W. R. POAGE, Texas, Vice Chairman E DE LA GARZA, Texas COMMITTEE ON AGRICULTURE THOMAS A. FOLEY, Washington, Chairman WALTER B. JONES, North Carolina GEORGE E. BROWN, JR., California JACK HIGHTOWER, Texas MATTHEW F. MCHUGH, New York JOHN W. JENRETTE, JR., South Carolina RAY THORNTON, Arkansas LEON E. PANETTA, California IKE SKELTON, Missouri JOSEPH S. AMMERMAN, Pennsylvania JERRY HUCKABY, Louisiana DAN GLICKMAN, Kansas DANIEL K. AKAKA, Hawaii HAROLD L. VOLKMER, Missouri CHARLES WHITLEY, North Carolina WILLIAM C. WAMPLER, Virginia CONTENTS Page H.R. 5011, a bill to amend the Federal Crop Insurance Act.. Report from the U.S. Department of Agriculture............ H.R. 7111, a bill to provide a voluntary self-help program which is designed to assist producers of agricultural products to protect themselves against loss of production when natural or uncontrollable conditions adversely affect production and which will assure consumers that producers will be Abdnor, Hon. James, a Representative in Congress from the State of South Alverson, Dwight F., vice president, Firemans Fund Insurance Co.......... American Bankers Association... Ames, John, executive secretary, National Crop Insurance Association.- Annear, Bruce, president-elect, Independent Insurance Agents of Iowa. Baldus, Hon. Alvin, a Representative in Congress from the State of Bedell, Hon. Berkley, a Representative in Congress from the State of Benson, Fred, vice president, Farmers Mutual Hail, and manager, Crop Bevill, Hon. Tom, a Representative in Congress from the State of Alabama. Bjornson, Neal, secretary, National Milk Producers Federation... Burrows, Fred, W., executive vice president, International Apple Institute. Cline, Lloyd, representing the National Cotton Council of America... 24, 275 58 Darr, Robert A., president, Federal Land Bank of Columbia and Federal 335 Datt, John C., director, Washington office, American Farm Bureau Federa- 190 Fuqua, Hon. Don, a Representative in Congress from the State of Florida. Geyer, Roland, president, Federal Crop Insurance Agent Association of 53 Gregory, Warren, president, Mar-I-War Farms_ 81 Hagy, Emory J., Jr., manager, Rain and Hail Insurance Bureau- Hart, Woodrow, executive director, South Texas Cotton and Grain 152 Hawks, Gene, Regional Director, Federal Crop Insurance Corp- Hayes, Earl, president, Kansas Association of Wheat Growers. Johnson, Donald A., executive vice president, Plains Cotton Growers, Inc. Johnson, Reuben L., director of legislative services, National Farmers 110 Johnson, Seymour, chairman of the board, American Soybean Association. Kellison, Stephen G., executive director, American Academy of Actuaries. 102 Keys, Hon. Martha, a Representative in Congress from the State of Krimm, Richard W., Assistant Administrator, Flood Insurance, Federal Lowden, Orie, Greenfield, Iowa.. Lundine, Hon. Stanley N., a Representative in Congress from the State of Page 107 349 85 122 McClintock, Chuck, insurance agent, Quinby, Iowa... 63 365 McGranaghan, Jerome P., Washington counsel, National Association of 212 Mahon, Hon. George H., a Representative in Congress from the State of 103 Mathis, Hon. Dawson, a Representative in Congress from the State of 105 Meeds, Hon. Lloyd, a Representative in Congress from the State of 140 Murtha, Hon. John P., a Representative in Congress from the State of 385 Nance, Walter, farmer 293 Noel, Lawrence, Louisiana Farm Bureau Federation.. 300 85 Rees, Jerry, executive vice president, National Association of Wheat 240 Reilly, Willlam K., president, The Conservation Foundation.. 394 57 Shaffer, Monte, Washington Association of Wheat Growers. 298 156 of Minnesota_. Stangeland, Hon. Arlan, a Representative in Congress from the State Stevenson, Stan, chairman, Agents Association for Federal Crop Insurance (Minnesota and Wisconsin).. 133, 323 71 Stoneberg, Everett G., extension economist, Iowa State University. Stroud, Steve, president, The Prairie States Insurance Co. 76 301 226 Taylor, Wayne K., president, National Association of Agricultural Stabilization and Conservation Service County Employees. Toon, Richard, farmowner.. 290 49 Waggoner, Leo, administrative director, Iowa Farm Bureau Federation__ 55 152 148 Willey, Gene, dairy farmer; president, Addison County Farm Bureau_ CORRESPONDENCE Brown, Dolan E., president, Southern Cotton Growers, Inc., letter of Davis, Hilton, vice president, legislative action, Chamber of Commerce 408 390 387 Lathrop, Donald B., president, American Bank and Trust of Houma, 276 Russ, Perry A., director, National Affairs, Society of American Florists 277 407 405 285 157 153 280 353 358 FEDERAL CROP INSURANCE PROGRAM MONDAY, AUGUST 15, 1977 HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON CONSERVATION AND CREDIT OF THE COMMITTEE ON AGRICULTURE, Norwalk, Iowa. The subcommittee met at 9 a.m., in the Commons Area, Norwalk Middle School, Hon. Tom Harkin (acting chairman of the subcommittee) presiding. Present: Representatives Baldus and Bedell. Staff present: Robert A. Cashdollar. Mr. ĦARKIN. Good morning, ladies and gentlemen. I want to welcome you to Norwalk