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PIA National Asks USDA/RMA to Treat Closing Date as Open for Burley Tobacco Crop Insurance

WASHINGTON, April 1, 2005 - The National Association of Professional Insurance Agents has asked the U.S. Department of Agriculture's Risk Management Agency (RMA) to leave...
April 1, 2005

WASHINGTON, April 1, 2005 - The National Association of Professional Insurance Agents has asked the U.S. Department of Agriculture's Risk Management Agency (RMA) to leave the sales closing date for Spring 2005 contracts for burley tobacco open, due to the inability of county offices of the USDA's Farm Service Agency (FSA) to provide farmers with the data they need to secure an accurate valuation of their crops.

Although the March 15 sales closing date for insuring burley tobacco contracts under federal crop insurance for spring 2005 has already passed, PIA National believes the date must be treated as "open" until FSA county offices can reasonably deliver accurate yield data to farmers.

Burley tobacco farmers have traditionally calculated their production based on pounds. As part of the 2004 tobacco buyout, farmers must calculate Actual Production History based upon yield. FSA county offices were supposed to have the last four years of production reports based upon yield ready for farmers by April 1. But due to continuing software problems, FSA county offices will not be able to meet this date.

"PIA crop insurance agents and their farmer customers are facing great difficulty writing crop insurance policies for burley tobacco this year because of the data change," said PIA National Senior Vice President Patricia A. Borowski.

RMA has advised that farmers and agents need only take past production in pounds and divide by the farmer's acreage, to secure a reasonably accurate conversion to yield. However, many farmers do not have their production records kept that way and previous crop insurance policies only show the prior year's production, determined on pounds. Additionally, this method does not take into account losses and crop carry-overs.

"Farmers and their crop insurance agents should not be told to just 'guess' their production figures, or the amount of coverage they need in their crop insurance policies," said Borowski. "Doing so has the potential of creating losses for farmers and liability for crop insurance agents if a claim needs to be filed."

PIA National is also asking RMA for an indemnification for crop insurers and agents in terms of any issues arising directly from this one-time transition year.  RMA has the authority to do this, and in fact has done this exact same thing in the past as a temporary, transitional one-time only "fix" when identical circumstances arose on other crop conversions.

"PIA National continues to work with Congress and RMA offices in Washington, D.C. and Kansas City directly on this issue," said PIA National Senior Director of Political Affairs Kellie Bray. "On March 21, PIA met with USDA/RMA Administrator Ross Davidson to make our views known and discuss potential solutions. On March 31, PIA sent a letter to Davidson with recommendations."

"This is really a problem, as it can cause our farmers and crop agents adverse consequences," said PIA National Vice President Donna L. Pile of Lexington, Kentucky. "We hope our appeal to RMA will offer a solution to farmers and agents. We do not want our farmers devastated by unrecoverable losses."

"When America's farmers need crop insurance, they turn to their PIA agents," Pile said. "Now, PIA crop insurance agents are going to bat for their farmer clients to solve this problem."

Founded in 1931, PIA is a national trade association that represents member insurance agents and their employees who sell and service all kinds of insurance, but specialize in coverage of automobiles, homes and businesses.

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