Chairman Frank Lucas today released the following statement on Scott O'Malia's last day as Commissioner of the Commodity Futures Trading Commission (CFTC). Last month, O’Malia announced he would resign to pursue other opportunities.
Committee OK's "Agricultural Risk Protection Act of 1999"
The U.S. House Committee on Agriculture on Tuesday, August 3, 1999 finalized proposed improvements to the federal crop insurance program, designing a bill to attract more farmers and ranchers purchasing policies through improved crop protection and the development of new coverage for lost market revenue, and livestock losses.
H.R. 2559, "The Agricultural Risk Protection Act of 1999" meets the commitment of Agriculture Chairman Larry Combest (R-TX) to affordable, flexible coverage based more closely on productive capability than the financially-harsh APH formula (Actual Production History). Instead, the Committee bill allows farmers to exclude the recorded yield in any crop year when such yields are below 60 percent of the transitional yield, and to replace with a yield equal to 60 percent of the applicable transition yield. Chairman Combest said improved coverage and increased federal premium assistance provide incentives for producers to reach out to a strengthened farm safety net.
"Too many producers are forced into the financially risky decision to work without a crop insurance safety net, judging that policies are not effective in coverage nor cost," said Combest. "Unpredictable weather damage and fluctuating world markets threaten farm families with a financial free-fall. This bill's insurance against crop, livestock and revenue losses offers more secure anchors for a stronger safety net that producers need and want."
Premium assistance levels would increase as follows: for 50/100 coverage from the current 55% to 67%; for 55/100 coverage premium assistance increases from 46.1% to 64%; for 60/100 up from 37.8% to 64%; while 65/100 assistance increases from the current 41.7% to 59%; for 70/100 assistance rises from 31.9% to 59%; for 75/100 assistance goes from the current 23.5% to 54%; for 80/100 the assistance rises from 17.3% to 40.6%; and for 85/100 coverage the premium assistance increases from 13% to 30.6% under the legislation approved by the Agriculture Committee. (As an example, a 65/100 policy is shorthand for 65 percent yield coverage that sets a 35 percent deductible for the farmer, that will pay 100 percent of the USDA-set price for the yield.)
Included provisions of the "Agricultural Risk Protection Act of 1999"
Affordable coverage at every level, with strong incentives to purchase higher levels of protection, and new flexibility for producers to choose the level of coverage that best meets their needs.More affordable policies to protect farmers against price and income loss, in addition to production loss
Encouragement of greater flexibility and diversity of coverage by expanding policy development and providing incentives for the creation of new policies. Introduction of a livestock pilot program to test the effectiveness of risk management tools to protect livestock producers. Strong compliance and enforcement provisions against fraud, waste and abuse through substantial sanctions for violations and monitoring by the Farm Service Agency.