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The Administration would support S. 2251, a bill to reform the federal crop
insurance program, if the provisions that would modify the composition of
the Federal Crop Insurance Corporation's Board of Directors, permit premium
reductions for certain producers, and remove the sales closing dates for
specialty crops are deleted; and if the bill is amended to ensure its
effective implementation.
The Administration strongly supports crop insurance reform legislation that
would best serve the interests of farmers, rural communities, and federal
taxpayers, and S. 2251 represents significant progress toward that end.
Specifically, the bill would make crop insurance more affordable, address
the impact of multi-year losses on future insurance coverage, and provide
for crop insurance expansion, research and development, and education and
outreach -- issues of particular importance to growers of specialty crops.
As well, the bill's pilot insurance program for livestock and the
Noninsured Crop Disaster Assistance Program are compatible with the
Administration's reform proposals.
Nevertheless, the Administration strongly opposes the bill's provisions
that would restructure the Federal Crop Insurance Corporation's Board of
Directors. Increasing the number of members who are agriculture producers
or active in either the crop insurance or reinsurance industries, requiring
that one of these members serve as the Board's chairperson, and
establishing separate policy staff for the Board could hinder effective
management of the crop insurance program. In addition, the bill would
permit premium reductions for producers who opt-out of quality loss and
prevented planting coverage, and would effectively remove sales closing
dates for specialty crops, thus adding significantly to the cost of the
bill and complexity of the program. The Administration therefore strongly
recommends that the Senate delete these provisions.
To ensure the effective implementation of the bill's provisions, the
Administration urges the Senate to: (1) require mandatory participation in
the crop insurance program as a prerequisite for other federal farm program
benefits; (2) authorize the Risk Management Agency (RMA) to renegotiate the
Standard Reinsurance Agreement that defines the financial relationships
between the RMA and private insurance providers; (3) provide for the RMA
administrative expenses related to the bill by providing that such expenses
be taken from the insurance fund; and (4) clarify the mission and personnel
provisions of the proposed Crop Insurance Improvement Commission and
provide an appropriate level of funding.
Pay-As-You-Go Scoring
S. 2251 would increase direct spending and, therefore, is subject to the
pay-as-you-go requirement of the Omnibus Budget Reconciliation Act of 1990.
The bill does not contain provisions to offset the increased direct
spending and, if enacted, could contribute to a sequester of mandatory
programs. The Administration supports enactment of a crop insurance reform
bill and will work with Congress to identify offsets. OMB's preliminary
scoring estimates of this bill are presented in the table below. Final
scoring of this legislation may deviate from these estimates.
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