I believe that risk management is broader than crop insurance alone. An approach to risk management that focuses on the crop insurance program's subsidy structure is too narrow to address the many risks faced by farmers. In crafting my own risk management bill, I was guided by four principles. In the crop insurance program, private insurers receive substantial compensation for selling and servicing multi-peril policies on the government's behalf. Overall, the insurance companies receive about one-third of the federal financial support of the program.
Farmers get the remaining two-thirds.
In my view, farmers should receive more of the new federal spending. Leading economists believe that crop insurance encourages the planting of crops on marginal and environmentally challenged acreage. Federal risk management spending should not inadvertently subsidize overproduction when world-wide agricultural stocks are already large. Subsidizing overproduction postpones the day when agricultural prices will rebound. In terms of eligible 1998 acres insured, farmers' participation by state ranges from a low of 4 percent to a high of 93 percent.