Federal Crop Insurance Corporation

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Federal Crop Insurance Corporation
Agency overview
Formed February 16, 1938; 76 years ago (1938-02-16)
Parent department Risk Management Agency, United States Department of Agriculture
Website http://www.rma.usda.gov/fcic/

The Federal Crop Insurance Corporation (FCIC) is a wholly owned government corporation managed by the Risk Management Agency of the United States Department of Agriculture. FCIC manages the federal crop insurance program, which provides U.S. farmers and agricultural entities with crop insurance protection.

Corn crops bordering the Wabash River

The Great Depression and the New Deal[edit]

The Great Depression happened in the 1930s when the Stock Market crashed and it sent America into economic turmoil. During the Great Depression, many Americans were left without jobs. There were two events that occurred during the Great Depression to send America into economic tragedy, including the Stock Market Crash and the Dust Bowl. During the Stock Market Crash, the stocks dropped tremendously, causing many people that were invested in stocks worrisome. The banks at this time thought that investing money would be a good way to gain profits, but once the American's noticed that stock was dropping and there was no hope of it rising again, people started withdrawing their money from banks causing them to close down. This also hurt businesses because they were losing money in either the Stock Market Crash or losing their money from the banks. The businesses then decided that, in order to save money, they would reduce the amount of workers they had and stop spending money on luxury items. Because many businesses were not spending money, there was no money going into the economy. The people that thought they were safe during the Great Depression were the farmers, because they could provide food for themselves. That changed quickly when another major event occurred, known as the Dust Bowl. The Dust Bowl was caused by drought, which 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.[1] In order to help America recover from the disaster that is The Great Depression, President Franklin D. Roosevelt took office in 1933 and started The New Deal, which was a plan compiled of federal programs. <[2] The purpose for The New Deal is help increase the level of employment. There were two parts of the New Deal, the first and the second New Deal. Each focused on different issues of the Great Depression, and certain programs of The New Deal helped with the farming crisis.

Agency history[edit]

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.[3]

On September 26, 1980, the program was expanded through Public Law 96-365.[4]

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, 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." [5] Mandatory participation was repealed in 1996, but 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.[6]

An independent office designed to supervise and monitor FCIC activities was mandated in the Federal Agriculture Improvement and Reform Act of 1996 (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.[4]

Financial claims[edit]

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 result three weather-related disasters – drought, excess moisture, and hail – with the remaining claims divided among 27 different causes, including crop-damaging frost and tornados.[7]

Biotech coverage expansion[edit]

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 corn hybrid seeds that are designed to be resistant to damage from lepidoptera pests (including moths and their larvae) and below-ground corn rootworm 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.[8]

References[edit]

Further reading[edit]

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