 57 for the 2016 crop year.
-- The number of acres insured by organic producers grew from 576,700 in 2009 to more than one million in 2015.
-- The number of crops insured under whole farm insurance policies is increasing.
Willis acknowledged that participation in the new cotton STAX program has not been as high as hoped, but he noted that the program is only now in its second year and said he wants to see the results of the program's second year before discussing whether changes to that program might be needed in the next farm bill.
He also said he is not sure why vegetable farmers have not taken out crop insurance policies at the same levels as fruit farmers, but said he and his staff are traveling around the country to meet with farmers where "crop insurance may not be as vibrant as we would like."
The crop insurance program is a partnership of the Agriculture Department, crop insurance companies and agents and farmers. The agents sell the policies for 17 companies. The government pays about 60% of the cost of premiums and the farmers pay the rest. When farmers experience a loss due to weather or market conditions, a claim is made and if it is approved the farmer gets a payment.