Lugar Questions the 'Wisdom' of $6 Billion for Crop Insurance

November 10, 1999

Senate Agriculture Committee Chairman Richard Lugar (R-IN), who has promised a crop insurance markup no later than March 8, 2000, questions "the wisdom of providing an additional $6 billion in subsidies to make crop insurance policies more attractive." Risk management is more than just crop insurance, he tells his colleagues.

In a "Dear Colleague" letter distributed Tuesday, Lugar said the $6 billion for five years that Congress has authorized means "taxpayers subsidize the planting of acres that have a high risk of crop failure and from an environmental standpoint should not be cultivated. It should come as no surprise that a few states receive enormous benefits from subsidized crop insurance but most do not."

He also noted a Washington Post article Sunday which "suggests that I have been an impediment to rapid consideration of crop insurance legislation after sampling the use of subsidized premiums for the past two years. I have been attempting to learn much more about the current status and the possibilities of crop insurance programs."

Only 44% of eligible acreage in Indiana is covered by any level of crop insurance even with federal subsidies. "Apparently many farmers cannot understand the complexities of the programs or simply feel that even subsidized premiums still are not attractive economic choices. In any event, the current crop insurance programs will continue while all of us are learning more," he said in the letter.

Lugar also distributed copies of a study by the Food and Agricultural Policy Research Institute (FAPRI) that illustrates how the states would fare under Lugar's risk management bill and another bill on crop insurance reform by Sens. Pat Roberts (R-KS) and Bob Kerrey (D-NE).