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Reinsurance Agreements

Oct 1, 1999

The Honorable Larry Combest, Chairman,
Committee on Agriculture, U.S. House of Representatives
1301 Longworth House Office Building
Washington, D.C. 20515-6001

Dear Mr. Chairman:

This is to update you on the performance of the Federal crop insurance program in crop year 1999.

Crop insurance experienced a major increase in farmer participation this year, as Congress is debating reform. I am pleased to inform you that 170,000 farmers increased the amount of their crop insurance protection for crop year 1999. The total number of policies in force increased to about 1.3 million. Insured farmers converted about 91,000 catastrophic policies in 1998 to higher levels of coverage in 1999, and about 43,000 policies at higher levels of coverage were purchased for the first time. This increased participation is primarily due to the 30 percent premium discount authorized under the Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Appropriations Act, 1999.

Although the program needs reform, farmers who have suffered major crop losses will be paid an estimated $1.8 billion in 1999. Despite lower commodity prices, the projected loss payments parallel a 17 percent jump in crop insurance protection for farmers from $28 billion in 1998 to a projected $33 billion in 1999.

Farmers continue to suffer from low commodity prices, and neither yield-based or revenue-based crop insurance can guarantee insured farmers a good price. The crop insurance program is not intended to affect markets or commodity prices. However, to ensure that more farmers are adequately protected in crop year 2000, I look forward to working with you to pass meaningful crop insurance reform this year.

Please let me know if I may be of assistance to you or your staff.

/s/ Kenneth D. Ackerman

Last Modified: 01/23/2007
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