II

106TH CONGRESS

1ST SESSION S. 629

To amend the Federal Crop Insurance Act and the Agricultural Market

Transition Act to provide a safety net to producers through cost of

production crop insurance coverage, to improve procedures used to determine yields for crop insurance, to improve the noninsured crop assistance

program, and for other purposes.

IN THE SENATE OF THE UNITED STATES

MARCH 16, 1999

Mr. BAUCUS (for himself and Mr. CRAIG) introduced the following bill; which

was read twice and referred to the Committee on Agriculture, Nutrition,

and Forestry

A BILL

To amend the Federal Crop Insurance Act and the Agricultural Market Transition Act to provide a safety net to

producers through cost of production crop insurance coverage, to improve procedures used to determine yields

for crop insurance, to improve the noninsured crop assistance program, and for other purposes.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION. 1. SHORT TITLE.

4 This Act may be cited as the ‘‘Crop Insurance Im5 provement Act of 1999’’.
2

•S 629 IS

1 SEC. 2. COST OF PRODUCTION INSURANCE COVERAGE.

2 Section 508 of the Federal Crop Insurance Act (7

3 U.S.C. 1508) is amended—

4 (1) in subsection (c), by striking paragraph (5)

5 and inserting the following:

6 ‘‘(5) EXPECTED MARKET PRICE.—

7 ‘‘(A) IN GENERAL.—For the purposes of

8 this title, the Corporation shall establish or ap9 prove the price level (referred to in this title as

10 the ‘expected market price’) of each agricultural

11 commodity for which insurance is offered.

12 ‘‘(B) AMOUNT.—The expected market

13 price of an agricultural commodity—

14 ‘‘(i) except as otherwise provided in

15 this subparagraph, shall be not less than

16 the projected market price of the agricul17 tural commodity, as determined by the

18 Corporation;

19 ‘‘(ii) may be based on the actual mar20 ket price of the agricultural commodity at

21 the time of harvest, as determined by the

22 Corporation; or

23 ‘‘(iii) in the case of cost of production

24 or similar plans of insurance, shall be the

25 projected cost of producing the agricultural
3

•S 629 IS

1 commodity, as determined by the Corpora2 tion.’’; and

3 (2) in subsection (h), by striking paragraph (6)

4 and inserting the following:

5 ‘‘(6) COST OF PRODUCTION INSURANCE COV6 ERAGE.—

7 ‘‘(A) IN GENERAL.—The Corporation shall

8 offer a cost of production plan of insurance

9 that—

10 ‘‘(i) allows producers to select a dollar

11 amount of coverage per acre of an agricul12 tural commodity for each production area

13 described in subparagraph (B) designated

14 by the Corporation; and

15 ‘‘(ii) is based on the actual or ex16 pected cost of producing the agricultural

17 commodity.

18 ‘‘(B) SIZE OF PRODUCTION AREA.—For

19 the purposes of this paragraph, a production

20 area shall be determined based on the similar

21 characteristics of the acreage and the use of

22 similar farming practices to produce the agri23 cultural commodity and shall not be limited by

24 the boundaries of a county.
4

•S 629 IS

1 ‘‘(C) CONSULTATION WITH STATE COMMIT2 TEES.—Prior to designating a production area

3 described in subparagraph (B), the Corporation

4 shall consult with the appropriate State com5 mittee.

6 ‘‘(D) AMOUNT OF COVERAGE.—Notwith7 standing subsection (c)(4), the dollar amount of

8 coverage per acre of an agricultural commodity

9 shall not exceed 90 percent of the cost of pro10 duction of the agricultural commodity, as deter11 mined by the Corporation, in the production

12 area described in subparagraph (B).’’.

13 SEC. 3. YIELD DETERMINATIONS.

14 Section 508(g)(2) of the Federal Crop Insurance Act

15 (7 U.S.C. 1508(g)(2)) is amended—

16 (1) in subparagraph (A)—

17 (A) by striking ‘‘Subject to subparagraph

18 (B),’’ and inserting the following:

19 ‘‘(i) IN GENERAL.—Subject to clause

20 (ii) and subparagraph (B),’’;

21 (B) by adding at the end the following:

22 ‘‘(ii) ROTATION PRACTICES.—

23 ‘‘(I) DEFINITION OF A PRO24 DUCER THAT HAS SUFFERED A LOSS

25 DUE TO A NATURAL DISASTER.—In
5

•S 629 IS

1 this clause, the term ‘a producer that

2 has suffered a loss due to a natural

3 disaster’ means a producer that has

4 suffered a loss due to a natural dis5 aster with respect to a crop that has

6 resulted in a substantial reduction in

7 the producer’s actual production his8 tory with respect to the crop, as deter9 mined by the Corporation.

