Senate Approves Crop Insurance Reform

March 23, 2000

The Senate, on a 95-5 vote, Thursday approved crop insurance reform. With the House waiting in the wings with its bill that was approved last September, the bills now go to a conference committee for reconciliation. House Agriculture Committee Chairman Larry Combest (R-TX) said he hopes the new program will be in place for winter wheat plantings this fall.

Both bills spend an additional $6 billion on the crop insurance program over four years.Senate Agriculture Committee Chairman Richard Lugar (R-IN) said, "The point is to try to persuade farmers to take seriously the safety net provided by crop insurance and risk management tools. This bill goes a long way toward offering those incentives."The bill originally was proposed by Sens. Pat Roberts (R-KS) and Bob Kerrey (D-NE). Lugar had held out for a more positive response to his own version of crop insurance reform, and the Senate included a key provision of Lugar's legislation.

"This plan goes a long way toward making the crop insurance program more affordable, accessible and flexible," Roberts said. "In these times of low prices and global economic woes, American farmers deserve an effective risk management tool they can use."

It establishes a risk management pilot program to farmers who choose to forego crop insurance subsidies in a given year. The producer would receive a risk management payment for using two of twelve risk management options.

The Senate bill also --

--Increases the premium subsidies to make crop and revenue insurance policies more affordable for farmers, especially at higher levels of coverage;

-- Eases actual production history (APH) rules so that a farmer's insurance coverage is less likely to be artificially depressed by successive years of bad weather; there also is an APH credit program to address the lack of production histories for beginning farmers or those who have added land or rotated crops;

-- Encourages the development of insurance coverage for specialty crops and revenue insurance on a whole farm rather than a commodity-by-commodity basis;

-- Eliminates the requirement of an area-wide loss before disaster payments can be made to producers of currently noninsurable crops, and

-- Reduces the potential for insurance fraud and abuse with program compliance provisions.