USDA proposing changes to crop insurance.

The U.S. Department of Agriculture is proposing to simplify its crop insurance program by eliminating five plans of insurance and replacing them with one.

The USDA's Federal Crop Insurance Corp., via a Federal Register notice, is proposing a newly developed "combination policy" that would change how it provides revenue and yield protection for small grains, cotton, coarse grains, malting barley, rice, canola and rapeseed.

The proposed amendments would offer farmers a choice of revenue protection--that is, coverage for loss of revenue caused by low market prices, low crop yields or a combination of both--or just yield protection, which covers only low yields. The changes would replace five of the plans offered by the USDA's Risk Management Agency, the entity that oversees the federal crop insurance program: crop revenue coverage; income protection; indexed income protection; actual production history; and revenue assurance plans of insurance.

According to the RMA's Federal Register notice on the proposed rule changes, the FCIC also wants to drop revenue protection for one crop: sunflowers. That, the RMA said, is "due to the lack of consistent and appropriate price data." When determining a base price upon which farmers are reimbursed for their crops, the RMA typically uses commodities prices. However, there is no sunflower futures market, so to reimburse farmers in the sunflower revenue assurance plan, the FCIC had been tying the prices to the soybean oil price on the Chicago Board of Trade.