Senate Committee Mulling Disaster Aid

May 24, 2002

Senate Agriculture Committee Chairman Tom Harkin (D-IA) said yesterday that his panel will consider a disaster assistance bill in early June. The committee held a hearing on the need to provide emergency agricultural disaster assistance for 2001 crop and livestock production. Several senators and witnesses asserted the crop insurance program does not provide enough assistance when an area has multiple years of losses, as actual production yields decline while the insurance premiums increase.

Like many other farm topics this year, disaster aid has come to have political undertones. The major champion of disaster payments this year, Sen. Max Baucus (D-MT), is up for re-election in a Senate where party control hinges on a single seat. Baucus succeeded in attaching an "emergency" disaster assistance package to the Senate's farm bill, but it was dropped in conference with the Republican-controlled House of Representatives.

Keith Collins, Chief Economist for USDA and Chairman of the FCIC Board, stated there has been a number of weather related stresses placed upon production agriculture over the last few years. He explained that USDA is utilizing every tool available to assist producers, including crop insurance, the noninsured crop disaster assistance program, emergency haying and grazing of conservation reserve land and providing low interest loans. He explained that crop insurance reform legislation in 2000 did expand benefits for producers, but if a producer experiences multi-year losses, the coverage for his projected yields would decline. He noted that the program provides that a producer may use 60 % of the county average yields for coverage if his previous yield fell below the county average. Collins stressed that by law the crop insurance program must be actuarially sound.