1122 GENERAL FARM PROGRAM 



Crop-yield insurance jirotects tlie farmer against failure to jirodvice a certain 

 percentage of his normal yield per acre or, in the present program, failure to 

 recover the average investment in his crop. Preliminary figures indicate that, 

 for grains, about 65 percent of normal yield would equal the average crop in- 

 vestment. Premiums, as well as benefit payments, are calculated at 90 percent 

 of the April 15 jmrity price for the commodity. 



4. A farm-income-insurance policy migth be implemented as follows, by 

 Federal Statute: 



(a) DEFINITIONS 



"Normal crop marketing" is the number of units of any commodity determined 

 and announced by the Secretary of Agriculture each crop year in advance of 

 planting or breeding, to be the goal for that year's marketing. 



"Normal share" of each producer is the numV^er of marketable units of each 

 commodity ascertained by the Secretary of Agriculture to be that producer's 

 .share in the aggregate of the "normal crop marketing" of that commodity, or 

 those commodities. 



"Insurance price range" is the range expressed in percentages of parity price 

 or other standard adopted by the Congress, which is established by statute for 

 each included commodity; this range to endure until such time as revision of the 

 statute occurs. 



"Absolute insurance price" is the price determined and announced by the 

 Secretary of Agriculture^ for each crop year in advance of planting or breeding, 

 this to fall within the statutory "insurance i)rice range" of each included com- 

 modit.v and, like parity j^rice itself, to be expressed as an average national farm 

 price, with similar adjustments for locations and qualities. 



"National average farm selling price" is the annual average farm selling price 

 as calculated after each crop year by the Secretary of Agriculture for each in- 

 cluded commodity for that crop year (perhaps on principles specified by statute) 

 and adjusted, like parity price itself, for location and quality. 



(6) The operation of the income-insurance plan is, briefly, as follows: 



The amount of the insured income of a policyholder for a certain commodity 

 for any croi) year is the producer's "normal share" multiplied by the "absolute 

 insurance price" announced for that crop year. 



(The result of using "normal share" rather than the policyholder's actual 

 marketings, is that the insured income amount for any crop year becomes a 

 constant; the producer is not doubly rewarded for a big crop or doubly penalized 

 for a small one. The present support-price policy has this unfair result, in that 

 it disregards the quantities sold at the supported price.) 



From the above-determined amount of insured income for a commodity, and in 

 order to establish the insurance payment due, if any, the potential actual crop 

 income of the producer shall be deducted as follows: 



(1) Any payments accruing to or received by the policyholder for crop-yield, 

 insurance for that commodity, and 



(2) The amount of income that would be received if the policyholder's actual 

 marketable production of the commodity (evidenced by bills of sale or otherwise 

 as required by the Corporation), were to be sold at the "national average farm 

 selling price." 



(Using the actual marketable production figure prevents the policyholder from 

 collecting insurance benefits because of low prices alone. Frequently, a large 

 crop at a low price will yield greater total income than a small crop at higher 

 prices. The "actual marketable production" determination, wdiich can be ac- 

 complished under procedure required in any case for verifying crop-yield insurance 

 data, makes possible the shifting of production and marketing plans by a producer 

 during a crop-year — such as selling less corn and feeding more hogs, or carrying 

 over part or all of a crop from one year to another — without invalidating or 

 postponing j^ayment of claims under the policy. Fvirthermore, the plan uses 

 the "national average farm selling price" in determining the deduction for potential 

 actual income, rather than the producer's actual sales price, because it is de- 

 liberately intended to leave the producer always with the incentive to produce 

 efficiently and to market his crops to best advantage. He must not be left free 

 to give his products awaj' (thus demoralizing markets), or to produce inferior 

 qualities, and i"ely upon Government to pay him the difference.) 



(c) In order to provide farmers currently with income from insurance payments 

 in years when actual market price at the farm is definitely known to be running 

 below the announced absolute insurance price, the Secretary of Agriculture 

 should be empowered by statute (1) to proclaim the existence of an "insurance 

 year" for any insured commodity; (2) to estimate prior to the seventh month 



