Published on 06/27/00

Crop Insurance Act Good for Georgia Farmers

Georgia farmers struggling to nurse their crops through another drought can take heart that a new law will help protect them against future crop failures.

Beginning with crops planted this fall, the $8.2 billion Agricultural Risk Protection Act will give farmers better crop insurance at lower costs. Payouts could begin Sept. 1.

The ARPA, signed into law June 20, reforms the federal crop insurance program. It protects growers against losses from harsh weather and volatile markets.

Should Help Georgia Farmers

"The reforms should prove beneficial to many of the state's crop farmers," said Don Shurley, an economist with the University of Georgia College of Agricultural and Environmental Sciences.

"Many details of how the reform will actually work aren't yet known," Shurley said. "But it's clear the intent of the legislation is to reduce the cost of insurance and improve its benefits."

For example, a farmer who would pay $34.50 per acre for 65-percent coverage with no federal subsidy now pays $20 per acre. Under the reform act, the premium would drop another $6 to about $14.

More Coverage, Less Money

"The increase in the federal subsidy also means farmers can increase their coverage for less money," Shurley said.

The new program will let farmers insure up to 85 percent of their actual production history (APH). The top level now is 75 percent.

"The crop-insurance reform package also includes revisions in how a farmer's APH is calculated," Shurley said.

"This should be very beneficial, especially to nonirrigating producers, given the poor growing conditions of the past three years," he said. "If a farm suffers a drought, for example, the farm's APH can be calculated using 60 percent of the long-term county average yield or the actual farm yield, whichever is highest."

Losses in Quality Covered

The reform that covers losses in quality will help Georgia cotton farmers.

"We expect the new rules to make it easier for farmers to qualify for insured losses due to low grades," Shurley said. "Right now, if the price received falls below 85 percent of the market price due to low quality, then the loss in income is covered."

The reform bill also details how $7.1 billion in already-budgeted aid will be distributed to growers suffering from another year of extremely low prices.

Crackdown on Waste, Fraud, Abuse

The bill includes measures to strengthen the crop insurance program. It directs the Secretary of Agriculture to better coordinate U.S. Department of Agriculture agencies' investigations of waste, fraud or abuse claims.

Rep. Saxby Chambliss (R-Ga.) said he is pleased with the flexibility the reform brings to crop insurance.

"No longer will our farmers be forced to protect their crops with a one-size-fits-all program," Chambliss said. "This new ... flexible coverage addresses the diversity of Georgia agriculture, rewards good farming practices and provides better protection from weather and markets."

Faith Peppers is the director of public affairs with the University of Georgia College of Agricultural and Environmental Sciences.