Senate Committee Plans Call for Slashed Crop Premiums
By Dave Willis
Senators from the Plains states pushed legislation through a committee late last week that would reduce the premiums that farmers pay for federally subsidized insurance.
The Senate Agriculture Committee split along regional lines in approving the bill 10-8, as some southern and northeastern members complained that it wouldn't do enough for farmers in their states.
Banking and insurance groups like the bill. The Senate Agriculture Committee is commended for approving a crop insurance reform bill that will strengthen the existing program and not damage the states' ability to oversee sales of all crop insurance policies, Independent Insurance Agents of America (IIAA) spokesman Robert Fulwider, chairman of the Association's Crop Insurance Task Force, said.
During the debate, the committee approved a substitute amendment offered by Senators Pat Roberts (R-Kan.) and Bob Kerrey (D-Neb.), in the process rejecting a reform proposal offered by committee Chairman Richard Lugar (R-Ind.) and clearing the way for the bill to the Senate floor.
The Roberts-Kerrey substitute bill embodied their reform measure-the Risk Management for the 21st Century Act (S. 1580)-that proposes to use most of $6 billion earmarked by the 1999 federal budget for increased subsidies for higher levels of crop insurance coverage.
Lugar's chairman's mark would have created a national choice program under which farmers could choose between direct cash payments or higher subsidy levels for crop insurance polices. Committee members rejected the chairman's approach, voting to support the Roberts-Kerrey substitute on the 10-8 vote.
"Going into the committee's debate, IIAA was most concerned about two issues-whether increased funding should be used for increasing premium subsidies or direct payments, and whether state anti-rebating laws should be preempted to allow non-profit co-operatives to engage in questionable insurance sales practices that, in many instances, run counter to state law," explains Fulwider, executive vice president of the Wuestenberg Agency, West Liberty, Iowa.
"The Roberts-Kerrey substitute proposes to increase premium subsidies for farmers purchasing higher levels of crop insurance coverage and does not allow for association purchasing and rebating of coverage-both significant victories for independent agents and farmers," continues Fulwider.
The Independent Community Bankers of America today welcomed committee passage of the bill.
``This is a major step towards strengthening the farm safety net during a difficult time for many farm families who have suffered from both low prices as well as devastating natural disasters over the past few years,'' said ICBA President Bob Barsness. ``The bill will provide farmers greater coverage at more affordable rates and should strengthen the crop insurance program.'' Barsness is also chairman/president of Prior Lake State Bank, Prior Lake, Minnesota.
ICBA believes this action will help prevent the need to pass expensive, ad hoc disaster bills that cost taxpayers billions of dollars while undermining participation in the crop insurance program. ICBA urges the Senate to act expeditiously on the bill and looks toward a speedy resolution during the House-Senate conference.
The House passed a similar version of crop insurance reform legislation (HR 2559) last fall.
ICBA is the primary voice for the nation's community banks, representing 5,500 institutions at nearly 16,700 locations nationwide.
During the markup, the committee debated an amendment offered by Sen. Blanche Lambert Lincoln (D-Ark.) to allow co-operatives to purchase crop insurance policies and rebate part of the premium back to farmers, an activity that runs counter to state insurance anti-rebating and sales and solicitation laws. Following considerable debate, Lambert Lincoln pulled the amendment after reaching an agreement with Sen. Charles Grassley (R-Iowa) to work on a potential compromise.
"The co-operative selling amendment was pulled because of the committee members' concerns over the damaging impact it could have had on the ability of states to regulate all crop insurance sales," says Fulwider. "Had IIAA not worked this issue so diligently by talking with members of the Agriculture Committee and engaging our grassroots network, the outcome on this amendment may have been different today. IIAA's and its grassroots members' hard work has helped to hold off this proposal until a mutually agreeable compromise can be reached."
An onerous rebating provision was included in a bill-the Agricultural Risk Protection Act (H.R. 2559)-adopted by the House last year.
"This so-called co-operative selling issue is less about who can sell crop insurance and more about how co-operatives sell policies and rebate money back to farmers, which is anathema to state anti-rebating and sales and solicitation laws," says IIAA Director of Federal Government Affairs Thomas McCrocklin. "While IIAA respects Sen. Lambert Lincoln's intention to expand the crop insurance programs' reach to more farmers, the fact remains that under current federal law the very groups she proposes to include as a distribution channel already are permitted to sell and service crop insurance. Independent insurance agents welcome competition in the sales of crop insurance, but it must be fair and just competition. Nobody, especially the nation's farmers, is served very well when one provider is given preferential treatment."