ICBA has raised several concerns over a proposed rule regarding the federal crop insurance program. The proposed rule contains 31 planned provisions to reform federal crop insurance policies and is also intended to comply with the Agricultural Risk Protection Act of 2000 (ARPA). ICBA identified several aspects that could undermine the program and cause uncertainty for lenders.
ICBA noted the importance of crop insurance to thousands of agricultural lenders whose farm customers use the program to strengthen their ability to repay loans in the event of significant weather-related crop losses. Concerns on the proposed rule include: applying the changes to the 2003 crop year; requiring production records for the past three years when a claim is filed; prohibiting producers from using arbitration to resolve disputes; and eliminating the "good faith and reliance on misrepresentation" provision, which would result in a producer's indemnity payment being denied if his yield and acreage data have more than a five percent error, even if such errors are not the fault of the producer. The latter change could result in a producer not receiving crop insurance payments intended for the repayment of loans. After receiving letters from ICBA and farm and insurance groups, FCIC announced an extension of the public comment period until November 12. USDA's proposed rule is available at www.rma.usda.gov/regs/02basicprovisions.pdf.