NU Online News Service, June 22, 12:55 p.m. EDT

The nation's crop insurers warned that the industry's "back is against the wall" as they reiterated objections to a planned 30 percent cut to the federal crop program.

The new cut, constituting $6 billion over 10 years, is in addition to the 12 percent cut imposed on the program through the 2008 farm bill that is just going into effect now.

Agents will be particularly hard hit, said Bob Parkerson, president of the National Crop Insurance Services (NCIS), Overland Park, Kan., although he said at least two of the 16 insurers in the program have warned that they may be unable to live with the cuts.

"Agents have taken a tremendous cut; they have been singled out," he said.

According to Mr. Parkerson, agent commissions were cut more substantially in Corn Belt areas–the Midwest–than in other areas.

"They said they are rebalancing the program by making it less profitable in the Corn Belt and more profitable in other areas," he said.

Mr. Parkerson said 18-to-20 percent of premiums is the average commission for agents, but some go higher.

The cuts will drop commissions to 14-to-15 percent nationally, he said.

He called it "a very sharp drop" as a percentage of premium.

Charles Symington, senior vice president of government affairs for the Independent Insurance Agents and Brokers of America, called the decision "unprecedented."

He said, "The cap on an agent's earning potential does not impact the crop insurance budget or save the taxpayer any money, and needlessly weakens an already struggling agricultural economy."

The new cuts will go into effect for the 2011 fiscal year, the U.S. Department of Agriculture (USDA) said.

In a statement, USDA officials said two-thirds of savings from the cuts will go toward paying down the federal deficit, and the remaining third will support high-priority risk management and conservation programs.

Mr. Parkerson said the NCIS, which represents the 16 crop insurers, has been in the federal program for 30 years.

He said, "Our back is against the wall; this is a very substantial cut."

As Congress continues to debate another farm bill, Mr. Parkerson said, "You can't take any more out of this program without totally altering what farmers and ranchers have come to expect from this program."

Special Reports /

Crop Insurers Reiterate Objections To Federal Program Cuts

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