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STATEMENT BY RMA ADMINISTRATOR ELDON GOULD
U.S. Department of Agriculture
Before the House Agriculture Subcommittee on
General Farm Commodities and Risk Management
May 1, 2007
Charts (PDF)

Mr. Chairman and members of the Subcommittee, I am Eldon Gould, Administrator of the Risk Management Agency (RMA). I am a life-long farmer in northern Illinois, with a 1,500 acre corn, soybeans and wheat farm and a 700 sow farrow-to-wean hog operation.

My role here today is to report on the progress and challenges of the Federal crop insurance program and, in particular, to provide an update on our successes and challenges in implementing the Agricultural Risk Protection Act of 2000 (ARPA). In fulfillment of the mandates of ARPA, and under the direction of the Federal Crop Insurance Corporation (FCIC) Board of Directors (Board), with its Chairman, Dr. Keith Collins, the Risk Management Agency continues to fulfill the mandates of ARPA by bringing new and innovative insurance products to the agricultural community. We work daily to validate the utility of current insurance products, to ensure outreach to small and limited resource farmers, to promote equity in risk sharing and to guard against fraud, waste and abuse within the program.

Secretary Johanns asked me to administer the crop insurance program in a timely and farmer-friendly manner. True cooperation between the Federal government and our approved insurance providers (AIP) is necessary to meet our common goals of providing effective insurance products, processing timely and accurate claims for producers when losses occur and identifying and eliminating fraud, waste and abuse in the program to the greatest extent possible.

Effective outreach to our stakeholders and customers is also necessary to identify attributes of the program that are working well and the aspects that need to be changed to improve efficiency and effectiveness. Administration of the crop insurance program requires all interested parties working together to identify viable insurance products and solutions that meet the needs of the agricultural community and follow legislative guidelines. Moreover, if the program is to continue to be successful, the checks and balances necessary to guard against the risks of fraud, waste and abuse need strengthening. Our dual roles of regulator and reinsurer make this cooperation the path to excellence.

The Standard Reinsurance Agreement (SRA) included key changes for the 2005 and subsequent reinsurance years. These entailed a lowering of the percentage rate of administrative and operating (A&O) expense reimbursement and a rebalancing of risk sharing between the government and AIP's. In addition, RMA enhanced the reporting and monitoring of AIP's and their affiliates with respect to financial solvency and program integrity. To complement that enhancement, RMA has strengthened formal ties with state insurance regulators and the National Association of Insurance Commissioners.

We now have 16 AIP's selling and servicing crop insurance. Most companies have requested authorization to increase the amount of premium they write and the number of states they intend to serve.

For the 2006 insurance year, A&O reimbursements are estimated at $958 million, up from $552 million in 2000. Despite the decline in the A&O reimbursement percentage, the total dollar reimbursement is up because of the increase in premium per policy, primarily due to higher average coverage levels, greater purchase of revenue insurance, and RMA rate adjustments. Underwriting gains for the companies are up as well, rising from $282 million in 2000 to $890 million estimated for 2006. The combined increases in A&O and underwriting gains have helped improve the financial performance of the companies and encouraged new entrants into the program.

The Federal crop insurance program has experienced extraordinary growth in the last quarter century. Through the private sector delivery system in crop year 2006, RMA provided $49.9 billion of protection to farmers on approximately 360 commodities, covering nearly 80 percent of major crops for which we can determine total eligible acres within the United States. This coverage was offered through 21 plans of insurance and approximately 1.1 million policies insuring about 242 million acres. In 2005, crop insurance provided approximately $2.4 billion in indemnity payments to farmers and ranchers. For 2006, indemnity payments totaled approximately $3.4 billion. We estimate that in 2007, we will reach $65 billion in protection for American agriculture.

Attached to my testimony are several charts that provide further background and highlight the growth of the Federal crop insurance program under ARPA.

Since the enactment of ARPA, RMA has aggressively expanded availability of existing crop insurance programs to producers. Sixty-two proposals have been submitted to the Board under Section 508(h) of the Federal Crop Insurance Act (Act) since mid 2000 when ARPA was enacted. Of that total, the Board has approved 34 and disapproved eight. The submitter withdrew thirteen, four were returned or deemed incomplete, and one was tabled pending further action. RMA has 24 active pilot programs in various stages of development.

