01/03/07 Pricing a challenge for "Combo" insurance

Farm and Ranch January 3, 2007 The public comment period recently ended on USDA's Risk Management Agency's proposal to combine its various insurance options for wheat, barley, corn and other commodities into one policy. Dave Paul of RMA's regional office in Spokane, sums up the reasons for consolidating policies. Paul: "A lot easier for producers to understand and for agents to quote and for RMA to keep track of and so on." Paul says the agency received lots of comments, lots of good comments and there are some things they need to work on. Paul: "Pricing the commodity, particularly in the Pacific Northwest, which technically wasn't part of the proposal but is going to impact us, is something we are really working with the wheat growers to address the most effective and fair way to price wheat for example in this new product." RMA is trying to determine the best mechanism to establish the base price for wheat in the PNW using one of the futures exchanges, Chicago, Kansas City or Minneapolis. One challenge is that there is no longer any soft white wheat futures contract and soft white is of course the predominant class of wheat grown in the Pacific Northwest. Paul says the goal is between now and next January, when RMA would file for 2009, to get through all the public comments and put out the best rule they can. Paul: "We do anticipate rolling out that combo policy for the 2009 crop year so for this year and the 2008 crop year we will have the same tools that we have out there today." I'm Bob Hoff and that's the Northwest Farm and Ranch report on the Northwest Ag Information Network.