Public Policy and Federal Crop Insurance - Cont.

Following this Act, more crops and growing areas became eligible for insurance. Premiums increased from $156 million in 1980 to $436 million in 1988. However, the 1988 premiums represented only about 18 percent of acres planted to principal crops, a level that proved inadequate to withstand demands for disaster assistance.

Beginning in 1988, several years of adverse weather conditions affected different parts of the country, culminating in the floods of 1993 that impacted urban areas as well as agriculture. Several ad hoc assistance bills (i.e., temporary rather than permanent measures) were enacted in 1988 and subsequent years. These ad hoc measures typically paid more benefits to producers who had insurance and also required beneficiaries to purchase insurance the following year. By 1994, premiums had increased to nearly $950 million and insured acres approached 40 percent of planted acres.

In 1994, Congress again amended the enabling legislation for crop insurance. Insurance was required as a condition of eligibility to receive benefits available under other Federal programs for agriculture. A level of coverage intended to provide benefits only in the event of catastrophic losses was introduced and offered to producers for a minimal fee. This legislation also increased the subsidy for those persons who carried higher coverages than this minimum. In 1995, premiums increased to $1,550 million and over 80 percent of planted acres were insured.