What are Vilsack’s expectations for how disaster payments will be handled in the next farm bill?

A new direction began with the 2008 farm bill “when Congress made an effort with the SURE program and Indemnity Livestock and Forage programs and assistance programs. (They were) trying to avoid ad hoc disaster assistance.”

From that experience, “we realized the experience of having (such an approach) and also recognizing there needs to be a swifter reaction to natural disasters. The SURE program is very complex and requires calculations. It takes a year or two of delay in order to get resources to folks for disasters. … That’s a problem because folks need the help (immediately) when faced with a farm or loan payment.”

For the 2012 farm bill “there is recognition we need a safety net. And it needs to rely heavily on crop insurance and a continued expansion of crop insurance. We’ve seen about 135 new policies initiated in the last couple of years.

“And we need to have something that supplements crop insurance. So -- if you’re faced with a natural disaster, faced with a serious decline in commodity prices, faced with a huge increase in input costs – you can weather that storm.

“That’s why I think you’ll see some kind of revenue protection program discussed. The key question will be how it fits into the fiscal constraints that Congress will set. How can it be explained to (legislators) representing the 98 percent of Americans who don’t farm and the 84 percent that” live in urban areas.

What about the coming farm bill and the cost of crop insurance, which jumped to $11.3 billion in fiscal year 2011? The jump comes alongside record farm income and skyrocketing land values.

Vilsack said the crop insurance program currently requires a 12 to 14 percent return on investment to remain solvent. Beyond that, “we’ve taken steps to reduce taxpayer exposure by renegotiating the reinsurance agreement that backs up the crop insurance program.”

This was done in addition to “placing limitations on administrative and operating expenses paid out of the premiums. We saved collectively about $6 billion, reallocated $2 billion into other programs and committed $4 billion over 10 years to deficit reduction.”

USDA is also “constantly taking a look at the actuarial soundness of the program. We have to make sure when we make a commitment to cover, we’re in a financial position to do so. And we also want to make sure when we’re reviewing the actuarial data for the program that the premiums charged to producers are fair and reasonable and transparent as can be.”

A recent evaluation determined that “perhaps, corn and soybean producers were paying their fair share. Those premiums have been reduced and are looking at potentially further reductions depending on what the data shows us.”