Crop Insurance Today February 2014 - (Page 4)

CropInsurance TODAY a 25 year Milestone in Farm Policy Looking back at the 1989 GAO report "Those who don't know history are destined to repeat it." -Edmund Burke by Keith Collins and Tom Zacharias, NCIS and Farm Policy Facts Staff Editor's Note: An earlier version of this article was prepared for Farm Policy Facts and is the basis for this article. Excerpts from the Farm Policy Facts article are used with permission. In the wake of weather disasters in 1983, 1984 and 1988, U.S. agriculture was struggling, and compounding the problem was an unparalleled farm debt crisis. America's food and fiber producers needed assistance, but aid was expensive and slow to arrive, causing hardship, not just in the countryside, but for taxpayers as well. On April 20, 1989, House Agriculture Committee Chairman E. "Kika" de la Garza had enough and asked the General Accounting Office (GAO) for help. Concerned that the federal government's responses to natural disasters had been "generally reactive and ad hoc," de la Garza raised questions about the lack of an overall strategy for dealing with recurring disasters. Interestingly enough, the resulting GAO examination and report would help pave the way for a new approach to agricultural policy-one that would ultimately protect almost 90 percent of planted cropland and help farmers weather disasters, including the 2012 drought, the worst on record since 1988. Specifically, the GAO studied USDA's three main disaster programs, ad hoc direct disaster payments, disaster emergency loans and crop insurance, and compared their effectiveness using eight different criteria, including: * The amount of assistance provided should be determined by the amount of loss; * Programs should offer similar amounts to farmers for similar damage; * Assistance to farmers should not exceed the value of their losses; * Disaster assistance programs should not incentivize risk taking; * Disaster programs should be available over the long-term to assist with planning; * Programs should help farmers withstand and recover from natural disasters; * Programs should have predictable costs; and, * Programs should meet their objectives at the lowest possible cost. The GAO found that while none of the programs satisfied all the criteria laid out, "crop insurance is a more equitable and efficient way to provide disaster assistance" than both direct disaster payments and emergency loans. "Crop insurance treats disaster victims more equitably" and also "provides farmers disaster assistance more efficiently because farmers generally have more incentive to reduce risk under the program than they do under loan and direct payment programs." That did not mean crop insurance did not have its flaws in the 1980s. The report further stated "...we recognize that FCIC (Federal Crop Insurance Corporation) has had a history of management problems that, in the short term, makes it difficult to justify the current crop insurance program as the sole source of disaster assistance to farmers," the GAO wrote. "Consequently, if the Congress chooses to rely on the crop insurance program exclusively to provide crop disaster assistance, a transition period VisitWebsite ag-risk.org 4 February2014 http://www.ag-risk.org

Table of Contents for the Digital Edition of Crop Insurance Today February 2014

Four Keys to 2014
A 25 Year Milestone in Farm Policy, Looking Back at the 1989 GAO Report
Excellence & Professionalism, No Matter What Comes Our Way!
Corn Loss Instructions Updated for 2014
There's a Right Tool for Every Job! NCIS' IMAP could be the one you're missing
Crop Insurance In Action: Crop Insurance Lifeline
FFA Proficiency Winner
Insurable Crops Locations & Plans
Crop Insurance In Action - A Young Farmer on a Mission to Stay in Farming

Crop Insurance Today February 2014

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