Having reviewed priorities and schedules for product development RMA has determined that, barring any significant unforeseen hurdles, within the next five years a risk management product will be available to potentially cover approximately 98 percent of the commercial value of U.S. crops. That is not to say that the task of having effective and useful products will be complete. We continue to look for ways to make traditional APH products more effective and useful for producers, and this year we have added a livestock product, LRP Lamb, as well as Pasture, Rangeland, Forage insurance to address other needs identified by ARPA. We will manage these products to maturity and continue to search for new ways to improve the ability of farmers and ranchers to manage risk.

Now I would like to provide an update to the Subcommittee on the following key issues.

RMA Program Issues

• Information Technology
• Program Integrity
• Conflict of Interest
• Pasture, Rangeland, Forage and Hay Initiatives
• Cooperative Discount Issue
• Premium Reduction Plans
• Combination Policy
• Growth of Corn Price due to Ethanol Production

Information Technology (IT)
In order for RMA to successfully operate the multi-billion dollar Federal crop insurance program, while controlling fraud, waste, and abuse, it is prudent and necessary to have a current and reliable operating system to deliver the crop insurance program. The system's last major overhaul occurred about 12 years ago.

The current IT business systems are based on outdated system architectures and are at the end of their expected life cycle. This includes the use of data structures that do not provide the ability to readily obtain consistent information and analysis from the 120 databases in use at RMA. As a result, comparisons across multiple crop years that are useful in detecting unusual patterns of activity cannot be made without expensive and separate data manipulation that exceeds the technical and funding capacity of the Agency. In addition, the data warehouse which consolidates the information from all of these databases and is used to support the data mining efforts is at the end of its useful life and must be replaced.

The 2008 Budget includes two proposals that will facilitate funding of our IT needs.

The first is a reproposal of last year's request, which required insurance providers to share in the cost to develop and maintain a new IT system. Insurance providers would be assessed a fee based on one-half cent per dollar of premium sold. The fee is estimated to generate an amount not to exceed $15 million annually. After the new IT system has been developed, the assessment would be shifted to maintenance and would be expected to reduce the annual appropriation of the salaries and expenses account of RMA.

The second would expand the uses of mandatory ARPA research and development funding for datamining and data warehousing activities required by ARPA, and the testing and development of the Comprehensive Information Management System (CIMS).

ARPA provided RMA with mandatory funding to implement data mining and data warehousing to improve compliance and program integrity for years 2001-2005. At the close of FY 2005, these mandatory funds were depleted and Congress appropriated discretionary funding for this purpose for FY 2006. These activities allow RMA to effectively detect fraud, waste, and abuse in the crop insurance program.

Similarly CIMS was fully funded through 2007 by the 2002 Farm Bill. Specifically, CIMS is a requirement of section 10706 of the Farm Security and Rural Investment Act of 2002. The first stage of CIMS, a proof of concept project, is operating and provides a centralized source of RMA and Farm Service Agency (FSA) information. Developed applications provide RMA, FSA, and reinsured companies' electronic access to approved CIMS information. The CIMS project is completing recommendations to standardize RMA and FSA common business elements, reporting requirements and program dates to the extent practical for producer identification and acreage reporting. CIMS identifies potential discrepancies between RMA and FSA data. This early detection will reduce fraud, waste, and abuse within the various USDA programs. Under section 10706, all current information of RMA and FSA is to be combined, reconciled, redefined, and reformatted in such a manner so that the agencies can use the information management system. It was the sense of Congress that CIMS would lay valuable groundwork for further modernization of information technology systems of USDA agencies in the future. This will lead to the one stop reporting of common producer and acreage information, which will reduce the reporting burdens on farmers, ranchers, and producers, RMA, FSA, and approved insurance providers with the delivery of USDA programs.

Program Integrity
RMA's Compliance function workload increased substantially due to the expansion of the Federal crop insurance program and the implementation of ARPA. In order to address the increases, RMA is emphasizing preemption through better quality control and assurance, while still aggressively pursuing program abuse by assisting USDA's Office of Inspector General and the Department of Justice. Improvements in quality controls and investigations continue to be assisted by new and better technology, specifically the use of data mining, remote sensing, geospatial information technologies and other computer-based resources.

The most recent renegotiation of the SRA resulted in changes in the way RMA ensures program compliance. The SRA directs insurance providers to expend more resources on quality assurance and internal controls than ever before. The SRA also recognizes that insurance providers have improved internal control processes in response to new Federal financial reporting requirements. The SRA permits the insurance providers to document and receive credit for their efforts rather than complying with a separate set of assurance mandates.

