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**FEDERAL CROP INSURANCE**

***Background***

The Risk Management Agency (RMA), on behalf of the Federal Crop
Insurance Corporation, oversees and administers the crop insurance
program under the Federal Crop Insurance Act.

Crop insurance is offered to qualified producers through 16 private
sector crop insurance companies. Under the Standard Reinsurance
Agreement, RMA provides reinsurance, pays a premium subsidy to reduce
the premium charged to producers, reimburses the insurance companies for
administrative and operating costs, and oversees the financial integrity
and operational performance of the delivery system. While RMA bears much
of the insurance risk in areas where losses have traditionally been
higher, the insurance companies that deliver the program retain a large
portion of the risk in the lower risk areas, which they can reinsure in
the private market.

In 2005, the Federal crop insurance program provided producers with more
than \$44.29 billion in liability protection on approximately 246
million acres through about 1.25 million policies. There are 22 plans of
insurance available and nearly 30 new insurance products under various
stages of evaluation or development. Approximately 80 percent of acres
of major program crops are insured--many at higher levels of coverage.

RMA works closely with the private sector to find new and innovative
ways to provide more and better coverage, thereby reducing the need for
ad-hoc disaster bills and improving risk protection for specialty crops,
livestock and forage, rangeland, and pasture. RMA is also working with
the private sector to address the reduction in available coverage caused
by long-term production declines that result from extended drought in
many areas.

***General Opinions Expressed***

-   Crop insurance programs must be simplified so that farmers can make
    the best possible coverage decisions.

-   Higher premium subsidies should be provided for those who insure
    their crops under a "whole farm" approach.

-   There is a need to establish better quality loss adjustment
    procedures to improve the relationship between the crop insurance
    adjustment and the actual discount received in the market.

-   Crop insurance subsidies should be capped to avoid encouraging
    larger and more expansive farms.

-   RMA and FSA should have the same reporting dates for acres planted
    and certified.

-   A whole-farm revenue program should replace the counter-cyclical
    program.

-   Federal crop insurance is needed for producers of inherently
    high-risk specialty agricultural products.

-   More training is needed for insurance agents and crop loss
    adjusters.

-   Individual risk management savings accounts with matching USDA funds
    should be established for farmers.

-   Crop insurance needs to be more affordable for farmers.

-   Concern was expressed that when there are several years of crop
    disasters, the APH is decreased, and the coverage decreases.

-   General support for more funding for the Federal crop insurance
    program was expressed.

-   Support and appreciation were expressed for more farm revenue
    programs rather than insuring only yields. Full-farm revenue
    insurance should be considered.

-   Some commenters expressed concern that crop insurance has unintended
    consequences of encouraging high-water-usage crops in semi-arid
    regions.

-   Some comments suggest including disaster revenue assurance in farm
    bill legislation.

-   Support for "cost-of-production insurance."

-   A few comments stated that USDA should end subsidies for loans,
    insurance, and crop subsidies.

-   Support for direct delivery of Federal crop insurance without
    involvement of private insurance companies.

-   Farmers should be able to compete without Federal programs, like
    crop insurance.

-   Many positive comments were made about the benefit of crop insurance
    during disaster years.

-   One participant noted that crop insurance had done more for High
    Plains farmers over the last 6 years of drought than direct
    payments.

-   One commenter noted that an inequity exists in crop insurance where
    growers in Washington and Oregon have a whole different deal than
    growers in Utah.

***Detailed Suggestions Expressed***

-   Young producers should receive higher premium subsidies in order to
    purchase crop insurance at the 80 and 85 percent coverage level.

-   RMA and FSA should have same reporting dates for acres planted and
    certified.

-   RMA should establish a certification process for independent
    contractors to adjust for losses and measure production yields for
    both loan and crop insurance purposes.

-   Crop insurance for certain specialty crops, particularly potatoes,
    does not work.

-   Federal crop insurance should not be provided for certain crops,
    particularly for green chili because it distorts plantings.

-   FSA acreage certification software should be allowed to interface
    with RMA.

-   Crop Revenue Coverage (CRC) should be modified to provide variable
    coverage levels based on yield potential in normal years rather than
    actual history in times of prolonged losses.

