Agriculture Risk Protection Act of 2000 Overview and Impact

The Agriculture Risk Protection Act of 2000 was a significant piece of legislation that aimed to improve the risk management tools available to farmers and ranchers.

This act made significant changes to the crop insurance program, increasing the level of coverage available to farmers and providing more flexibility in terms of premium payments.

The act also established the Agriculture Risk Protection Act of 2000 Trust Fund, which was designed to provide financial assistance to farmers and ranchers who experienced crop losses due to natural disasters.

One of the key provisions of the act was the introduction of the "sheltered commodity" program, which allowed farmers to purchase crop insurance on a portion of their crop, rather than the entire crop.

The Agricultural Risk Protection Act of 2000 made some significant changes to the federal crop insurance program.

On June 20, 2000, the President signed the Agricultural Risk Protection Act of 2000 into law, which aimed to reduce the farmer cost of acquiring a crop insurance policy.

The law, also known as P.L. 106-224, is estimated to add $8.2 billion in new federal spending for the federal crop insurance program over the next 5 years.

This new spending is expected to attract more farmers into the program and lessen the need for ad hoc disaster assistance.

The government pays the full cost of the premium for catastrophic (CAT) coverage and pays a portion of the premium for higher levels of coverage.

Private insurance companies sell and service the policies, but are reinsured by the government for most of their losses and expenses.

Major reforms were made to the crop insurance program in 1994, but overall farmer participation had not increased enough to forestall the need for ad hoc disaster payments.

The law addresses many problems with the crop insurance program, including providing improved coverage for farmers affected by multiple years of natural disasters.

P.L. 106-224 also authorizes pilot insurance programs for livestock farmers and growers of other farm commodities that are currently not served by crop insurance.

The law gives the private sector greater representation on the crop insurance policymaking board and eases eligibility requirements for a permanent disaster payment program for noninsurable farmers.

The Agriculture Risk Protection Act of 2000 implemented several regulatory actions to improve crop insurance programs. The law required the Secretary of Agriculture to ensure that crop insurance policies provide adequate protection against crop losses due to natural disasters.

Crop insurance policies were required to be actuarially sound, meaning they were based on accurate estimates of crop losses. This change aimed to reduce the risk of crop insurance companies going bankrupt due to underpricing of policies.

The law also established a new crop insurance program, the Supplemental Revenue Assistance Payments (SURE) program, which provided financial assistance to farmers who suffered crop losses due to natural disasters. This program was designed to provide a safety net for farmers during times of crisis.

Eligible farmers could receive up to 90% of their crop losses, depending on the severity of the disaster. The SURE program was a significant change to the existing crop insurance system, which previously only provided limited assistance to farmers.