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Corn+Soybean Digest

NCGA Applauds Bill To Reform Crop Disaster Aid

Corn growers affected by the adverse weather conditions of this year's crop season came one step closer to seeing assistance last Wednesday. The National Corn Growers Association (NCGA) announced today House Agriculture Committee member Rep. Sam Graves' (R-MO) introduction of H.R. 5589, the Companion Disaster Assistance Program Act of 2002 (CDAP). This legislation incorporates many of the principles and recommendations for crop insurance reform advocated by the NCGA. If adopted, H.R. 5589 would provide more equitable aid for crop insurance participants and those producers who have been hurt by substantial losses from severe drought and floods.

"NCGA applauds Rep. Graves for stepping forward and introducing legislation that provides disaster aid to row crop producers without undermining progress of the federal crop insurance program," says NCGA Disaster Task Force Chairman Ron Litterer, a corn grower from Greene, IA. "Graves' bill will help deliver assistance to more producers and, hopefully, encourage more producers to participate in the federal crop insurance program."

NCGA formed the Disaster Task Force in mid-August as a result of collaborative efforts between NCGA and grower leaders from state corn grower and checkoff organizations. The mission of the task force is:

* Make sure that clear, timely and accurate information on the impact of the disaster situation gets to policy-makers and program implementers

* Share information between growers and states on assistance programs and options to assist crop and livestock producers in responding to the disaster

* Set a course of further action for NCGA with respect to disaster response.

Despite significant improvements made to the federal crop insurance program and farm safety net, economic losses caused by severe drought conditions and floods over the last two years have prompted calls for emergency assistance to help producers rebuild their operations. While the supplemental market assistance provided to row crop producers by the Congress in recent years has proven extremely helpful, depressed commodity prices and an overall weak economy have deteriorated the financial resources of many producers who have operated within the slimmest of margins.

Rep. Graves' legislation would complement the crop insurance program by covering a portion of the uninsurable deductible rather than duplicating the insurance coverage under traditional disaster assistance. Further, NCGA believes CDAP provides an effective means for payments to be delivered sooner because most growers that collect indemnity payments would be eligible to collect the CDAP payments.

"Today, many insured growers who have been hit with crop losses of 35-40% receive minimal to no payments under the traditional disaster aid program," says Litterer. "Worse, their net insurance payments will be small or none. The truth is they can lose more than $50/acre below the revenue they expected at the time of planting.

"Unlike the 65% threshold loss in the current crop disaster program, CDAP provides levels of assistance more proportionate to the degree of losses, beginning with a 20% loss in average production," he adds. "The CDAP Act helps fills some of the gaps that exist in the current crop disaster program and our farm safety net."

Related Links:

CAP on Combined Crop Insurance and Traditional Disaster Aid (TDA) versus Companion Disaster Assistance Program (CDAP) - PDF (10-11-02)

CDAP Payment Calculation - PDF (10-11-02)

The Companion Disaster Assistance Program Act - PDF (10-11-02)

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