Insuring Sunflower in 2002
Saturday, February 2, 2002
filed under: Marketing/Risk Management
Insuring Sunflower in 2002
Higher confection price election, adjusted T-Yield in place
The USDA Risk Management Agency has set the price election for confection sunflower at $13.60 for the 2002 growing season, a $.90 increase from last year's level of $12.70. The price election for oil sunflower remains at $9.30.
Further, the trend or “T-yield” used for sunflower has also been updated. The RMA uses the T-yield—the average county yield, established by the National Agricultural Statistics Service—as a check figure against farmers' reported yields, and to help determine a production guarantee for land that doesn’t have sunflower production history.
The T-yield is also significant in that it allows producers to substitute a yield equal to 60% of the T-yield for actual yields that fall below that mark in a crop year. This option, which must be made in writing before the sales closing date, helps producers maintain an adjusted APH.
T-yields for sunflower in most cases have increased from last year's levels, generally by about 10-20%, according to Eric Bashore, risk management specialist with the RMA Regional Service Office in Billings, Mont. The T-yield affects the rating of an insured, and can mean lower or higher premiums, depending on the insured’s production and loss history.
Quality coverage for Sclerotinia is again available for confection sunflower. Confection sunflower with Sclerotinia levels at 1.1% or higher will be eligible for quality adjustment. Better Sclerotinia coverage was granted by the RMA beginning with the 2001 crop, at the urging of the National Sunflower Association. Beginning with the 2001 crop, the RMA also enhanced the policy’s quality coverage in other areas, including low test weight, kernel damage and odors, all of which provide better coverage for both confection and oil-type sunflower.
The NSA is working on insurance policy changes for future sunflower crops. The NSA’s John Sandbakken says that insurance coverage for the quality factor known as “dark roast” is being sought for confection sunflower. The RMA is in the process of researching this quality factor and is assessing data provided by the NSA and its confection processor members. Results of the study were supposed to be completed last September, says Sandbakken, but have been delayed.
Sandbakken says the NSA also is urging the RMA to extend planting dates for multi-peril coverage in South Dakota and Colorado. South Dakota’s final planting date is June 10 for sunflower, the same as southern N.D. “We argue that the planting date in South Dakota could easily be June 20, without any increase in indemnity risk.” Further, Colorado has three different final planting dates—June 15, 20, and 25—while the final planting date for the entire state of Kansas is June 25. “There is not a lot of difference there in the growing season on the Colorado side of the border compared to Kansas,” says Sandbakken. “We think it’s reasonable to give Colorado producers more of an opportunity to plant sunflower later without penalty.”
The NSA is also working on getting Revenue Assurance coverage expanded to other sunflower-producing states besides North Dakota. Revenue Assurance provides dollar-denominated coverage by the producer selecting a dollar amount of target revenue from a range defined by 65-85% of expected revenue. Unlike APH policy, RA coverage offers additional protection for price fluctuations during the crop year.
Since the 2001 growing season, producers have been able to receive better value in their crop insurance coverage, particularly at higher buy-up levels, thanks to increased federal subsidies for the federal crop insurance program through the Agricultural Risk Protection Act of 2000.
According to RMA Billings, only 2,000 acres of sunflower were insured by Revenue Assurance in N.D. in 2001. Of the 1.364 million acres of sunflower in N.D. insured by standard APH policies last year, 9% was insured with catastrophic coverage (CAT-50% of APH yield and 55% of the additional price). 8% was insured by 50% production buy-up coverage; 1% 55% buy-up; 3%, 60% buy-up; 35%, 65% buy-up; 26%, 70% buy-up; and 18%, 75% buy-up.
In South Dakota, 700,000 acres of sunflower were insured in 2001. Of that acreage, 12% was CAT (50/55); 9%, 50% production buy-up; 1%, 55% buy-up; 6%, 60% buy-up; 45%, 65% buy-up; 19%, 70% buy-up; and 8%, 75% buy-up.
The sales closing/cancellation date for crop insurance coverage is March 15.—Tracy Sayler
APH LOSS EXAMPLE
(Based on Actual Production History (APH) yield of 1400 lbs/ac, 65% coverage level, 100% additional price, and one basic unit.)
1400 pounds per acre APH yield
x .65 coverage level
910 pounds guarantee*
- 210 pounds per acre actually produced
700 pounds per acre loss
x $ 0.093 price election
$65.10 gross indemnity*
- $ 9.00 estimated premium per acre (varies by county)
$56.10 net indemnity*
*Figures shown on a per acre basis; yield guarantees and losses are paid on a unit basis. See policy
provisions. Source: RMA