Mr. WHITTEN. Mr. Luft, I have said many times that having served in Congress at the time they curtailed the Federal Crop Insurance Corporation, because we were losing our shirts, I didn't believe there would ever be any time when we could make this a workable program. I kept that belief through many years when we had the pilot program. I mention that to say we are all very proud of the tremendous progress that has been made. This now has become more of a national program, far beyond an experimental basis. I say that to commend not only you, but your predecessors, and others in the Department who have worked rather hard to make this a sound program. We still have some problems but we have made remarkable progress.

We shall be glad to have your general statement.

GENERAL STATEMENT

Mr. LUFT. Mr. Chairman, gentlemen of the committee, and Mr. Murphy-I am glad to have Mr. Murphy here with us—it is always a pleasure and a privilege to appear before this committee to discuss the operations of the Federal Crop Insurance Corporation.

TWENTY-FIFTH ANNIVERSARY

In 1963, we celebrated our 25th anniversary by reaching a new high in service to the Nation's economy and the insured farmers by providing nearly a half billion dollars of crop insurance protection to farmers. This protection against loss from unavoidable causes increased by $140,353,000 over the protection provided in 1962.

EXPANSION OF CROP INSURANCE

The service potential of the Federal Crop Insurance has been broadened more since 1961 than during any other period in its history. Expansion of the Federal Crop Insurance in 1963 to a record volume of protection is only a part of the improved service effort, which got underway in 1961. During this period there has been a review of the protection provided, the operating procedures, and contract provisions. Many simplifications and improvements have been made in

the policy and endorsements for the various crops. These are continuing areas of annual analysis, research, and refinement.

CROP INSURANCE EXPERIENCE, 1963

While utilization of the crop insurance service is voluntary on the part of the grower, its potential for service exists only in those counties and on those crops where it is available. In 1963, crop insurance protection was offered in 1,096 counties, 100 more than in 1962. Insurance protection was in operation on 21 different crops, with 20 of these on a separate crop basis, and 1-rye-was insured under the combined crop plan. The three new crops brought into the program on a limited basis in 1963 were apples, cherries, and tomatoes.

Current estimates of crop year 1963 experience show premiums amounting to $30.5 million, an increase of 40 percent over 1962 premiums, and indemnities of $25 million for a loss ratio of 0.82. This experience again proves that despite record breaking yields on most crops, thousands of farmers annually face a harvest of a smaller return than the investment they make in their effort to produce the crop. The indemnity payments of $25 million are about equal to the profit of some $100 million of future crop sales. Crop year 1963 will be the sixth year out of the last seven in which the Federal Crop Insurance Corporation will record premiums exceeding the indemnity payments.

CAUSES OF CROP LOSS

Each year Federal Crop Insurance has paid indemnities due to many different specific causes of loss. The following are the major causes of loss for the crop years 1948-62: Drought, 39.1 percent; excessive moisture, 14 percent; insects, 10.9 percent; hail, 10.2 percent; frost and freeze, 10 percent; wind, 5.6 percent; disease, 4.8 percent; and all other causes 5.4 percent. Some of these causes of loss spread their damage over large areas, others are confined to a few counties or even an area within a county. These natural hazards which can range from light to heavy damage could add up to little or no crop production after money, labor, and materials have been spent by the

farmer.

STATES WITH OVER A MILLION DOLLAR LOSS

In 1963, the States with losses in excess of a million dollars each were: California which had rain damage to grapes while drying in the sun, suffered only two losses amounting to $2,000 during the first 2 years of raisin insurance. However, in 1963 the amount of loss is expected to exceed a million dollars; Colorado had its wheat affected by a killing freeze on May 18, 1962; Montana, North Dakota, and Kansas had extensive wheat damage caused by drought; Minnesota had heavy corn and soybean damage caused by hail and rain with 100 mile-an-hour winds; Texas had cotton and grain sorghum damage due to hail and excessive rains; and Virginia's tobacco and peanuts suffered extensive damage caused by the worst drought since 1930. Although, wheat appears to dominate the loss picture in 1963, it must be pointed out that wheat premiums exceeded indemnities which made its loss ratio for 1963 crop year 0.95. The cumulative loss ratio for wheat since 1948 shows that 90 cents of each premium dollar has been used to pay indemnities.