On average, crop insurance policies will cost 7% less for corn producers and 9% less for soybean producers, the agency said in a press release.
"We are improving the formulation of our rate-making methodology, and are moving to establish the most fair and appropriate premium rates for today's producers," says RMA Administrator William Murphy. He adds the revised policy more accurately matches premium rates with current risks.
USDA pays 60¢ of each $1 in crop insurance premiums. Crop insurance subsidies were forecast to cost $7 billion for the fiscal year that ended on Sept 30.
RMA adjusted the rates as the result of a study that it commissioned from Sumaria Systems, which was also opened up to independent expert peer review. The agency says it will further review and analyze the study’s recommendations and issues raised by peer reviewers and make additional adjustments "as warranted and appropriate."
RMA is taking a "phased in" approach to implementing premium rate adjustments that allows for further adjustment pending its additional analysis.
RMA will release actuarial documents by Nov. 30 reflecting premium rates and other program information that will be effective for the 2012 spring crop season.
Editor’s note: Richard Brock, Corn & Soybean Digest's marketing editor, is president of Brock Associates, a farm market advisory firm, and publisher of The Brock Report.