Testimony
Committee on Agriculture, Forestry, and Nutrition U.S. Senate

March 10, 1998
 

Mr. Chairman, members of the Committee, I thank you for this opportunity to present testimony today on the important subject of crop insurance reform.
I agree with your assessment that changes are needed to the crop insurance
program and I would like to take a few minutes to talk about the specific concerns in my district.

Mr. Chairman, I just returned from meeting with over 900 Northwest Minnesota farmers this weekend.  I helped organize the meetings in order to discuss concerns about the furture of farming in this region.  I can assure you, Mr. Chairman, that 900 farmers meeting in rural Crookston and Hallock, Minnesota is a substanial event any way you measure it.  The message that I heard from these farmers was clear-help is needed at the farm level and the help is needed now.

The farm crisis in Northwest Minnesota and eastern North Dakota is serious and real.  In some areas, both farmers and banks struggle for survival.
This year alone, the lending and farm management communites predict that
25% of farmers in Northwest Minnesota will be financially unable to continue farming. It is also expected that land in the rich and productive Red River Valley will lay fallow and that rental rates in the region will continue to fall.  These are not idle concerns nor are they exaggerated.

A combination of factors has contributed to the current crisis.  Farmers in Minnesota have faced an unprecedented series of weather disasters during the past 5 years, including the tragic flood of 1997.  They have also struggled against yield-robbing diseases such as fusarium head blight, or scab disease.  The combined losses have been staggering.  During this period, federal crop insurance and other tools provided less and less protection for ever greater cost.  The cumulative effect of low price, low yield, and low risk management coverage has been devastating.

Mr. Chairman, there are those who have suggested that, perhaps we shouldn't be farming in Northwest Minnesota.  However, I find that notion callous and short-sighted.  We have grown wheat in this region for 100 hundred years.
The area has some of the most fertile land in the country and farming has
been a successful way of life for generations.  The unusual circumstances that have put us in the current situation do not give reason to overlook or disregard Northwest Minnesota farmers.  Instead, it demands that we work to fix the problems with the current federal programs that are not supplying a safety net.

I share the concerns of my colleague, Mr. Pomeroy, that there some specific changes to the current program that could help provide relief to our region of the country.  Allowing greater flexibility in the determination of Actual Production History (APH), where repeated years of wide spread disaster and disease would not force a producer to accept a coverage level that is too inadequate to even secure the funds necessary to put a crop in the ground.  There is also a strong need to allow greater flexibility in the development of new types of policies as well as coverage for new
crops.

However, outside of "tweaking" the system by making minor program adjustments and insuring universal coverage and delivery, I share the concern with you that the program may need broader changes.  I respect and appreciate the help of Ken Ackerman, Administrator of the Risk Management Agency.  I firmly believe that he is trying to help make the system work better for our farmers.  However, he is limited in his ability to fix the program and it seems as though the federal government is in the way of crop insurance reform.   Congress has also attempted to reform the program in past years but very mixed results.

Mr. Chairman, I believe that The Federal Agriculture Improvement Act of 1996, or Freedom to Farm, contributes to the problem.  Farmers were promised sturdier prices through increased trade and more market-oriented farm decisions if Freedom to Farm passed.  There were promises the old safety nets were not needed because crop insurance would be fixed.
Unfortunately for the farmers in Northwest Minnesota, the promises ring
hollow with depressed prices and the lack of an adequate safety net.  The benefits of greater planting flexibility and less on-farm regulation mean little when faced with the prospect of losing your farm. The gloss and shine of Freedom to Farm has dulled in Northwest Minnesota, Mr. Chairman.

I ask for my colleagues' help in addressing some of the unique challenges facing Northwest Minnesota.  The farmers in this area are not asking for an easy street.  They are simply asking for tools they were promised-solid risk management tools and the flexibility to farm.   I stand ready now to work with you in addressing the crisis.  I believe that we are just the first region to test the affects of the current program, and the program has failed.  Before other areas of the country face similar difficulties, I ask that you consider changes to Freedom to Farm which will shore up the downside risks that are naturally present in agriculture.

I thank you for your time, Mr. Chairman.