Congress Looking For Improved
Approach Toward Crop Insurance

WASHINGTON —(AP)— Farming is a risky business in a stormy area of the Great Plains known as Tornado Alley. ``We know there's going to be a disaster,'' said Jerry Reynolds, who farms near Woodston, Kan. ``We just don't know what kind.''

Reynolds, who lost some of his wheat to hail this year, tries to protect his investment by purchasing federally subsidized crop insurance, but the program is so inadequate that many of his neighbors don't even bother to buy it, he said. The insurance only covers half the value of his wheat crop.

``What's available at the present time is so cost-ineffective, it's a joke,'' McReynolds said.

Congress is trying to do something about the problem. With the farm economy crippled by recession, lawmakers are seeking ways to weave a new safety net for growers without scrapping the 1996 farm law that phased out the old Depression-era price support system. Crop insurance is considered a crucial part of the safety net.

Lawmakers want to substantially lower premiums by doubling the insurance program's cost to taxpayers to about $3 billion a year.

The government currently pays 13 percent to 57 percent of the premium, with farmers picking up the rest. Under a bill approved by the House Agriculture Committee last month, the government subsidy would range from 31 percent to 67 percent, depending on the level of coverage. The legislation also boosts coverage for farmers who suffered one or two major crop losses in recent years.

Similar bills have been introduced in the Senate. A rival plan is being pushed by the chairman of the Senate Agriculture Committee, Sen. Dick Lugar, R-Ind. Rather than reduce premiums, Lugar wants to give direct payments to growers to spend as they choose.

There's still a question of whether farmers will buy the insurance if they think Congress will provide them with disaster aid each year.

Congress gave farmers $6 billion in 1998 to compensate for weather-related crop failures and low commodity prices and is considering even more assistance this year. The Senate approved a $7.4 billion aid package in August, and the Clinton administration is working on a request for more than that.

``The political process has been pretty good at providing disaster aid — if you knew your loss was going to be covered, would you buy insurance on your house, for example?'' said Kansas State University agriculture professor Art Barnaby.

Barnaby guesses that lawmakers might hold off on reforming crop insurance until next spring.

Passage of this year's disaster aid is the top priority of Rep. Jo Ann Emerson, a Missouri Republican who serves on the House Appropriations subcommittee that handles farm spending. While new ideas are critical, she said, they won't help producers struggling with this year's low prices.

``I don't think anyone believes crop insurance is a panacea for solving the farm crisis,'' Emerson said. ``Anything we do with regard to crop insurance won't apply to the crisis farmers are facing this year.''

McReynolds, the Kansas farmer, says the money Congress spends on disaster aid would be better spent on new risk-management programs for farmers.

``Disaster programs are not the best way to handle it, no. I think we need a more stable program than that. Crop insurance is a way to go,'' he said.

Critics say the current crop insurance program doesn't work where disasters have struck several years in a row because policies are based on past crop yields. If yields drop, so does the available coverage.

And if a producer, spurred by flexibility in the 1996 law, plants a completely new crop, insurers aren't willing to cover it until a few years later, when it is established.

Lawmakers are trying to address those problems by creating an average production history credit program for startup farmers or those who have added land or rotated crops. It adjusts the history for producers who have suffered calamities.