-   Provide direct vouchers for the purchase of insurance for crops
    and/or crop revenue products.

-   Some expressed concern with specific rules regarding crop insurance.
    Farmers must ask permission to commingle production in a bin.

-   Specific pack factor rules with RMA and FSA need to be consistent.
    One uses 6.6 bushels for a ton of silage and the other agency uses
    7.93.

-   Original Adjusted Gross Revenue (AGR) pilot program and AGR-Lite are
    important tools; however, they are complicated and difficult for
    producers to make application for eligibility.

-   Crop insurance rules should allow new farmers to utilize historic
    field yields, not county averages.

-   Crop insurance programs ignore winter wheat in continuous crop vs.
    summerfallow winter wheat in eastern Washington State.

-   The Federal crop insurance program needs revamping. Most insurance
    programs, such as health or home insurance, reimburse the insured
    for most of the costs associated with a tragedy. Crop insurance in
    no way provides this insurance.

-   Federal crop insurance is an example of a program benefit that
    encourages high-water-use crops to move into the semi-arid sorghum
    belt.

-   The Federal Government needs to act as insurance agents and return
    to insurer roles.

-   Reform crop insurance from 60 percent to 90 percent reimbursement
    for natural disasters.

-   Put in place crop insurance that pays Chicago Board of Trade prices
    based on running 5-year production averages.

-   The Government should not provide one farmer a larger grant or crop
    insurance guarantee than another farmer or else the Government is
    selecting a winner and a loser.

-   Need to make dairy production eligible for crop insurance.

-   The Federal crop insurance program can be a lot simpler. Should be
    done by a per value, per acre system so all people can be insured,
    and not be limited to certain products.

-   Federal crop insurance has problems with individual farm units. The
    program should go to single-unit crop insurance with better coverage
    and lower premiums.

-   Concern about APHIS imposing a quarantine or stop-sale order on
    plants and that the Federal crop insurance program does not have
    authority to cover those losses.

-   There is a need to revise rules for entry-level growers and growers
    who change crops to meet changing markets. The 5-year rule is
    unrealistic.

-   In Hawaii, there is a tremendous need for information for farm
    producers and, besides, there is a problem with language.

-   Stop crop insurance on vegetable crops.

-   The Federal crop insurance program does not work because you can
    make a profit out of it. Prefer a cost-of-production insurance
    program.

-   The Florida Avocado Administrative Committee has been petitioning
    the USDA since 1992 to make substantial changes to the avocado crop
    insurance program.

-   Federal crop insurance should be expanded to cover tropical hardwood
    tree farms. Private insurance is not available.

-   USDA should provide crop insurance for foliage crops that can be
    available for landscape and export nurseries.

-   Eliminate current direct payments, as well as counter-cyclical and
    loan deficiency payments and use the same funding to buy down crop
    insurance premiums.

-   There is a need for broader crop insurance coverage for corn as
    grain in North Dakota, in order to meet the growing needs of the
    ethanol industry.

-   Farmers assuming more risk through enterprise unit or group policies
    should receive the same percentage of premium subsidy as those
    assuming the least amount of individual risk through optional units.

-   Levels of funding need to be increased for RMA outreach programs.

-   There is a Federal policy problem when a landowner with land along a
    river gets flooded 8 of 10 years and receives crop insurance,
    disaster payments, and money to clean up the mess.

-   Federal crop insurance only covers about 30 percent of our
    production costs.

-   Require farmers to secure crop insurance in order to participate in
    USDA programs.

-   Crop insurance is ineffective -- never a pay-out yet one must pay
    the same premium every year.

-   Need to ensure that berry crop producers have necessary risk
    management tools.

-   USDA should establish a standing disaster program for producers who
    suffer an insurable loss but only to the extent of the uninsured
    loss, and should mandate and fully fund an RMA and FSA initiative to
    implement data sharing to administer this standing disaster program.

-   If you subsidize the insurance where farmers can afford the coverage
    they need for a disaster year, then you can do away with disaster
    payments.

-   Crop and livestock production insurance must be available to all
    types of production systems and types of crops and livestock.

-   Too many compliance issues exist with regard to prevented planting
    designations due to drought.