Crop Insurance Changes Approved By House Panel

August 4, 1999

The House Agriculture committee has finalized proposed changes to the federal crop insurance program with a bill designed to attract more farmers and ranchers to the program. For the first time, livestock producers could be insured.

A major feature of the bill is an increase in premium assistance levels: for 50% yield coverage that pays 100% of allowable price, assistance would increase from 55% to 67%; for 55/100 coverage, assistance would increase from 46.1% to 64%; for 60/100 coverage assistance would increase from 37.8% to 64%; 65/100 coverage increases from 41.7% to 59%; for 70/100 coverage, assistance increases from 31.9% to 59%; for 75/100, the premium assistance increases from 23.5% to 54%; for 80/100, from 17.3% to 40.6%, and for 85/100, assistance would move from 13% to 30.6%.

The legislation attempts to make crop insurance a better option for farmers who have suffered unusual crop losses that tend to make future coverage less generous and more expensive. In particular, the bill allows farmers to exclude the recorded yield in any crop year when such yields are less than 60% of the transitional yield. That yield may be replaced with a yield equal to 60% of the applicable transition yield. That provision would replace the actual production history method.

Other provisions of the bill, expected to cost $6 billion in fiscal 2001-03, include incentives for farmers to buy higher levels of coverage; more affordable policies to protect against price, income and production losses; encouragement of greater flexibility and diversity of coverage by expanding policy development and providing incentives for new policies, and a livestock pilot program to see how effective risk management is for livestock producers.