Subcommittee Reviews Federal Crop Insurance

Mar 15, 2006

WASHINGTON, D.C. – Today Subcommittee on General Farm Commodities and Risk Management Chairman Jerry Moran convened a hearing to review the federal crop insurance program. The federal crop insurance program is designed to help agricultural producers mitigate unavoidable risks such as adverse weather, natural disasters, disease and insect infestation that directly affect the agriculture industry. Today’s hearing provided Members with a general overview of current issues facing the crop insurance program including multiple-year losses, disaster assistance, premium reduction plan, and the upcoming farm bill reauthorization.

“As we all know, farming is a high-risk business. American farmers can use the best seed, chemicals and superior management practices, but the weather can still destroy their crops. Since our farmers cannot control the weather, it is often the right decision to defray some of the risk by purchasing crop insurance for a manageable premium as part of their operating budget,” said Chairman Moran.

The federal crop insurance program was created in 1930 and has undergone significant legislative reform in subsequent years. The Federal Cop Insurance Act of 1980 created a unique partnership between private insurance companies and the federal government within the crop insurance program. According to the U.S. Department of Agriculture, the program provided coverage for 370 commodities covering over 80 percent, or 246 million acres, of planted acreage in the country in 2005.

“Crop insurance is a key component of the farm safety net and it is crucial that this Subcommittee continues to stay abreast as to the health of the crop insurance industry,” said Subcommittee Ranking Minority Member Bob Etheridge.

Producers raised concerns about the crop insurance program at each of the four full Committee field hearings to review federal agriculture policy. As the Committee continues to gather feedback from producers about current farm policy, crop insurance will likely be an area of interest.

“As we look forward to a new farm bill and the next generation of farm programs, the need for risk management tools such as crop insurance will not lessen. …The FCIC [Federal Crop Insurance Corporation] Board will continue to diligently examine, encourage, and demand improvements in insurance products that are in the interest of producers, that are actuarially appropriate, and that protect the interests of the American taxpayer,” said USDA Chief Economist Keith Collins in his testimony.

Today’s hearing marked the first time Risk Management Agency Administer Eldon Gould testified before the Committee since assuming the position last year. The Subcommittee also heard from representatives of the crop insurance industry. A complete witness list is included below.

Witness testimony is available on the Committee website, and a full transcript of the hearing will be available on the Committee website 4-6 weeks following the hearing.


Panel I
Dr. Keith Collins, Chief Economist, United States Department of Agriculture, and Chairman, Federal Crop Insurance Corporation, Washington, D.C.

Mr. Eldon Gould, Administrator, Risk Management Agency, United States Department of Agriculture, Washington, D.C.

Panel II
Mr. Sam Scheef, President, ARMtech Insurance Services, Lubbock, Texas, on behalf of the American Association of Crop Insurers

Mr. Jim Brost, Executive Vice President, Cooper Gay & Cashman, LLC, Minnetonka, Minnesota, on behalf of the Crop Insurance Research Bureau

Mr. William V. Hanson, President, Kanok Inc., Manhattan, Kansas, on behalf of the Crop Insurance Professionals Agency

Mr. Robert W. Parkerson, President, National Crop Insurance Services, Overland Park, Kansas