UNITED STATES DEPARTMENT OF AGRICULTURE
OFFICE OF INSPECTOR GENERAL
STATEMENT OF THE HONORABLE PHYLLIS K. FONG
INSPECTOR GENERAL
Before the
COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM
U.S. HOUSE OF REPRESENTATIVES
May 3, 2007
Good morning, Chairman Waxman, Ranking Member Davis, and Members of the
Committee. Thank you for inviting me to testify before you today to discuss the Office
of Inspector General’s (OIG) views on the Federal Crop Insurance Program. The crop
insurance program represents a significant investment by the Department of Agriculture
(USDA) and Congress in the Federal safety net for America’s producers. OIG has
conducted substantial audit and investigative work on the crop insurance program and its
participants. As requested by the Committee, I will address issues of waste, fraud, and
abuse in the crop insurance program. My testimony will also review some of our most
significant findings and recommendations on the program’s current costs, regulatory
requirements, and areas of continuing concern.
I. Introduction
Congress established the Federal crop insurance program in the 1930s as a safety net for
American agricultural producers as they strove to recover from the Great Depression and
the Dust Bowl. Over the years the program has gone through significant changes. The
1996 Farm Bill1 created the Risk Management Agency (RMA) to provide supervision to
the Federal Crop Insurance Corporation (FCIC) and have oversight of its insurance
programs. FCIC is a wholly-owned Government corporation that publishes insurance
regulations and manages the Federal crop insurance fund.
RMA administers the Federal crop insurance program through a joint effort with
approved insurance providers (AIP) under the Standard Reinsurance Agreement (SRA), a
cooperative financial assistance agreement allowing AIPs to sell and service Federal crop
insurance program policies. Under the SRA, FCIC reinsures or subsidizes a portion