Middle School. This is the first official meeting of the Subcommittee on Conservation and Credit, of the House Agriculture Committee, on proposed revisions of the Federal Crop Insurance Corporation, the Federal crop insurance program. This is an official field hearing, and the transcript of this will be provided to the full subcommittee in Washington and also to the full House Agriculture Committee. I want to take this opportunity to welcome both Congressman Bedell-on my right, from the Sixth District of Iowa, and on my left, Congressman Al Baldus, from the Third District of Wisconsin. All three of us are members of the Conservation and Credit Subcommittee of the House Agriculture Committee. Congressman Bedell, of course, is an Iowan, and Congressman Baldus is no stranger to Iowa. He was born and raised here in Iowa, but saw fit to move just across the river to the Third District in Wisconsin. We're pleased to have them here. We also have a committee staff member, Bob Cashdollar, who is sitting right here. If you have anything you want to talk to him about, he's our subcommittee staff consultant on the Conservation and Credit Subcommittee. The purpose of this hearing is to initiate a comprehensive review of the Federal Government's role in protecting farmers against crop destruction resulting from natural disasters. A Federal role is necessitated because of the inability of private industry to offer an all-risk crop insurance program. This is because crop growing hazards, such as drought, tend to affect a large number of farmers in a given year, giving rise to the possibility of catastrophic loss all at one time, which the private insurance industry simply cannot handle. We did have for 1 year-I believe it was 1974-a $6 million all-risk program here in Iowa, but it was dropped immediately by the private companies due to the large losses that occurred that year. Examination of the current programs covering crop losses reveals many inadequacies. First of all, the current law mandates that Federal Crop Insurance shall refuse insurance to any county, any area within a county, or even to an individual farm where the risk is assessed to be too high. This gives rise to situations like last spring, when Federal Crop Insurance refused to write new policies in many Iowa counties. But the law does mandate that FCIC operate on an actuarially sound basis. Current Federal Crop participation is only 13 percent of all eligible acres in the United States. This might suggest a farmer dissatisfaction with the program. Iowa figures for 1976 are, for corn, 20 percent coverage; soybeans, 15 percent coverage; and oats, 3 percent coverage. Another part of the coverage for crop disasters, of course, is the disaster program. And as all of you know, and as Secretary Bergland has so often stated, the disaster program has been in the past a disaster. It had, as you know, snapback provisions, it was based on an outdated allotment, and didn't really pay that much. The new farm bill eliminates these inadequacies and provides for a new disaster program which will go into effect with this crop year, this year. However, the new disaster program in the new farm bill, is extended through the 1970 crop year, with the expressed purpose that a new crop disaster and/or insurance system will be in effect by that time. Therefore, the burden is now on the Congress to act. In addition, Secretary Bergland has indicated a strong interest in making reforms in this area of Federal crop insurance. As I said, this hearing is the first step in the legislative process, and the best means for soliciting grassroots input into proposed revisions. So we want to examine this morning and to consider all options to present, and to find answers to several questions: First, what is to be the future role of private industry in the crop insurance program? What would be the advantages and disadvantages to a Federal reinsurance, or a private industry subsidy program? Or should FCIC and a disaster payment program be combined, to provide one comprehensive Government program to cover all crops in all counties? Should the Government subsidize the premiums, and if so, to what extent? Which agency should administer the program? And how can sales be increased to maximize participation? The basic bill that will be working off of is H.R. 7111, introduced by Mr. Jones of Tennessee, the chairman of the Conservation and Credit Subcommittee, entitled the "Farm Production Protection Act of 1977." It would establish a new entity in the Department of Agriculture called the Farm Production Protection Corporation. The FPPC would be granted broad authority to provide protection against loss of investment due to natural hazards. The discretionary authority given to the Corporation Board of Directors, which is subject to the general supervision of the Secretary, would be extremely broad to tailor protection programs to meet policy objectives. This extension is discretionary authority is perhaps the most important change from the existing Federal Crop Insurance Corporaton Charter Act. [The bill H.R. 7111 follows:] |