In conjunction with the new insurance provider quality control requirements, RMA Compliance has revised its work plans to reflect a more balanced approach between quality assurance and investigating program abuses. In a time of declining resources and increased responsibilities, effective internal controls provide a significant cost-benefit compared to identifying and prosecuting program abuse alone. RMA is currently reviewing company operations and internal controls to determine if their efforts actually address crop insurance program vulnerability concerns.

RMA Compliance personnel completed the second year of structured random policy reviews in 2006, and will soon begin the third round in the three-year cycle of reviewing participating insurance providers. Compliance completes the random reviews, in conjunction with an assessment of each insurance provider's operational compliance, and uses the information to establish a program error rate under the Improper Payments Information Act of 2002.

RMA is making significant progress in preempting fraud, waste and abuse through the expanded use of data mining. We have preempted millions of dollars' worth of expected payments and RMA continues to identify ways to reduce program abuse. RMA continues to use data mining to identify anomalous producer, adjuster, and agent program results and, with the assistance of FSA offices, conducts growing season spot checks to ensure that new claims for losses are legitimate. These spot checks based on data mining have resulted in a significant reduction in anomalous claims for certain situations. Specifically, reduced indemnities on spot-checked policies were approximately $112 million in 2002, $82 million for 2003, $71 million in 2004, $138 million in 2005, and $35 million in 2006.

RMA is also using data mining to verify compliance with established rules and regulations. For example, data mining identified policies where a comparison of past claims and production data indicated that insurance providers may have failed to use claim production data to establish future approved yields, as required by regulation. RMA is providing this information to the insurance providers to assist them in correcting producer data for subsequent crop years. Insurance providers are only required to make changes when an error is found.

The Government Accountability Office (GAO) audited RMA compliance activities in 2005, and recommended areas for improving our compliance efforts. The GAO made several recommendations that RMA accepted and is working to implement.

Compliance managers continue to concentrate on the mission-critical tasks of evaluating and improving new processes to prevent and deter fraud, waste and abuse in the crop insurance program. We have dedicated significant resources to building and adapting a reporting and tracking system to complement and integrate the oversight mandates established by ARPA and other statutory requirements.

While RMA, FSA and the insurance providers have preempted tens of millions of dollars of improper payments through these and other measures, RMA is constantly identifying ways to balance competing needs to make our products fraud-proof while seeking to provide responsive, useful risk protection to farmers. We still have work to do and improvements to make, but we are making good progress in our fight against program abuse.

Conflict of Interest Supplementary Guidance
RMA is finalizing a Manager's Bulletin that contains further guidance to assist insurance providers in implementing changes to the SRA regarding conflict of interest disclosure. The Bulletin will establish standards for reporting conflicts of interests by insurance provider employees, agents, and loss adjusters. It will thereby promote program integrity and ensure adequate internal controls based on the identification of certain conflict of interest problems in past audits and investigations of fraud, waste and abuse in the program.

Pasture, Rangeland, Forage and Hay Initiatives
In August 2006, RMA announced the availability of the Pasture, Rangeland, Forage insurance products for pasture and rangeland, in response to ARPA requirements. There are over 400 million acres of rangeland, 120 million acres of pasture, and 62 million acres of hay in the United States, and we clearly saw a need. The new insurance products are area-based products that trigger indemnities based on indexes. One index is based on accumulated rainfall and the other is based on a temperature-adjusted measure of vegetation obtained from the National Oceanographic and Atmospheric Administration. Both products will use new technology to help solve the problem of the inability to directly measure forage production across the diverse range and pasture settings on U.S. farms and ranches. Each pilot program is offered in six states. As of April 9, 2007, the sales of the new Pasture, Rangeland and Forage Rainfall and Vegetation Index pilot programs have exceeded expectations. There have been a robust 8,023 Rainfall Index policies sold covering 24,535,220 acres with $328,234,326 in total liability. Each state in the pilot has a policy sold. The pilot area in Texas had the greatest number of polices sold with 5,928 policies and over 20.8 million acres covered. In the pilot, Texas has the largest area and South Carolina has the smallest number of potential acres. South Carolina had the lowest number of polices sold at 9 and just over 2,000 acres insured with $159,995 in liability. The total liability to date exceeds the estimated participation of ten percent and $205 million for the life of the pilot.

