Sentiment is mounting in Congress to reform federal crop insurance laws to better protect farmers against low prices and bad weather.

More than a half-dozen bills have been introduced since March, and at least two more are on the way. They all aim to encourage more farmers to buy crop insurance by increasing subsidies.

Farmers, bankers, and insurance agents are cautiously optimistic legislation will pass.

"I sense a lot of urgency in Congress to pass something this summer," said Michael Connealy, the president and chief executive officer of Rural Community Insurance Services, a subsidiary of Wells Fargo & Co. and the nation's second-largest crop insurer. But "they need to get cranking on it in order to have something in place" when the government's fiscal year 2001 budget takes effect.

Crop insurance reform has been a hot topic since last fall, when Congress approved a $6 billion emergency relief package to farmers hard hit by weather disasters and plummeting crop prices. By encouraging farmers to buy more insurance, lawmakers are hoping to avoid similar taxpayer-funded bailouts.

"Farmers need a forward-looking, more permanent solution to the weather and pricing crises they can't control," said Rep. Saxby Chambliss, a Georgia Republican who introduced the Crop Insurance Equalization Act last week.

Crop insurance has become more popular since the Freedom to Farm Bill was passed in 1996. That legislation will phase out government price supports by 2003. Faced with the prospect of losing direct payments, farmers insured 69% of their crops in 1998, compared to just 38% in 1994, according to Rain and Hail LLC, a West Des Moines, Iowa, crop insurer.

The chief knock against crop insurance is that it is too expensive. The government currently subsidizes 23% to 55% of the cost of an insurance premium, depending on the amount of coverage. Yet even with federal subsidies, the annual cost to insure just 65% of the crops on a 1,000-acre corn farm is nearly $3,000 and about $6,400 for 75% coverage, according to Rain and Hail.

To guard against income losses caused by low crop prices, a farmer can pay as much $11,000 a year for that same 1,000-acre corn farm.

"Adequate coverage is too costly for many farmers," said Rep. Sanford Bishop, D-Ga., and co-sponsor of Rep. Chambliss' bill.

Another criticism of crop insurance policy: The subsidy decreases as a farmer buys more coverage. For example, the government will pay 55% of the premium when a farmer chooses to insure 50% of a crop, but only 23% if the farmer wants 75% coverage.

"If you're going to subsidize, then it should be at the highest levels of coverage," said John Blanchfield, manager of the agricultural bankers division at the American Bankers Association.

The bills introduced to date propose changing the formula for calculating subsidies. The cost is expected to be $6 billion, an amount both the House and Senate have agreed to spend.

The banking industry in general supports the reforms because it is concerned about farmers' ability to repay loans. Just last week, the Federal Reserve Bank of Minneapolis issued a report in which it called the outlook for farm income in the third and fourth quarters "grim" unless prices rebound.

"Anything that allows farmers to minimize risks is something that banks are going to support," said Mark Scanlan, agricultural lobbyist with the Independent Community Bankers of America.

The high number of bills pending, however, has some bankers worrying that lawmakers will not be able to reach a consensus and fashion meaningful reform this year.

"I myself am rather confused," said James Caspary, president and chief executive officer at First National Bank of Clifton, Ill., and a member of the ICBA's agriculture committee. "We really don't know what direction this is going."

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