Lugar Introduces His Crop Insurance Bill

September 30, 1999

As the House passed its version of crop insurance reform, Senate Agriculture Committee Chairman Richard Lugar (R-IN) was introducing his own version. A major feature is a payment to farmers who use at least two risk management practices each year through 2004.

Farmers would be eligible for a risk management payment for crop years 2001-2004 with the first annual payment possible as early as Oct. 1, 2000. Payments would be based on a farmer's actual production history for crop year 2000 if the farmer used at least two risk management practices.

Lugar has included eight practices from which farmers could choose: buy crop insurance equal at least to catastrophic risk protection; hedge price, revenue or production risk with at least one standard contract for a future or option; hedge price, revenue or production risk on at least 10% of the value of a principal commodity produced on the farm by purchasing an agricultural trade option; cover at least 20% of the value of a commodity with a cash forward or other type of marketing contract; attend an agricultural marketing or risk management class; deposit at least 25% of the risk management payments into a tax deductible account; reduce farm financial risk by reducing debt in an amount that reduces leverage or by increasing liquidity, or reduce farm business risk by diversifying the farm's production.