Vegetation Index pilot program sales are at 1,687 policies sold covering 3,962,930 acres and $61,786,236 in total liability. All states in the pilot sold policies with the exception of Pennsylvania. The South Dakota pilot area contained the largest potential acres and has the highest number of policies with 885 polices sold. These policies insure 3,029,871 acres and a liability of $41,982,206. The state with the lowest number of sales is South Carolina with two policies covering 318 acres and $20,289 in liability.

The participation in the pilot program areas are at approximately 16 percent, while the target goal was 10 percent at the end of the pilot.

Combination Policy
RMA is continuing to develop a "Combination" policy, which merges similar features from the existing Actual Production History, Crop Revenue Coverage, Income Protection, Indexed Income Protection and Revenue Assurance plans of insurance into one consolidated plan. We have been working on this for some time now, and the draft final rule is being completed. The final rule is targeted to be effective for the 2009 reinsurance year.

We believe this change will continue to give producers a broad array of insurance options, but in a more straightforward manner resulting in more streamlined and improved product delivery and operations.

The regulation proposes to reduce duplication and to simplify revenue and yield protection into: (1) One set of policy materials, special provisions, and actuarial documents; (2) One rating and pricing methodology; (3) One premium calculator; and, (4) One database. This combination of APH, CRC, RA, IP, and IIP provides simplification, fewer documents to read and process, and less chance of errors for producers, crop insurance companies, sales agents, and RMA.

Cooperative Discount and Rebating Issue
The SRA prohibits insurance providers from providing rebates to producers, except for two specific instances provided in the Act. One of these exceptions is the Premium Reduction Plan, which is provided in section 508(e)(3) of the Act, which I will address later in my testimony. The other rebating exception is provided in section 508(b)(5)(B) of the Act and involves the participation of farmer-owned cooperatives in providing crop insurance to their members. Section 508(b)(5)(B) of the Act is very clear that all payments from cooperative or trade associations to members must comply with and be subject to State law governing insurance rebating in the States in which payments are to be made. To qualify to pay a dividend or other such payment to its members under 508(b)(5)(B), an entity must be recognized by RMA as a cooperative or trade association and RMA must receive certification from the respective State department of insurance that the payment program complies with State rebating law.

Interest by insurance providers and their agents in providing premium discounts through cooperatives was intensified by the moratorium on the Premium Reduction Plan for the 2007 reinsurance year, enacted in 2006 appropriations legislation. RMA soon began receiving reports that individuals were exploring creative schemes to rebate insurance premiums, including the formation of cooperative-like entities that might qualify under section 508(b)(5)(B). Evidence also emerged that many State insurance departments were unaware that the rebating programs of cooperative and trade associations were clearly subject to State rebating law.

As a result of these developments, RMA became increasingly concerned that these recent developments might disrupt the marketplace for Federal crop insurance. And, it determined that its existing procedures for operating cooperative and trade association programs under section 508(b)(5)(B) were inadequate. Consequently, RMA has taken the following actions:

• RMA halted approval of cooperative dividend programs for the 2007 reinsurance year, until adequate procedures could be developed and established through a Managers Bulletin.
• RMA has enlisted the active support of the National Association of Insurance Commissioners (NAIC). NAIC is assisting RMA in raising awareness of the States anti-rebating responsibilities under this particular section of the Act. NAIC has circulated a draft "Model Letter" which will guide States in their evaluation of cooperative and trade association rebating proposals under State rebating law and respond effectively and decisively to RMA.
• RMA drafted a Managers Bulletin that incorporates procedures that approved insurance providers must follow to sponsor cooperative and trade associations. It includes the items the entity and the insurance provider must submit for RMA to be able to determine that an entity is a cooperative or trade association and its dividend program complies with State rebating law. RMA circulated the draft Managers Bulletin to the industry and, based on their input, is finalizing the Bulletin for publication.

Through these actions, RMA is confident that the intent of Congress will be preserved by encouraging participation by legitimate farmer-owned cooperatives under section 508(b)(5)(B). RMA is further confident that, as a result, the stability of the marketplace for crop insurance will not be threatened by schemes to establish cooperative-like entities for the sole purpose of crop insurance rebating.

Premium Reduction Plans (PRP)
The PRP is not available during the 2007 reinsurance year (RY) due to language in the 2006 FY (Fiscal Year) Appropriations Bill as extended by the current Continuing Resolution. However, RMA is evaluating requests from 2006 RY PRP-eligible AIPs after the 2006 RY annual settlement in February 2007. We are finalizing a Managers Bulletin that will provide clarification and guidance regarding PRP payment authorization requests for 2006. This will allow us to be prepared to offer PRP for the 2008 RY.