10 ‘‘(II) YIELD BASED ON ACTUAL

11 PRODUCTION HISTORY.—Subject to

12 subparagraph (B), in the case of a

13 producer that has adopted an accept14 able rotation practice, involving 3 or

15 more agricultural commodities, the

16 yield for a crop shall be based on the

17 actual production history for the crop

18 for the 3 preceding crop years during

19 which the crop was produced on the

20 farm building up to a production data

21 base of 10 crop years for which the

22 actual production history is estab23 lished.

24 ‘‘(III) NATURAL DISASTERS.—

25 For the purposes of calculating the
6

•S 629 IS

1 actual production history of an agri2 cultural commodity under this clause,

3 a producer that has suffered a loss

4 due to a natural disaster with respect

5 to the crop may exclude 1 year of pro6 duction history for each 4 years of

7 production history for the crop for

8 which the producer has purchased

9 crop insurance.’’; and

10 (2) in subparagraph (B)—

11 (A) by striking ‘‘assigned a yield’’ and in12 serting ‘‘assigned—

13 ‘‘(i) a yield’’;

14 (B) by striking the period at the end and

15 inserting ‘‘; or’’; and

16 (C) by adding at the end the following:

17 ‘‘(ii) a yield determined by the Cor18 poration, in the case of—

19 ‘‘(I) a person that has not been

20 actively engaged in farming for a

21 share of the production of the insured

22 crop for more than 2 crop years, as

23 determined by the Secretary;

24 ‘‘(II) a producer that produces

25 an agricultural commodity on land
7

•S 629 IS

1 that has not been previously farmed

2 by the producer; and

3 ‘‘(III) a producer that rotates a

4 crop produced on a farm to a crop

5 that has not been previously produced

6 on the farm.’’.

7 SEC. 4. NONINSURED CROP DISASTER ASSISTANCE PRO8 GRAM.

9 (a) OPERATION AND ADMINISTRATION OF PRO10 GRAM.—Section 196(a) of the Agricultural Market Transi11 tion Act (7 U.S.C. 7333(a)) is amended—

12 (1) in the first sentence of paragraph (1), by

13 striking ‘‘to provide coverage’’ and all that follows

14 through ‘‘Federal Crop Insurance Act (7 U.S.C.

15 1508(b))’’; and

16 (2) in paragraph (2), by adding at the end the

17 following:

18 ‘‘(C) COMBINATION OF SIMILAR TYPES OR

19 VARIETIES.—At the option of the Secretary, all

20 types or varieties of a crop or commodity de21 scribed in subparagraph (A) or (B) may be con22 sidered to be a single eligible crop under this

23 section.’’.

24 (b) RECORDS.—Section 196(b) of the Agricultural

25 Market Transition Act (7 U.S.C. 7333(b)) is amended—
8

•S 629 IS

1 (1) by striking paragraph (2) and inserting the

2 following:

3 ‘‘(2) RECORDS.—To be eligible for assistance

4 under this section, a producer shall provide annually

5 to the Secretary records of crop acreage, acreage

6 yields, and production for each crop, as required by

7 the Secretary.’’; and

8 (2) in paragraph (3), by inserting ‘‘annual’’

9 after ‘‘shall provide’’.

10 (c) LOSS REQUIREMENTS.—Section 196(c) of the

11 Agricultural Market Transition Act (7 U.S.C. 7333(c)) is

12 amended—

13 (1) by striking paragraph (1);

14 (2) in paragraph (2)—

15 (A) by striking ‘‘Subject to paragraph (1),

16 the’’ and inserting ‘‘The’’; and

17 (B) by striking ‘‘because of drought, flood,

18 or other natural disaster, as determined by the

19 Secretary’’;

20 (3) in paragraph (3)—

21 (A) by striking ‘‘Subject to paragraph (1),

22 the’’ and inserting ‘‘The’’; and

23 (B) by striking ‘‘, because of drought,

24 flood, or other natural disaster as determined

25 by the Secretary,’’;
9

•S 629 IS

1 (4) by redesignating paragraphs (2) and (3) as

2 paragraphs (1) and (2), respectively; and

3 (5) by adding at the end the following:

4 ‘‘(3) AREA TRIGGER.—The Secretary shall pro5 vide assistance to individual producers without any

6 requirement of an area loss.’’.

