The Federal Crop Insurance Corporation (FCIC) is a wholly owned

government corporation A state-owned enterprise (SOE) is a business entity created or owned by a national or local government, either through an executive order or legislation. SOEs aim to generate profit for the government, prevent private sector monopolies, provide goo ...

managed by the

Risk Management Agency The Risk Management Agency (RMA) is an agency of the U.S. Department of Agriculture, which manages the Federal Crop Insurance Corporation (FCIC). The current Administrator is Heather Manzano in an acting capacity. History The Risk Managemen ...

of the

United States Department of Agriculture The United States Department of Agriculture (USDA) is an executive department of the United States federal government that aims to meet the needs of commercial farming and livestock food production, promotes agricultural trade and producti ...

. FCIC manages the federal

crop insurance Crop insurance is insurance purchased by agricultural producers and subsidized by a country's government to protect against either the loss of their crops Failed acreage, due to natural disasters, such as hail, drought, and floods ("crop-yield ins ...

program, which provides U.S. farmers and agricultural entities with crop insurance protection. Corn corps bordering the Wabash River

Background

During the 1930s, farmers thought they were safe during the

Great Depression The Great Depression was a severe global economic downturn from 1929 to 1939. The period was characterized by high rates of unemployment and poverty, drastic reductions in industrial production and international trade, and widespread bank and ...

because they could provide food for themselves. That changed quickly when the

Dust Bowl The Dust Bowl was a period of severe dust storms that greatly damaged the ecology and agriculture of the American and Canadian prairies during the 1930s. The phenomenon was caused by a combination of natural factors (severe drought) and hum ...

drought made it difficult for farmers to produce any crops during this time. By not being able to produce these essential crops, they lacked necessary food for themselves and were unable to make money off of the crops. In order to help America recover from the Great Depression, President Franklin D. Roosevelt started the

New Deal The New Deal was a series of wide-reaching economic, social, and political reforms enacted by President Franklin D. Roosevelt in the United States between 1933 and 1938, in response to the Great Depression in the United States, Great Depressi ...

, which was a plan compiled of federal programs, including several focused on farming.

History

The Federal Crop Insurance Corporation was a program created to carry out the government initiative to provide insurance for farmers' produce, which means that farmers would receive compensation for crops, even if they were not sustained in that year. On September 26, 1980, the program was expanded through Public Law 96-365.Crop Insurance (10.450)
Federal Grants Wire. Initially, participation in FCIC was voluntary. However, insurance premiums were subsidized by the U.S. government as a means of encouraging participation in the FCIC program. This changed with the

Federal Crop Insurance Reform Act of 1994 The Federal Crop Insurance Reform and Department of Agriculture Reorganization Act of 1994, , was introduced on April 14, 1994 by Kika de la Garza ( D- TX) and was signed into law on October 13, 1994 by President Bill Clinton. It consisted of tw ...

, which required farmers to participate in the program in order to be eligible for deficiency payments related to certain FCIC programs. During the mandatory participation Catastrophic coverage was created. "Catastrophic coverage compensated farmers for losses exceeding 50 percent of an average yield paid at 60 percent of the price established for the crop for that year." Mandatory participation was repealed in 1996, but for the farmers who had accepted other benefits it was mandatory to obtain crop insurance, or they would surrender the eligibility for any benefits that were caused by disaster. An independent office designed to supervise and monitor FCIC activities was mandated in the

Federal Agriculture Improvement and Reform Act of 1996 The Federal Agriculture Improvement and Reform Act of 1996 (P.L. 104-127), known informally as the Freedom to Farm Act, the FAIR Act, or the 1996 U.S. Farm Bill, was the omnibus 1996 farm bill that, among other provisions, revises and simplifies ...

(P.L.104-127). The Agriculture Risk Protection Act of 2000 (ARPA) made amendments, providing for FCIC to offer a wider selection of insurance-related risk management tools to farmers and agricultural entities.

Financial claims

Between 1980 and 2005, FCIC recorded $43.6 billion in total claims, averaging approximately $1.7 billion in losses per year. Three-quarters of FCIC claims were the result of three weather-related disasters –

drought A drought is a period of drier-than-normal conditions.Douville, H., K. Raghavan, J. Renwick, R.P. Allan, P.A. Arias, M. Barlow, R. Cerezo-Mota, A. Cherchi, T.Y. Gan, J. Gergis, D. Jiang, A. Khan, W. Pokam Mba, D. Rosenfeld, J. Tierney, ...

, excess moisture, and

hail Hail is a form of solid Precipitation (meteorology), precipitation. It is distinct from ice pellets (American English "sleet"), though the two are often confused. It consists of balls or irregular lumps of ice, each of which is called a hailsto ...

– with the remaining claims divided among 27 different causes, including crop-damaging frost and tornados."Climate Change" by John B. Stephenson, Google Books
/ref>

Biotech coverage expansion

In September 2008, the U.S. Department of Agriculture approved the expansion of the FCIC's risk management program to include agricultural producers involved in the planting and harvesting of certain

biotech Biotechnology is a multidisciplinary field that involves the integration of natural sciences and engineering sciences in order to achieve the application of organisms and parts thereof for products and services. Specialists in the field are kn ...

corn Maize (; ''Zea mays''), also known as corn in North American English, is a tall stout Poaceae, grass that produces cereal grain. It was domesticated by indigenous peoples of Mexico, indigenous peoples in southern Mexico about 9,000 years ago ...

hybrid seeds that are designed to be resistant to damage from

lepidoptera Lepidoptera ( ) or lepidopterans is an order (biology), order of winged insects which includes butterflies and moths. About 180,000 species of the Lepidoptera have been described, representing 10% of the total described species of living organ ...

pests (including

moths Moths are a group of insects that includes all members of the order Lepidoptera that are not butterflies. They were previously classified as suborder Heterocera, but the group is paraphyletic with respect to butterflies (suborder Rhopalocera) a ...

and their larvae) and below-ground

corn rootworm ''Diabrotica'' is a large, widespread genus of beetles in the family Chrysomelidae. Members of this genus include several destructive agricultural pest species, sometimes referred to as corn rootworms. There are an estimated 400 species grouped ...

damage. The biotech corn hybrid seeds must also show tolerance to certain herbicides. FCIC coverage for the biotech corn hybrid seeds went into effect in 2009."Farmers using biotech seed may pay less insurance," Reuters, August 19, 2008
/ref>

Standard Reinsurance Agreement

The

allows private insurance companies that participate in the federal crop insurance program to transfer a portion of their risk to the federal government. The standard reinsurance agreement establishes the terms and conditions under which the

United States federal government The Federal Government of the United States of America (U.S. federal government or U.S. government) is the Federation#Federal governments, national government of the United States. The U.S. federal government is composed of three distinct ...

will provide

subsidies A subsidy, subvention or government incentive is a type of government expenditure for individuals and households, as well as businesses with the aim of stabilizing the economy. It ensures that individuals and households are viable by having acce ...

and reinsurance on eligible crop insurance contracts sold or reinsured by the insurance company named on the agreement.

References

External links

*
Federal Crop Insurance Corporation
in the

Federal Register The ''Federal Register'' (FR or sometimes Fed. Reg.) is the government gazette, official journal of the federal government of the United States that contains government agency rules, proposed rules, and public notices. It is published every wee ...

{{authority control Agricultural insurance in the United States United States Department of Agriculture agencies Corporations chartered by the United States Congress Government-owned insurance companies of the United States New Deal agencies Federal Agriculture Improvement and Reform Act of 1996