House approves bill to cut farmers' insurance premiums

Wednesday, September 29th 1999, 12:00 am
By: News On 6

WASHINGTON (AP) -- The House agreed Wednesday to cut the premiums
farmers pay for federally subsidized crop insurance, in hopes of
getting more producers to buy the protection.

Legislation approved on a voice vote would lower the premiums by
doubling the cost to taxpayers to about $3 billion a year.

The insurance now covers about 65 percent of the eligible
acreage nationally. It primarily covers losses from storms and
severe drought, but some policies can protect against sharp drops
in commodity prices.

Many farmers say the insurance is too expensive for the coverage
they get.

"Farmers need the insurance, but if they can't afford it
they're not going to use it," said Rep. Leonard Boswell, D-Iowa.
"This will be a big step, an incentive to get this going."

The Senate Agriculture Committee is expected to take up the
issue in coming weeks.

With the agricultural economy in a recession, Congress is
searching for ways to provide farmers with a safety net while
preserving the market-oriented features of the 1996 farm law that
did away with a Depression-era system of price supports. Lawmakers
are working on a package of farm aid approaching $9 billion.

"Our producers need as many risk management tools as they can
get to be competitive out there," said Rep. John Thune, R-S.D.

The government now pays 13 percent to 57 percent of the premium,
with farmers picking up the rest. Under the House bill, the
government subsidy would range from 31 percent to 67 percent,
depending on the level of coverage.

The legislation also would boost coverage for farmers who
suffered one or two major crop losses in recent years; authorize
experimental insurance programs for livestock producers; and allow
some growers to plant a second crop on land for which they have
received payment on an insurance claim.

Criticism of the legislation has been muted, given the poor
economic times that farmers face this year.

But there is some concern that cutting insurance premiums will
increase production of commodities that are already in surplus and
encourage farmers to plant crops in areas that don't get enough
rainfall or where the growing season is too short.