1/ Includes costs of $1,815,000 for the transition quarter.

2/ Estimates.

Note: Excludes $116 million losses by CCC on commodity loan and inventory

operations prior to National Wool Act.

* Total wool payments shown above

Unallocated payments and adjustments for period October 1, 1979

to September 30, 1980

NOTE:

Total payments, fiscal year 1980

$29,418,029

1,571,971

30,990,000

No payments made to mohair producers since the average market price of
mohair was higher than the support rate.

Promotion Activities

The Food and Agriculture Act of 1977 extends the provision that advertising and sales promotion programs may be conducted outside of the United States for the purpose of maintaining and expanding foreign markets and uses for mohair or goats or the products thereof produced in the United States.

A "self-help" program for advertising, promotion, and related market development activities is authorized, if approved by producers, by Section 708 of the National Wool Act of 1954. In a referendum held August 21 through September 1, 1978, wool and lamb producers approved an agreement authorizing continued deductions from payments made on wool and unshorn lambs marketed through 1981.

The agreement with the Mohair Council of America expired in December 1973. No agreement has been entered into since no payments have been made to producers because market prices have exceeded the support level.

FRIDAY, MARCH 13, 1981.

FEDERAL CROP INSURANCE CORPORATION

WITNESSES

ROLAND WENTZEL, ACTING DEPUTY MANAGER

RAY G. HASTINGS, ACTING ASSISTANT MANAGER FOR ADMINISTRATIVE MANAGEMENT

RONALD E. McADOO, ACTING DIRECTOR, ACTUARIAL DIVISION

STEPHEN B. DEWHURST, BUDGET OFFICER, DEPARTMENT OF AGRICULTURE

SEELEY G. LODWICK, UNDER SECRETARY DESIGNATE, INTERNATIONAL AFFAIRS AND COMMODITY PROGRAMS

BIOGRAPHICAL SKETCHES

Mr. WHITTEN. We have before us today the Federal Crop Insurance Corporation, represented by Mr. Wentzel, the Acting Deputy Manager, together with Mr. Hastings, Mr. McAdoo, and Mr. Dewhurst. We are glad to have you make your statement to the Committee, and to introduce the new members that we have not met before. We have the biographical sketches that you have submitted, and we will enter them in the record at this point. [The biographical sketches follow:]

BIOGRAPHICAL SKETCH-ROLAND K. WENTZEL

Roland K. Wentzel has served in his present position, as Acting Deputy Manager of the Federal Crop Insurance Corporation, since July 1980. Prior to assuming these responsibilities, he served as Special Assistant to the Under Secretary of Agricul

ture.

Mr. Wentzel has served 3 years as a member of the Secretariat Staff of the Organization for Economics Cooperation and Development, Food and Agriculture Directorate, Paris, France. He was an Assistant Professor in the School of Business, San Francisco State University prior to joining OECD. Mr. Wentzel also worked several years in the Marketing Research Department of Wells Fargo Bank in its San Francisco Headquarters.

He received his bachelor's degree in farm management from California State Polytechnic University and master's degree from Oregon State University in agricultural economics. His Ph.D. was earned in agricultural and resource economics at the University of California, Berkeley.

Mr. Wentzel currently resides in Arlington, Virginia with his wife, Barbara, and their two children.

BIOGRAPHICAL SKETCH-RAY G. HASTINGS

Mr. Ray G. Hastings, Acting Assistant Manager for Administrative Management, was born in Providence, Rhode Island. After a tour of duty in the United States Navy, he took his Bachelor of Science degree at the University of Rhode Island, joining the United States Department of Agriculture upon graduation in 1958. Mr. Hastings has served in various capacities in FCIC; as a Systems Accountant and later Chief of the Fiscal Branch, Director of the Budget and Finance Division, and Deputy Director of Administrative Management Division.

BIOGRAPHICAL SKETCH-RONALD E. MCADOO

Ronald E. McAdoo is a North Dakota native. He served in the military and is a Vietnam veteran. He received his M.A. in public administration from Sangamon State University in Springfield, Illinois. He also received a B.S. in agriculture from North Dakota State University.

Mr. McAdoo started his career with FCIC as a field underwriter. He worked in Research and Development for 2 years and a Field Underwriting Supervisor for 2 years. He became Assistant Director of the Actuarial Division in the fall of 1977, and has been Acting Director of the Actuarial Division since July 1980.

Mr. McAdoo currently resides in the Kansas City area with his wife, Carol, and their two sons.

HISTORY OF CROP INSURANCE

Mr. WHITTEN. If I may say so, this is one of the most important hearings we have each year. I think it is good to review the history of your program somewhat. One of the advantages I have from being here quite a while is that I have seen your program develop.

Crop insurance has been quite a problem. The first crop insurance system went bankrupt. În one section of the country farmers knew they could not make a crop, so they just spread the seed on top of the ground knowing they could collect insurance. That broke the corporation.

This Committee worked quite a while to get broad enough coverage to get a crop insurance system that would be actuarially sound. No one could insure people's health, and then limit the insurance only to sick people, without the rates being extraordinarily high. Of course, the same thing follows, which means that we simply could not afford a crop insurance system in which those farmers with annual danger from floods would sign up for insurance and those that had a high expectancy of a good crop would not. Therefore we finally evolved an insurance system whereby a certain percentage of farmers in a county had to sign up for coverage before the county could participate in the program, in order to assure that there would be a broad enough base of participation to make crop insurance actuarially sound.

Throughout the development of this system, the government did fund certain costs, and I think this application of federal funds is probably one of the best bargains that farmers and consumers alike have ever had. Gradually we proved that crop insurance was feasible, if you gave some attention to have a broad enough base in each county.

GOVERNMENT IN INSURANCE BUSINESS

I might add that some private insurance companies have been concerned about government involvement in the insurance business. I had some people who would write me about this, and I had a stock answer I would write them back. I would say just have your company offer this coverage, and we will be glad to turn it over to you. I never got a response when I made this offer.

What worries me a little bit is that those who don't know the entire history of crop insurance probably believe that it will be better to have a crop insurance program than to continue the disaster relief programs that we have had through the years. Doubtless they are right. However, I think they may be overlooking the tendency of the American people to do whatever is necessary in the wake of a disaster, whether it is in the United States or