Last week, the U.S. Government Accountability Office (GAO) released a report on the federal crop insurance program that examines expense payments to companies, the program’s target rate of return, and opportunities for the federal government to reduce its delivery costs for the program.
GAO made the following recommendations in its report:
- Repeal the “sideboard” language in the 2014 farm bill that prevents USDA from taking money out of crop insurance through the SRA process.
- Once the sideboard language is repealed, renegotiate the SRA to decrease the target rate of return for companies and consider adjustments to the risk the companies retain versus the risk the government retains.
- Adjust the way A&O is calculated to level out fluctuations in payments caused by changes in various crop prices.
While it’s not surprising that GAO made recommendations to cut program expenses (as they’ve done many times in the past), this report is notable because: 1) it was requested by Sen. Diane Feinstein (D-CA); and 2) it talks specifically about the run-up in almond prices. In response, the industry has drafted a unified rebuttal that may be beneficial if you field any questions about the GAO report.
You can read the entire GAO report as well as the industry response below.