Premium Costs for Corn
The rise in projected demand for plant-based fuel has caused a projected increase in the price of corn and an increase in premiums for revenue based insurance products for corn. For example, in Page County, Iowa, the price election per bushel of corn is up 57% and the producer portion of the premium is up 62 percent. Additional acres in corn mean fewer acres in other crops and fewer bushels of soybeans, for example, means higher prices as well. The soybean price election in Iroquois County, Illinois, is up 31 percent and the producer portion of the premium is up 29 percent. We cannot tell this early in the crop year the extent to which the number of acres insured will be affected by the higher premiums.

Farm Bill Proposals
In putting the farm bill proposals together, USDA aimed to make farm policy more equitable, predictable and better able to withstand challenge. The Farm Security and Rural Investment Act of 2002 (FSRIA) was the right policy for the times. It was the first-ever farm bill with an energy title, and it increased conservation spending by about 80 percent. When it was developed, commodity prices were low, exports had declined for several years in a row, and the debt-to-asset ratio was at about 15 percent.

But times have changed and farm policy must reflect the new realities. Today, commodity prices are strong for most program crops, and we are seeing record and near-record production and yields. The debt-to-asset ratio has now fallen to 11.8 percent; the lowest number USDA has ever recorded. Exports, meanwhile, have increased every year since 2002 and last year hit a record $68.7 billion. They are expected to grow to $78 billion this year.

USDA put a great deal of time and energy into developing a comprehensive set of proposals for the 2007 Farm Bill that will help move the farm economy to a new level of prosperity and growth. Secretary Johanns began this process by holding 52 forums across the country to gather input directly from those most affected by farm policy - America's farmers and ranchers. In all, USDA received more than four thousand comments from producers and other stakeholders across the country. The collective common sense drawn from those comments has really formed the heart of the farm bill proposals.

The Department certainly heard a great deal of support for the structure of FSRIA, but also heard many suggestions on how to improve current policies and many of them were surprising. Secretary Johanns and the USDA team took all of what was heard into account as these proposals were crafted. And they sought to combine the best features of our farm policies of past years' including preserving a strong safety net for producers' with a more market-oriented approach to meeting the challenges and seizing the opportunities that we know future years will bring.

The Farm Bill proposals will put American agriculture on a strong competitive footing for years to come while also making responsible use of taxpayer dollars. With that, let me go into more detail on several of the crop insurance-related proposals.

The first proposal would allow farmers to purchase supplemental insurance that would cover all or part of their individual policy deductible in the event of a county or area wide loss. We are proposing literal "gap coverage" that a producer can buy to cover 100 percent of their deductible loss under the crop insurance program.

The threshold at which the supplemental insurance would be activated is a county-wide loss of 10 percent or more. When the loss under the group policy is sufficiently large, the grower's deductible would be completely covered, resulting in 100 percent of losses being covered. The supplemental policy would cover the "hole" in crop insurance, as well as provide compensation for disaster situations.

Ultimately, this approach would help to address the gap in the safety net that exists due to the fact that current crop insurance products fail to cover crop losses that are less than the size of the deductible. This proposal would increase the Administration's commitment to crop insurance by $350 million over 10 years.

Secondly, we are proposing again that if you receive program payments you should have crop insurance. Crop insurance is already widely used by producers. Some states have 90 percent- participation or more, but we want to get that last 10 percent enrolled. If a producer gets subsidies, we feel strongly that crop insurance should be used to help manage their risk. Higher participation and higher coverage will help obviate the need for costly supplemental assistance that undermines the crop insurance program.

The conditions under which program linkage will take place under the Administration's Farm Bill proposal are substantially different from that which existed in 1994 when linkage was previously attempted. Voluntary participation in the crop insurance program for major U.S. commodities is already around 80 percent, and almost 90 percent of those participants are already buying higher levels of coverage that satisfy the minimum linkage requirement. In the mid-1990's, voluntary participation was significantly lower, particularly at buy-up levels of coverage, and so mandatory coverage affected a much larger percentage of producers.

A third Farm Bill proposal would provide the authority for RMA to renegotiate the financial terms of the Standard Reinsurance Agreement (SRA) once every 3 years.

