USDA stepping up investigations of crop insurance

Responding to complaints about the potential for abuse of its cotton coverage, USDA announced it is taking new steps to improve oversight of the federal crop insurance program.

In a press release, the Agriculture Department said USDA's Risk Management Agency and Farm Service Agency and private reinsured crop insurance companies who sell and service crop insurance policies “have joined forces in a nationwide effort to improve the integrity of the program.”

“Federal crop insurance is an essential tool in managing risk associated with farming,” said Agriculture Secretary Ann M. Veneman. “The Agricultural Risk Protection Act of 2000 has strengthened USDA's ability to increase program integrity.”

With broad expansion of the program in recent years and even more extensive expansion expected in the near future, the Agricultural Risk Protection Act has provided USDA greater ability to curb program abuse, the secretary said.

“Abuses of the program are costly to taxpayers and drives up the cost of coverage for farmers and ranchers,” Veneman noted. “More extensive monitoring of the program will help to maintain its long-term viability as an affordable way to mitigate farm risk.

Rumors have been circulating for weeks that the USDA Risk Management Agency planned to step up field inspections on farms that were first-time purchasers of federal crop insurance cotton policies in the Delta region. But, this was the first official announcement of such intentions.

To discourage program abuse, violators are now subject to criminal prosecution, civil suit, and administrative sanctions, USDA said in its press release. Administrative sanctions can include fines, disqualification from crop insurance and other USDA programs, and government-wide debarment and suspension.

“Earlier this year, RMA began implementation of new oversight procedures that utilize the broad-based assistance of FSA to carry out a coordinated compliance plan that includes close monitoring and oversight of the crop insurance program,” the press release said.

“Re-insured companies will work closely with the two federal agencies in implementing the new procedures. Companies will continue to play a major role in the oversight of crop insurance through their internal procedures and by taking prompt corrective action to identified problems.”

The coordinated compliance-monitoring program also provides for expanded data exchange between the two agencies and reinsured companies. Information provided to FSA offices and reinsured companies by insured producers will be reconciled in an effort to research and identify inconsistencies.

“USDA will continue to ensure that crop insurance policies and rates are statistically sound and appropriate for a given geographical area,” the press release said. “By seeking input from state FSA committees, producers can be assured that recommended changes to crop insurance policies and plans of insurance will help to further strengthen the integrity of the program.”

Additional information on the federal crop insurance program is available on the RMA Website at:

[email protected]

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