Senate Committee Approves Crop Insurance Reform
March 3, 2000
The Senate Agriculture Committee Thursday approved a crop insurance reform bill that a top USDA official said was "a very positive step" toward improving the program. The bill, by Sens. Pat Roberts (R-KS) and Bob Kerrey (D-NE), was adopted 10-8 as a substitute amendment for legislation proposed by committee Chairman Richard Lugar (R-IN). The amended bill gained final approval by a unanimous vote.
Risk Management Agency Administrator Ken Ackerman told reporters there are points of disagreement on the Senate version but the bill "lines up very well" with USDA. s preferences on reform. The major point of disagreement appeared to be the bill. s proposed restructuring of the Federal Crop Insurance Corporation board, specifically that the chair should be filled by someone outside government. Ackerman said the chair should be someone within government.
However, he would not say if that was enough to invite a veto from President Clinton if it remained part of a final bill. "I wouldn't want to go in that direction," he said. But it "raises a serious question."
The "most important" development from the committee's action, he said, is that it moves the reform process forward and "clearly raises the odds" that a bill can be approved by Congress this year. The House has approved its version, so when the full Senate completes its work on the committee bill, a conference committee will have to work out the differences. Ackerman would not say when he expected a final bill to be approved. However, there is "a lot of commonality" between the two bills, making the process less encumbered by difficult decisions in conference.
Congressional approval of the legislation means $6 billion will be spent over four fiscal years on a reformed program, or $1.5 billion a year in addition to the approximately $1.9 billion now being spent on crop insurance, Ackerman said.
"After many discussions with other farm-state legislators and major agriculture and insurance groups, it was clear that we need to do two things: address the areas in which the current program is inadequate and make the administration of the program more flexible and responsive," said Roberts. The bill accomplishes both, he added.
A major feature of the bill is that it seeks to make higher levels of coverage more affordable. For 50/100 (50% of yield, 100% of price) and 75/100 coverages, the government would provide a 55% premium subsidy; for 65/100 and 70/100, the subsidy would be 50%; for 55/100 and 60/100, it would be 45% and for 50/100 the subsidy would be 60%. Current premium subsidies range from 13-57%.
Other features of the Senate bill:
. Establishes average production history (APH) credit program to address the lack of production histories for beginning farmers or those who have added land or rotated crops;
. Creates a multi-year disaster APH adjustment for producers who have suffered a natural disaster during at least three of the preceding five years, resulting in an APH reduction of 25%; qualifying producers may exclude one year of APH for every five years. experience;
. Allows producers to plant a substitute crop on prevented planting acres when specific conditions are met;
. Provides funding to conduct studies that lead to a new rating system to address lower-risk producers not currently using crop insurance;
. Provides an incentive for producers to undertake additional risk management activities;
. Provides improvements in coverage available under the Non-Insured Assistance Program (NAP);
. Provides funding of $200 million over four years for pilot projects to improve crop insurance policies and expand coverage to new crops and regions;
. Establishes heavy fines and penalties for producers, insurance agents, adjusters and approved providers who give false information on losses, planted acres or otherwise try to cause fraud and abuse in the program.
The committee also approved an amendment that calls on farmers who participate in crop insurance to develop and implement conservation plans on land that is prone to soil erosion.
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