Insuring Sunflower: What’s New in ’11?
Tuesday, January 4, 2011
filed under: Marketing/Risk Management
By John Sandbakken
The National Sunflower Association and the South Dakota Oilseed Council funded a three-year study with South Dakota State University to look at pushing back the final planting dates for crop insurance purposes by five days in South Dakota. In previous years, the final planting dates were June 10 in northern and western counties and June 15 for the rest of the state.
Many growers have found that mid-June planting in central South Dakota gives them the best yield results. The South Dakota planting date study concluded that final planting dates could be moved five to 10 days later in each zone without significantly impacting crop yields.
“We were hoping that the requested change in Risk Management Agency (RMA) planting dates could mirror what was going on in the field, and the study proved it” says Tom Young, NSA president and a farmer from Onida, S.D. With the successful research results in hand, the NSA submitted a request to push back final planting dates to the RMA last spring, and it was approved for the 2011 crop year.
Maps of final planting dates for the Dakotas, Minnesota, Texas, Oklahoma, Kansas, Nebraska, Montana, Wyoming and Colorado can be found on the NSA website — www.sunflowernsa.com. Go to the “Growers” link, then “Crop Insurance.” The final planting date as listed on these maps is the last day that you can plant the crop and still get full coverage. After that date, the coverage is reduced by 1% per day. The actual final date that RMA allows the crop to be planted with reduced coverage is anywhere from 20 to 25 days after the date listed on the NSA maps, depending on the county.
Simpler Crop Insurance Choices for 2011
For this upcoming crop year, your crop insurance choices for sunflower are simpler. RMA kept and combined the principle features of the five insurance plans that producers bought most often into one “Combo” policy. As a sunflower producer you have three crop insurance choices: (1) Yield Protection, (2) Revenue Protection or (3) Revenue Protection with Harvest Price Exclusion.
A few years ago, RMA announced that sunflower would not be part of the “Combo” policy and that Revenue Assurance (RA) for sunflower would be eliminated as an option. North Dakota grower and current NSA board chairman Don Schommer says the board made keeping revenue coverage for sunflower a top priority. “The board and staff spent a lot of time on this issue, and we were very pleased to learn that sunflower revenue coverage would be continued. Given the wild market swings of past years, having revenue coverage insurance for my sunflower allows me to sleep at night” Schommer says.
With the Combo, RMA developed a single rating and pricing component so all insurance coverage is consistent in insurance protection and cost to producers — thus eliminating the differences between policies that were often seen in the past. Coverage levels will be 50% through 85%, in 5% increments. Coverage levels of 80-85% will be available only in counties where yield protection policy allows that level of coverage.
Both the yield and revenue contracts will be available in all counties that previously had Revenue Assurance or Actual Production History (APH). The new basic provisions of crop insurance are the same for both confections and oils in all policies.
In the past, RA and APH had different price elections. With the advent of the Combo, the revenue and yield policies will have the same starting base price announced in early March. The projected price (spring price) is based on the average December futures soybean oil price traded at the Chicago Board of Trade, divided by two and adding one, during the month of February. The fall harvest price uses the same contract and formula during the month of October. So if, for example, the CBoT October contract in February averages $52.00, that would put the RA price guarantee for sunflower at $27.00.
The new Yield Protection policy replaces the Multi-Peril (MPCI) Catastrophic Coverage (CAT) or Actual Production History (APH) coverage. As in the past, the price per hundredweight is set early in the year, and there is no adjustment for market price movement.
RMA combined or converted the former CRC, RA, Income Protection and Indexed Income Protection into one revenue policy. Like the former RA-with-harvest-price option, the new Revenue Protection will lock in minimum coverage in early March and then calculate a fall price in October, and the higher of the two will apply. Unlike past policies, farmers get the fall option automatically. If you don’t want the fall price option, you will have to specify that you want the Revenue Protection with Harvest Price Exclusion.
Based on what you purchased last year, your policy will automatically convert for 2011. If you wish to make a change in policies and/or coverage, you will need to contact your crop insurance agent/company.
Confections Have Added Coverage
As in the past, confection sunflower will continue to receive an upward price adjustment in relation to oil sunflower to compensate for higher confection values. RMA will calculate an upward adjustment based on the (oil type) price as determined above, plus an adjustment as determined by RMA based on the difference between the USDA estimate available in January for the next harvest year of confection and oil-type season average prices. For example if the estimated season average price for confections was $29.50/cwt and season average prices for oil types was $25.00/cwt, the adjustment for confections would be $4.50/cwt. If the announced base price for oils was $26.00, then the actual base price for confections would be $30.50.
Insurance coverage for Sclerotinia and dark roast is again available for confection sunflower. Better Sclerotinia and dark roast coverage was granted by the RMA several years ago, at the urging of the NSA. Don Schommer is very complimentary of RMA officials. “They really worked with us. It was clear that insurance coverage was needed for these quality factors in confections in some production years. They (RMA officials) listened to us and made the change.”
Sclerotinia levels at 1.1% or higher in confection sunflower are eligible for quality adjustment. Quality adjustment for dark roast begins at 1.0% for confection sunflower seeds that go into human consumption as kernels or in-shell. Dark roast usually occurs in relationship to Sclerotinia head rot. The harvested seeds look fine until the kernels are roasted in hot oil. It is at that point that the kernels turn dark and have a bitter taste. Processors test each load for dark roast and have a very small allowance for sunflower seed that turns dark when roasted.
Revised T-Yields & Stricter Enforcement of Prevent Plant Provisions
Transitional Yields (T-Yields) were recalculated and in most cases revised in all counties in North and South Dakota, Minnesota, Montana and Wyoming for the 2011 crop year. An evaluation of T-Yields in Colorado, Kansas and Nebraska was completed in 2009. NSA is hoping to have T-yields reviewed in Texas and Oklahoma in 2011. At regional meetings, RMA has indicated that there will be stricter enforcement of preventive planting rules than there was in the past. Some producers that filed for prevent plant acres had their claims denied in 2010 because they did not meet the prevent plant criteria.
When formulating your crop insurance plan for 2011 with these “new” options, the best advice is to sit down with your local crop insurance agent so that you can put together the best risk management plan for your operation. Your crop insurance agent can help you manage your business risks through effective, market-based risk management solutions offered by RMA.
John Sandbakken is marketing director for the National Sunflower Association.