Wednesday House Agriculture Subcommittee on General Farm Commodities and Risk Management Chairman Jerry Moran convened a hearing to review the federal crop insurance program.
The 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," says 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%, 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," says 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," says USDA Chief Economist Keith Collins in his testimony.