Agriculture Subcommittee Holds Hearing to Review Federal Crop Insurance Program

Jul 21, 2004

WASHINGTON, D.C.- Congressman Jerry Moran, Chairman of the House Agriculture Subcommittee on General Farm Commodities and Risk Management, chaired a hearing today to review the federal crop insurance program. The hearing follows up on a series of hearings held last year where producers acknowledged progress since the passage of the Agriculture Risk Protection Act of 2000, but raised some areas of ongoing concern.

The subcommittee heard from the Chairman of the Federal Crop Insurance Corporation, Dr. Keith Collins, who also serves as Chief Economists at USDA, and Ross Davidson, Administrator of the Risk Management Agency, also with USDA. The panel had the opportunity to respond directly to the 25 crop insurance related issues collectively raised in previous hearings and provide the subcommittee with an update on the activities of the Board of Directors (Board) of the Federal Crop Insurance Corporation (FCIC).

Crop insurance is an increasingly important risk management tool for many farmers. The Agriculture Risk Protection Act of 2000 (PL 106-224) reauthorized crop insurance programs through FY 2005. Following the passage of the crop insurance reform bill, products were expanded and additional coverage was offered.

The federal crop insurance program was created to protect crop producers from unavoidable risks resulting from plant disease, weather conditions and insect infestation. Prior hearings brought producer, farm groups, and insurance companies’ concerns to the forefront of discussions about federal crop insurance programs.

“I must point out that the number one issue on the list is multi-year loss. USDA agreed to put this issue on a fast track, and in May held a pre-proposal conference to solicit proposals to address decline in producers Approved Production History (APH) yields due to multi-year drought/loss. I believe it is absolutely critical that producers have a product that will assist them through times of abnormal weather patterns and disasters. I look forward to a report on the status of that project and the discussion that follows,” Moran said.

Multi-year losses are one of 25 general issues the subcommittee asked the panel to include in their report. Other issues included approval of expansion of Adjusted Gross Revenue (AGR)/AGR-Lite, streamlining approval process for private product submission as well as revenue products, establishing a minimum loss standard, development of Group Risk Protection (GRP) coverage, and review of RMA quality loss adjustment procedures for program crops. A complete list of issues as well as a current status report on each issue can be found in Davidson’s full testimony which is available on the Agriculture Committee’s web site.

The Board has taken 50 official actions in relation to issues raised by producers in previous hearings. According to Collins’ testimony, the Board sent 11 proposals for new insurance products and changes to existing insurance products for review. The Board also aimed to significantly improve the governance of FCIC as they restructured the delegations of authority for FCIC.

“In an era where boards of directors are under increased scrutiny by their shareholders for management oversight, we are pleased to be able to report…that the Board, in concert with the RMA management team and the Office of General Counsel, has conducted an exhaustive review of all statutory responsibilities and ensured they are properly delegated for action,” Collins said in his testimony.

At the conclusion of the hearing Moran pledged continued oversight of the federal crop insurance program.

WITNESS LIST

Panel

Dr. Keith Collins, Chairman, Federal Crop Insurance Corporation, United States Department of Agriculture, Washington, D.C.

Mr. Ross Davidson, Administrator, Risk Management Agency, United States Department of Agriculture, Washington, D.C.

###