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RMA, precludes RMA from approving any PRP plans. RMA cannot and should not assume that a non-PRP company will take up the servicing of small producers, limited resource farmers, women and minority producers and producers located in areas with small volumes of crop insurance business. This issue clearly illustrates the negative consequences to the program should the proposed rule be enacted, and the impossibility that it can be administered in a fair and equitable manner.

Section 400.719(a)14 – This section indicates that the PRP plan must not adversely impact the financial and operational capacity and expertise of the provider to properly deliver the program. We agree with this item, but it is unclear how RMA will make this determination for start up companies unless it requires the company to operate without a PRP for 3 to 5 years before allowing it to submit a PRP application. In light of the importance of this issue, RMA should not allow “pro forma” information for a new provider to justify a PRP.

Section 400.720(e) – This item indicates that all producers insured by the provider will “automatically receive” the premium reduction contained in the approved PRP plan. This language does not go far enough to ensure discrimination does not take place. Independent agents frequently write for multiple companies. What conduct is expected of an agent that writes for a PRP company and a non-PRP company? Should said agent offer PRP to only select customers? What if an agent writes for a PRP company with a 1% discount and one with a 4% discount - which plan of insurance should said agent offer to customers? RMA should define agent rules of engagement for both of these circumstances. Otherwise, discrimination will occur and RMA will have no way of regulating or determining it. Any discrimination among farmers will darkly tarnish the Federal crop insurance program.

Section 400.720(f) – This language requires certification by an independent certified public accountant to the reasonableness, accuracy and completeness of actual costs relating to the efficiencies and the total dollars of premium reduction for the reinsurance year the premium reduction plan will be offered, not later than April 1 after the annual settlement for the reinsurance year. Since this is an after-the-fact certification, the words “…will be offered…” should be changed to “…was offered…”.

Section 400.720(h) – This item indicates that if RMA discovers that the cost reduction or efficiencies contained in the PRP plan are not attained, are not sufficient to cover the dollar amount of the premium reduction, or that the reduction in premium is not corresponding to the efficiency, RMA will require that the amount of efficiency used to determine the premium reduction for the next reinsurance year will be limited to the actual cost savings. We strongly disagree with this approach. We suggest that any company that advertises a PRP and does not achieve the efficiency should incur a financial penalty and should be prohibited from offering a PRP for a minimum of three years during which time the company must demonstrate that it can operate at its proposed operating plan without having to draw on financial reserves that are outside of its operating plan.

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