RMA’s Willis: Using Technology, Data-Mining to Keep Program Integrity

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Using technology and data-mining are two of the ways that USDA’s Risk Management Agency (RMA) is utilizing to make sure the integrity of the federal crop insurance program is intact, according to RMA Administrator Brandon Willis.

RMA has continued to deploy new technologies as they become available, Willis told us in an interview, even though they have yet to utilize drones to a major degree. “We are not there yet,” Willis said relative to the use of drones, noting there are some “legal prohibitions” yet to their use that is keeping them as an area the agency is studying. However, he noted that “on the non-federal crop insurance side, those that have private policies, they are being used. But we at RMA are not spending a lot of time on them yet.” However, they are still continuing to examine their use and will be ready when it fits with the “law of the land,” he said, noting that the answer on the use of drones could well be different if the question were asked three or four years from now.

Technology remains an important area utilized by RMA, Willis said. “Data mining is one in particular. We are trying to move that to the forefront. We want to run the program in a way that prevents waste, fraud and abuse.”

As for data mining, Willis reminded, “we are continuing to expand the use [of technology]. We have a small agency – only 450 employees – and using big-data and data mining allows us to spend our time wisely.” One of the key areas for data mining is to look for anomalies. “When we find those, that doesn’t mean there is something wrong,” he warned. Approved Insurance Providers (AIPs) are “doing spotchecks based on data mining,” reiterating that for RMA, it allows them to use their time in an effective way.

Satellites are another tool used by RMA, Willis added. “The agency as a whole tries to use new technology,” he commented.

As the focus continues on the federal crop insurance program by those seeking to reduce ag subsidies, Willis said the measure they use relative to a return on investment or profit/loss assessment is the return on retained premium. “That is or own little definition,” he stated. “It’s a number we can use over time to give a good indication on the returns for the program. When we do the Standard Reinsurance Agreement (SRA), that’s what we use… that’s also the way it is written. It’s an average over time on the rate of return.”

The public/private partnership on crop insurance is one of the key areas that Willis puts a particular emphasis on. “As you look over the past 40 years,” he observed, we have seen one program [crop insurance] slowly and steadily grow in terms of farm programs, while others have come and gone. More and more, this is the central part of the safety net for producers.”

For one, Willis pointed out, crop insurance “is a model the public understands. Farmers have skin in the game and have to buy crop insurance long before they have a loss. Plus, the private delivery seems to have matched the strengths of the private sector and the public sector – competition drives efficiencies.”

Plus, Willis said the stability provided by the government is key. “We make sure there is program integrity,” he noted. “And we make sure we have new policies out there to cover small markets.” He specifically noted the organic crop situation where there were just four organic crops with coverage in the 2011 crop year to now 56 crops for 2016 and 2017 crop years.

Another provision deployed as a result of the 2014 Farm Bill is the Supplemental Coverage Option (SCO), something not limited just to the traditional farm program crops but is now offered on 58 crops in total. For the program crops, out of all insured acres, RMA data shows that for 2015 crops, there were 2.893 million acres out of the 46.585 million total insured acres that have the SCO option — 6.2%. The highest percentage of insured acres with SCO for program crops is rice where 22.4% had the option for 2015 crops — 588,187 acres out of 2,628,872 insured acres.

“We also have a lot of non-program crops that are using the SCO option,” he commented, adding that it’s hard at this stage to “write a conclusion” on how well it works. “In three years from now, we’ll be much better able to write a summary of how producers reacted to SCO,” he added.

Conservation compliance requirements that came in with the 2014 Farm Bill were one area that had Willis “nervous” at this stage a year ago. “But it has gone better than expected,” he said. Both the Natural Resources Conservation Service (NRCS) and Farm Service Agency (FSA) “went the extra mile,” he detailed, noting there were people in field offices placing calls to those impacted by the requirement and even private crop insurance agents “went the extra mile.”

RMA data indicated that 1.8% of those with crop insurance hadn’t been certified for conservation compliance, Willis said. “The vast majority of those didn’t need to become compliant,” he informed. “Sometimes it was a transmission error, or they were deceased or some other factor. But the vast majority in that 1.8% were okay.”

As the program continues to evolve, Willis reminded that if the discussion with Issue Monitor was held three or four years from now, “the answers might well be different. Just as if this was three or four years ago, the answers would have been different as well.”

Comments: Willis is in charge of an agency that has gone through some significant changes via new provisions in the 2014 Farm Bill — the growing attention to organic production and the use of new technologies to keep the program operating in a fiscally sound manner. It remains, as Willis noted, one of the main tools that farmers use for their risk management and that also forces the agency to be proactive and to keep fostering a climate for stability and innovation, including new technologies coming on the scene and those yet to be imagined. But that innovation and broad use also makes the program a target for those seeking to cut US ag subsidies paid to farmers, something which will not abate in the future and will test Willis and subsequent leaders of the agency.

NOTE: This column is copyrighted material; therefore reproduction or retransmission is prohibited under U.S. copyright laws.