ARTICLE VIII

The Reinsurer shall have the right to examine the books and documents of the Adwinistration so far as they relate to any matter falling under this agreement, at all reasonable time by a duly authorized responsible officer of the Reinsurer.

ARTICLE IK

In the event of any difference hereafter arising between the contracting parties with reference to any transaction under this contract, the same shall be referred to two arbitrators, one to be chosen by each party, and to en umpire chosen by said arbitrators before they enter upon arbitration. La case of their not being able to agres as to the umpira, each of them shall nine ore, and the decision shall be made by drawing lots. In default of either party naning the arbitrator within one month after the other party requesting it to do so, the latter shall nema both arbitrators and they shall select an umpire 2e ebore stipulated. Each party shall submit its case to the arbitrator within one month of a decision to refer to arbitration.

The arbitrators are relieve from all judicial formalities and may abstain from following the strict rule of law. They shall interpret the present contraét as an honorable engagement and not as a merely legal obligation, and their decision shall be final and binding on both parties. Any arbitration shsil tske place in San Juan, Puerto Rico, unless otherwise agreed.

IN VITESS WHEREOF, each party has executed and attested these presents. in duplicate each party receiving one copy.

I am pleased to have the opportunity of presenting the views of
Grain Sorghum Producers Association concerning "All-Risk Farm Insurance
Program and Disaster Programs." The membership of GSPA is spread through-
out the sorghum production area of the United States.

Grain sorghum farmers are pleased to know that Congress and U. S.
Department of Agriculture are considering a new crop insurance program
that would help remove some of the tremendous financial risks that they
face each year, as a result of weather, insects, disease, and other fac-
tors that destroy crops. Probably no other industry is plagued with
so many risks in addition to highly variable prices for their products.
GSPA believes the time has come for the development of an insurance
program that covers all the risks of agricultural production.

GSPA recommends that the current disaster program be continued for the duration of the current farm bill. Since the disaster provisions expire with the 1978 crop year, it will be almost impossible to implement a new Federal All Risk Insurance Program in time to take effect before its expiration. These programs should be extended until an all-inclusive crop insurance program is in full operation.

Grain Sorghum Producers Association supports the basic provisions
of the "Farm Production Protection Act of 1978" that was introduced
last year by USDA. The bill introduced was S. 3029 and H.R. 12636.
There are several points of concern that we feel should be more specific
in any law passed by Congress than is proposed in S. 3029 and H.R. 12636.

First, GSPA wants grain sorghum added to the list that is covered by the legislation. The USDA bill does not include grain sorghum as

one of the named crops. The intent of USDA to cover sorghum is explained in their comments. We believe it should be listed in the Act itself.

GSPA further recommends that any new Federal Crop Insurance Program include:

1.

2.

3.

Coverage for all crop losses such as hail, rain, drought,
sand, wind, and other weather-related forces, and should
also cover losses from insects, diseases, and other losses
that are beyond the control of a farmer. We, of course,
believe that the land should be farmed in a good farmer-
like manner.

Administration through the ASCA offices instead of estab-
lishing a separate agency.

Provisions for allowing each producer to provide records
of proof in establishing his own proven yields for each
farm and that these yields should be the basis of the
amount of coverage that each farm is eligible to receive.
4. Separate coverage for each farm owned or operated by a
farmer and separation of coverage and protection between
dryland and irrigated land on each farm.

Grain Sorghum Producers Association recommends early passage and implementation of the Administration's "Farm Production Protection Act" provided the provisions listed above are carefully spelled out in the law.

We will be available to work with your committee as you develop this program any time we can be of assistance.

Thank you for the opportunity of presenting this testimony.

Sincerely,

Elbert Harp

Elbert Harp
Executive Director

The Independent Insurance Agents of America was delighted to have
the opportunity last week to present its views on federal crop insurance
to your subcommittee. IIAA endorsed the statement delivered on behalf of
a number of insurance company and agent associations by the National Crop
Insurance Council.

Briefly, IIAA recommends that the subcommittee include the following
provisions in its federal crop insurance legislation: 1) exclusion of
hail and fire insurance from federal coverage, 2) provision of federal
reinsurance so that interested private carriers could underwrite risks
other than hail and fire, and 3) marketing and servicing federal crop
insurance, under suitable contract agreements, through private insurance
agents. The Administration's proposed legislation incorporates none of
these provisions.

These recommendations are designed to ensure private insurance
industry participation in a federal crop insurance program--participation
that we believe is essential to the program's ultimate success, and with-
out which both the consumer and the private crop insurance industry would
needlessly suffer.

Statement of Mr. William F. McFarlane, President
Western Cotton Growers Association
Representing the cotton farmers of California

to the

Subcommittee on Conservation and Credit

of the

House Agriculture Committee
Representative Ed Jones, Chairman

RECEIVED

MAR 1 3 1979

ED JONES, M.C. 7TH DISTRICT TENNESSEE

Mr. Chairman:

It is obvious the disaster payment program in the Agriculture Act of 1977 is not sufficient for farms that suffer major crop loss at a time when costs of production have increased so dramatically. Farmers do need available an all risk crop insurance program they can use if desired.

with

California farmers use crop insurance to a high degree in raisins, where there is a competitive insurance offering. also offered by the Federal Crop Insurance Corporation (FCIC), This insurance is out subsidy. As in tobacco, peanuts, and in some counties where corn is insured, these situations exhibit a high rate of participation. Apparently a majority of the farmers have decided they want and can afford the program without subsidization.

The cotton farmers of California would like a realistic program offered for low risk farms that require minimum coverage, therefore, having an attractive premium without subsidy. sidering reducing the premium in low risk areas by as much as 45 to Since FCIC is con50 percent, this would make the premiums for minium coverage feasible for the cotton farmer of California. We should have a crop

insurance program which will subsidize the high risk premiums to
the degree that it would be a realistic alternative to disaster pay-
ments. If the low risk premium can be reduced as FCIC is suggesting,
then the farmer of California would participate without federal
subsidization. He would also understand that where the risk is higher
the need for a subsidization with the percentage of subsidy increas-
ing as the risk increases.
realistic alternative, with a higher dollar protection, to the
This certainly would give all farmers a
present disaster program.

I do not believe the cotton industry should or can back a bill
that is modeled after the Canadian program.
want government to be involved to the degree it is in farming in
We do not need or
Canada. It is the wrong approach to subsidize all premiums so
that participation will be high.
by the actual individual need.
on individual actuarial history.
to-ten year records, and these could be utilized to compute the
actual risk involved farm by farm.
should be made a part of the law.

Participation should be governed
Each cotton farm should be evaluated
The ASCS county offices have five-
The requirement to use these

It should be a goal to reduce federal expense immediately possibly
by as much as one-half and this goal could be attainable.
administration bill, as it now stands, still has the social stigma
The
of a give-away program. Our dollar is in trouble; one of the most
important reasons is, to quote from the Wall Street Journal of Aug-
ust 9, 1978; "This decline of the dollar was made in the U.S.
by U.S. policies and only U.S. policies can arrest it.
er of a century of government deficits financed by creating money
A quart-
and credit inevitably lowered the value of the dollar not only at
home but everywhere." So why create a further service that con-
tinues the one-half billion deficit
be fashioned after the Farm Credit Law where eventually it can be-
Let's cut it! The law should
come a private farmer owned insurance business.

If an all out effort is made, by Congress, to replace disaster payments with the crop insurance program and this is defeated then Western Cotton Growers would reluctantly ask for an extension of the disaster payment program.