7 (d) PAYMENTS.—Section 196(d)(2)(B) of the Agri8 cultural Market Transition Act (7 U.S.C. 7333(d)(2)(B))

9 is amended by striking ‘‘55 percent of the average market

10 price for the crop’’ and inserting ‘‘100 percent of the aver11 age market price for the crop’’.

12 (e) YIELD DETERMINATIONS.—Section 196 of the

13 Agricultural Market Transition Act (7 U.S.C. 7333) is

14 amended by striking subsection (e) and inserting the fol15 lowing:

16 ‘‘(e) YIELD DETERMINATIONS.—

17 ‘‘(1) ESTABLISHMENT.—The Secretary shall es18 tablish farm yields for the purposes of providing

19 noninsured crop disaster assistance under this sec20 tion.

21 ‘‘(2) ACTUAL YIELDS.—Subject to paragraph

22 (3), the Secretary shall determine yields for an eligi23 ble crop on the basis of the quantity of production

24 per acre for the crop for the farm for each of the
10

•S 629 IS

1 5 crop years for which the crop was planted imme2 diately preceding the crop year, excluding—

3 ‘‘(A) the crop year with the highest yield

4 per acre on the farm; and

5 ‘‘(B) the crop year with the lowest yield

6 per acre on the farm.

7 ‘‘(3) STATE OR COUNTY YIELDS.—If insuffi8 cient records exist, as determined by the Secretary,

9 to determine the actual yield pursuant to paragraph

10 (2), the Secretary may establish a per acre yield

11 based on State or county yields for an eligible crop

12 on the basis of—

13 ‘‘(A) historical yields, as adjusted by the

14 Secretary to correct for abnormal factors affect15 ing the yields in the historical period; or

16 ‘‘(B) the Secretary’s estimate of actual

17 yields for the crop year involved if historical

18 yield data are not available.’’.

19 (f) NEW ELIGIBLE CROPS.—Section 196 of the Agri20 cultural Market Transition Act (7 U.S.C. 7333) is

21 amended—

22 (1) in subsection (d)(1)—

23 (A) by inserting ‘‘(except as provided in

24 subsection (j))’’ after ‘‘percent’’; and
11

•S 629 IS

1 (B) by inserting ‘‘determined under sub2 section (e)’’ after ‘‘for the crop’’;

3 (2) by redesignating subsection (j) as sub4 section (l); and

5 (3) by inserting after subsection (i) the fol6 lowing:

7 ‘‘(j) NEW ELIGIBLE CROPS.—

8 ‘‘(1) IN GENERAL.—Subject to paragraph (2),

9 if a producer produces an eligible crop that is new

10 to an area (as determined by the Secretary), a pay11 ment for the producer shall be computed by sub12 stituting the following percentages of yields for the

13 percentages of yields specified in subsection (d)(1):

14 ‘‘(A) In the case of the first crop year of

15 the eligible crop produced by the producer, 35

16 percent of the established yield for the crop de17 termined under subsection (e).

18 ‘‘(B) In the case of each of the second

19 through fourth years of the eligible crop pro20 duced by the producer—

21 ‘‘(i) 45 percent of the established yield

22 for the crop determined under subsection

23 (e); or

24 ‘‘(ii) if the producer received a pay25 ment under this section for the first crop
12

•S 629 IS

1 year of the eligible crop produced by the

2 producer, 35 percent of the established

3 yield for the crop determined under sub4 section (e).

5 ‘‘(2) TEMPORARY INELIGIBILITY.—If a pro6 ducer of an eligible crop described in paragraph (1)

7 receives a payment under this section in both the

8 first and second crop years of the eligible crop, the

9 producer shall be ineligible for a payment under this

10 section until the producer has successfully produced

11 the crop for at least 3 consecutive crop years with

12 no loss reported, as determined by the Secretary.’’.

13 (g) SERVICE FEE.—Section 196 of the Agricultural

14 Market Transition Act (7 U.S.C. 7333) (as amended by

15 subsection (f)) is amended by inserting after subsection

16 (j) the following:

17 ‘‘(k) SERVICE FEE.—To be eligible to receive assist18 ance for an eligible crop for a crop year under this section,

19 a producer shall pay to the Secretary a service fee of $50

20 for each eligible crop.’’.

Æ