The major portion of the budget will be used to support private sector delivery systems. Two basic forms of delivery are currently in place: reinsured companies, which provide all the fundamental insurance services and share underwriting gains and losses; and Master Marketers, operating under general agency sales and service agreements, which sell and service crop insurance written on FCIC paper. Of the amount requested for Administrative and Operating Expense, over $155 million will be used for master marketing commissions, loss adjustment costs, and reinsurance administrative expense. The remaining $72.2 million will be used for the expenses of field actuarial offices, field operations offices, field staff, ASCS reimbursable work, Kansas City Operations offices, which includes computer support, and the Headquarters staff. In total, our fiscal year 1985 request for Administrative and Operating Expenses represents an increase of $27.2 million over the fiscal year 1984 appropriations. Premium Subsidy The fiscal year 1985 appropriation request of $141 million for premium subsidies represents an increase of $55.9 million over the fiscal year 1984 appropriation. The $141 million would provide for maximum expansion of the crop insurance program to an estimated 62.6 million insured acres in crop year 1984. While the Fiscal Year 1984 appropriation for Administrative and Operating Expenses assumes a lower program level of 55.6 million insured acres, the Corporation will continue to strive for maximum expansion. F.Y. 1984 Supplemental The drought on 1983 crops resulted in a severe cash drain on the Corporation's revolving fund. Current estimates indicate that the Corporation may have a cash shortage this spring. Therefore, the Corporation is requesting a supplemental in F.Y. 1984 for emergency Treasury borrowing. This supplemental would permit the Corporation to borrow funds from Treasury if at any time the resources of the revolving fund become insufficient to meet its commitments. Supplemental borrowing is authorized by the Federal Crop Insurance Act of 1980 in such amounts provided in appropriation acts. An indefinite amount has been requested because of the difficulties in estimating the exact amount of supplemental funding required. Exhibits I would like to have two exhibits inserted in the record. The first exhibit is a revised table of the 1983 crop year experience, by commodity, as of January 1984, and reflects the changes that have taken place since the submission of the President's Budget. The second set of exhibits (Exhibits II(a), II(b), and II(c)) shows. loss ratios during the 36 years of our existence. The crop insurance program has had 18 years in which premiums have exceeded indemnities and 18 years in which the reverse has been true. The 36-year loss ratio is 1.26. This concludes my statement. We will be glad to answer any questions or furnish any additional information you may desire. 1948 1949 1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 1960 1961 1962 1963 1964 1965 1966 1967 1968 PROGRAM Exhibit II (a) Wheat Cotton .58 1.43 .52 1.06 .43 1.97 2.81 Tobacco Corn Flax .85 1.25 1.42 1.26 1.09 .82 .44 1.05 .56 .84 .67 Combined Crop .06 .16 .94 1.65 2.33 .91 1.50 1.42 1.28 .43 .66 .61 .49 .79 1.90 .89 40 .17 .16 1.26 2.38 .25 .56 1.47 .51 .62 42 .79 .95 77 28 34 זו. 3.35 .46 49 .77 .54 2.46 .19 .38 35 29 .56 .87 1.45 .23 1.52 .45 1.64 .47 1.27 .65 .91 .59 .54 2.03 .24 2.11 2.36 .56 .23 1.09 .38 .95 .57 1.24 .54 1.14 .52 1.38 1.24 70 46 .84 .27 1.23 .76 .79 1.01 Wheat 2.29 3.85 1.92 Cotton .45 45 .07 .62 .37 .41 1.67 41 2.12 .10 Combined Crop .53 .59 38 .54 Tobacco 2.04 .45 94 .65 Corn ALL PROGRAMIS .53 1.31 .91 1.12 .97 1.15 1.24 1.14 1.26 .69 .26 .77 .58 .89 1.10 No Program וו. .90 1.13 .68 1.27 1.05 Safflower Sugar Reet Tung Nut Grape Puerto Rico Reinsurance Sunflower Forage-Seed Forage-Prod. Rye Prev.Planting ALL PROGRAMS Exhibit II (a) LOSS RATIOS-1969-1983 PROGRAM CROP YEAR PROGRAM 1969 1970 1971 .94 1.47 .47 1.06 Tobacco Corn .69 .67 2.98 .20 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1948-1983 Wheat .74 .46 .42 .42 .83 .97 .51 Cotton 2.61 1.33 1.67 .97 .46 2.24 3.22 3.57 Combined Crop .06 21 14 .29 1.02 1.06 .61 .46 1.06 .58 .39 .36 .67 .29 1.06 .91 .57 1.17 .37 Grain Sorghum .41 96 .27 .93 .82 1.18 52 .91 13 .82 .68 1.01 1.75 3.11 .63 1.23 44 42 .37 2.66 .28 1.01 .50 1.94 2.23 .05 9.06 .89 .59 .72 .79 .31 1.01 .39 1.11 .39 .35 .38 2.11 1.81 2.03 2.30 31 .66 .30 .61 .86 1.53 1.07 1.31 .99 .40 .56 2.39 .82 2.97 .41 1.19 1.77 2.18 2.41 1.14 1.42 .46 .50 2.17 15 .62 .35 3.52 3.07 58 .87 .23 1.63 .52 .91 .47 1.46 .62 2.96 .93 1.14 2.01 .47 .25 1.23 1.03 1.05 .53 2.99 .56 .53 .60 2.44 1.42 .59 .83 .07 .51 .57 .63 .41 23 54 .72 .76 1.55 4.58 1.86 3.46 4.20 .20 11.66 .02 12.13 .01 6.29 1.14 59 .83 .80 2.93 .84 .32 .49 .57 .28 .98 2.53 1.44 .65 .48 .98 2.85 .97 .88 .91 .90 .34 71 .52 2.88 .88 .87 Barley 1.47 Peach Potato 1.54 * 14 -- 1.36 1.30 2.58 2.15 Potato .97 2.38 1.93 19 .79 .29 1.44 .23 .39 2.57 1.22 1.35 Tonato * * Forage-Seed. Sugarcane Reinsurance Sunflower Sweet Corn Forage-Prod. Rye .38 2.27 .89 T * .77 1.13 1.90 זו. .25 3.85 .20 .64 .84 1.57 .19 .17 .84 2.25 2.69 .70 1.37 1.22 2.02 Grape .74 1.44 .98 Sugarcane .02 76 3.32 1.83 Almond Hybrid Seed .78 5.17 Puerto Rico Reinsurance Sunflower Forage-Seed. Sweet Corn Forage-Prod. Prev. Planting 9.45 Hybrid Seed 1/ The 1983 crop year ratios are based on estimates as of January 1984. |