[Congressional Record Volume 145, Number 119 (Tuesday, September 14, 1999)]
[Senate]
[Pages S10847-S10848]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                  RISK MANAGEMENT FOR THE 21ST CENTURY

  Mr. BURNS. Mr. President I rise today as one of the proud cosponsors 
of the Risk Management for the 21st Century Act.
  This bill offers much-needed changes in the area of risk management 
for farmers and ranchers. Managing risk in agriculture has become 
perhaps the most important aspect of the business. Agricultural 
producers who are able to effectively manage their risk are able to 
sustain and increase profit. An effective crop insurance program will 
provide farmers and ranchers possibilities for economic sustainability 
in the future and help them out of the current financial crisis.
  The Federal Government can help facilitate a program to unite the 
producer and the private insurance company. The control must be put 
ultimately in the hands of the agricultural producer. Although he 
cannot control risk, an effective management plan will help him to 
manage the effects of risks, such as weather, prices and natural 
disasters.
  This bill addresses the inadequacies of the current crop insurance 
program.

[[Page S10848]]

 The problems and inconsistencies with the current program make it both 
unaffordable and confusing to agricultural producers. Costly premiums 
are the biggest problem. In years of depressed market prices, crop 
insurance, though badly needed, is simply unaffordable for farmers.
  This bill inverts the current subsidy formula, in order to provide 
the highest levels of subsidies to producers at the highest levels of 
buy-up coverage, and thus alleviate the unaffordable premiums. It also 
allows for the revenue policies to be fully subsidized.
  Another important provision in this bill is to allow an additional 
subsidy for risk management activities. If a producer uses futures or 
options, utilizes cash forwards, attends a risk management class, uses 
Agricultural Trade Options or FFARRM accounts or reduces farm financial 
risk, they will receive a 5 percent write-down on their premium for 
taking part in two of the above risk management tools.
  This bill also takes into account lack of production histories for 
beginning farmers or those who have added land or use crop rotation. 
This will make it possible for those producers to get a foot in the 
door and receive affordable crop insurance.
  Many times, especially in Montana, multi-year disasters occur. This 
bill helps producers that take a blow several years in a row, which 
reduces their Annual Production History (APH). If a producer has 
suffered a natural disaster during at least 3 of the preceding 5 years 
and their APH was reduced by at least 25 percent they may exclude one 
year of APH for every five years experience. During this time, the 
producer's APH may increase without limit back up to the level before 
the multi-year disaster began.
  Specialty crops such as canola or dry beans, are another important 
addition to this bill. The Risk Management Agency (RMA) will allocate 
at least 50 percent of their Research and Development funds to 
specialty crop development. Additionally, RMA is authorized to spend up 
to $20 million each fiscal year to create partnerships for developing 
and implementing specialty crop risk management options.
  This bill will also ultimately put more control in the hands of 
active producers by including four active producers; as well as one in 
crop insurance, and one in reinsurance. The board would also include 
the Under Secretary for Farm and Foreign Agricultural Services, the 
Under Secretary for Rural Development and the Chief Economist of USDA. 
In addition, it mandates that the Board Chairperson be one of the non-
governmental members. These are important steps to ensure that the new 
program is run for the producers by the producers.
  This bill is an important tool to reform the current crop insurance 
program into a risk management program, designed to help the producer 
in the long-term. It is vital to find a solution to provide a way for 
farmers to stay in agriculture. They must be able to continue to 
produce and distribute the world's safest food supply at a profitable 
margin.
  I look forward to working with Senators Roberts and Kerrey on this 
important piece of legislation. I believe this bill will pave the way 
for massive crop insurance reform and help agricultural producers out 
of this economic crisis.

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