RMA needs the opportunity to make changes in the SRA to address MPCI primary business changes. Revisions may be needed to strengthen program integrity efforts, or to bring the company underwriting gain potential back to a reasonable level. Without this opportunity, current terms and provisions would continue despite the fact they may be no longer in the best interest of the program.

As we all know, participation in the crop insurance program has grown significantly since the implementation of ARPA. Given this fact and the large number of changes taking place within agriculture today, it is in the best interest of all parties to have an SRA that is reflective of market conditions and dynamics.

Another key proposal would be to allocate up to $10 million in annual funding to strengthen crop insurance compliance efforts. This proposal would allow RMA's Compliance office to fill critical staffing needs in addition to providing funding for compliance related strategies including support for data mining, satellite imaging, and Geographic Information Systems.

RMA bases the need for enhancing the current Compliance staffing levels on the continuous program growth coupled with fewer on-board Compliance staff now than in the 1990's. Compliance has been seeking additional staff to address this critical shortage for the past few years.

Initially, RMA would look to use the money as indicated in past requests. We would spend approximately $1.5 million to support 15 staff years for Compliance. Twelve staff years would be distributed to the six Compliance field offices to fill Compliance reviewer positions. The three remaining positions would be allocated to Washington to provide for a Compliance Assistant Deputy, a Management Control Officer, and a dedicated OIG Hotline Complaint coordinator. This will enhance the oversight and support efforts to deter fraud, waste, and abuse in the program.

Another Administration proposal would be to increase the net book quota share (USDA FCIC's share of risk on premiums currently retained by the companies) from the current 5 percent to 22 percent and provide a ceding commission to the reinsured companies of 2 percent of premium.

The Net Book Quota Share (NBQS) is a means for RMA to participate in the crop insurance program at the same level as a commercial reinsurer. RMA assumes a percent of the companies retained premium, loss, and resulting underwriting gain or loss, similar to a commercial quota share reinsurer. The loss ratio and rate of return is the same for both the company and RMA, thus it does not impact the risk sharing of the other SRA reinsurance terms. A commercial quota share MPCI reinsurer will pay a ceding commission to the reinsured to aid in offsetting the costs of generating business. While the current NBQS provisions do not include a ceding commission, the proposal does include a 2 percent ceding commission. The impact to the companies retained business is limited by the significant increase in premium over the last several years. The total company retained premium for the 2006 reinsurance year is $3.68 billion. If this proposal had been in effect for the 2006 reinsurance year the company retained premium would be approximately $2.87 billion, which is greater than the 2003 retained premium amount of $2.61 billion.

The Administration has proposed reducing the administrative and operating expense reimbursement to the reinsured companies by 2 percentage points for all policies other than CAT policies.

Payments to companies for delivery of the crop insurance program have steadily increased, both in absolute terms and on a per-policy basis, over the past decade. In 1990, companies were paid about $280 million as compensation for program delivery, or about $350 per policy. By 2006, payments to companies were about $940 million, for a per policy payment of about $820. For 2007, payments to companies are expected to exceed $1.1 billion because of higher commodity prices, or over $950 per policy. With a two percentage point reduction in A&O, payments to companies would still be about $1 billion, more than has been paid in any other year. Further, higher commodity prices are expected to be sustained for at least the next few years, with the result that future A&O payments (inclusive of the two percentage point reduction) will still be far larger than those of recent years. Hence, this proposal will not create a disincentive to provide proper service to farmers.

Finally, the Administration proposes to allow private crop insurance companies to have direct access to data mining information currently held by RMA. Companies could use this information to reveal potential fraud and abuse. Companies would be allowed to query information related only to their respective clientele. To fund such activities, RMA would be required to charge a user fee for this service.

Conclusion
RMA continues to evaluate and provide new products and to promote the adoption of crop insurance as a risk management tool so that the government can further reduce the need for ad hoc disaster payments to the agriculture community.

The growth and effectiveness of the crop insurance program is dependent on a reliable delivery system; insurance products that meet the needs of producers; investment in information technology to ensure the delivery system is timely, accurate and dependable; and adequate funding to support compliance and program integrity, maintenance and administration, product evaluation and new product development, and a dependable and equitable delivery system.

USDA Farm Bill proposals will further strengthen the Federal crop insurance program and insure that this critical safety net continues to serve America's farmers and ranchers.

Again, thank you for the opportunity to participate in this important hearing. I look forward to responding to questions on these issues.