Article Archives
Insuring Sunflower: What’s New in 2018
Monday, February 5, 2018
filed under: Marketing/Risk Management
Would you ever think of going without crop insurance to help cover your risk? I don’t think so, because one bad year could have devastating financial consequences. Producers in the Northern Plains states gained firsthand experience on the value of having crop insurance this past growing season as drought conditions trimmed yields and reduced return per acre. Having crop insurance is something you absolutely must look at to have some protection from the factors outside of your control like Mother Nature or the loss of revenue due to declines in the prices of agricultural commodities.
Crop insurance for sunflower is available in 308 counties in the Dakotas, Minnesota, Texas, Oklahoma, Kansas, Nebraska, Montana, Wyoming and Colorado. Coverage for sunflower was expanded into Dawes and Cherry counties in Nebraska for the 2018 crop year.
If crop insurance for sunflower is not available in your county, have your crop insurance agent check into obtaining a written agreement at the USDA Risk Management Agency (RMA) regional Office that covers your state. RMA has 10 regional offices in various locations across the country that you may contact for information specific to your area by clicking here. A written agreement is a document designed to provide crop insurance for insurable crops when coverage or rates are unavailable in a particular county.
When insuring sunflower, you have three crop insurance choices: Yield Protection, Revenue Protection or Revenue Protection with Harvest Price Exclusion. The “Basic Provisions” are the same for all crops and all policies, making paperwork much simpler to digest. Revenue and yield policies have the same (minimum) starting price, and are based on December soy oil prices traded on the Chicago Board of Trade during February and October.
If you are interested in following spring and fall price information for all crops covered by crop insurance, click here. Then click on ‘Your Price’ or ‘Many Prices.’ It will allow you to see how prices are tracking.
What’s New for 2018?
At the national level, there are several changes that will impact sunflower producers for the 2018 year.
Changes were made to the Common Crop Insurance Policy Basic Provisions for the 2018 year. This will impact all crops insured under this policy, including, but not limited to, sunflower. The update can be found here.
RMA has removed the Prevented Planting +10% Option (PT) for the 2018 and succeeding crop years for all crops. Previously, there has been an option for policyholders of some crops to increase prevented planting coverage by 5 or 10%. While RMA has removed the +10% option, the +5% option is still available.
The move comes after USDA changed prevented planting coverage factors for some crops last spring, which included lowering the coverage factor for corn from 60% to 55%. Recently, USDA announced some other coverage factor changes, such as lowering the canola factor from 60% to 55%. Sunflower did not have a change in coverage and will remain at the 60% level. Additional information may be found here.
A Yield Cup (YC) option has been added and must be elected by the sales closing date. This is effective for 2018 and succeeding crop years for all crops. The YC will no longer be automatically applied to Actual Production History (APH) yields. A cup mitigates the effect of a catastrophic year on an approved APH yield by preventing it from decreasing by more than 10% compared to the prior year’s approved APH yield and is only available for carryover insureds. Cups are only available for additional coverage policies, and it is a continuous election that remains in effect unless cancelled.
Yield cups are now authorized to apply independently or with other yield adjustment measures, such as yield substitution, yield exclusion and trend adjusted yields; therefore, the premium rating methodology has also been amended. Since yield cups become an option and the associated rate may increase, the option must be elected by the insured. You should consult with your crop insurance agent prior to the sales closing date to decide if you want the yield cup option.
Other Notable Changes for 2018
In an effort to provide more flexibility, the June 1 certification deadline for conservation compliance has been dropped. The RMA deadline will now coincide with the premium billing date. Policyholders will also be able to select different unit structures for either irrigated or non-irrigated practices.
There were some changes made to the Enterprise Units (EU) section of the Basic Provisions that will allow a producer to select an enterprise unit for a single practice and choose the most appropriate unit structure on the other practice, be it a separate enterprise unit or optional or basic units. Prior to this change, a producer who chose EU by practice was required to have an EU for both irrigated and non-irrigated practices.
The Basic Provisions has an amendment for 2018 addressing replant and double cropping. It outlines what should be considered when deciding if the crop can be replanted as well as when the crop can be replanted. For more information, click here.
Other things you should consider when sitting down with your local crop insurance agent when making decisions on how to insure this year’s crop:
Supplemental Coverage Option (SCO)
The Supplemental Coverage Option, or SCO, will be available to sunflower producers in most counties in 2018. SCO is an area-based policy endorsement that can be purchased to supplement an underlying crop insurance policy. It covers a portion of losses that are not covered by the underlying policy.
SCO will be available on a county-wide level or on the basis of a larger area in counties that lack sufficient data. SCO indemnities will be triggered if losses in the area exceed 14% of expected levels, with SCO coverage not to exceed the difference between 86% and the coverage level selected by the producer for the underlying policy.
This link shows an interactive map that allows you to see those counties with SCO for 2018.
Trend-Adjusted APH
Trend-Adjusted APH will give you some options when buying crop insurance in 2018. If the same percent guarantee is chosen, the dollar value of coverage will be increased and the premium you pay will be slightly higher. As an alternative, you can elect a lower percent guarantee for approximately the same dollars of coverage. The total premium would be the same as before, but your share of the premium would be smaller because the percent subsidy from the USDA is higher for lower percent guarantee levels.
The Trend-Adjusted APH is available for either yield protection or revenue protection policies, at all levels of guarantee except catastrophic (CAT) coverage (50% yield guarantee). The Trend-Adjusted APH election must be made by the insured producer by the sales closing date each year, which is March 15 for sunflower in the eligible counties.
Actual Production History Yield Exclusion (YE)
Under this program, yields can be excluded from your APH when the county average yield for that crop year is at least 50% below the 10 previous consecutive crop years’ average yield. The YE allows eligible producers who have been hit with severe weather, including drought, to receive a higher approved yield on their insurance policies through the federal crop insurance program.
This link shows an interactive map that allows you to see which counties have YE.
Changes Ahead for 2019?
RMA will be reviewing county rates and t-yields in 2018 for the 2019 crop year. In addition to the rate and t-yield review, RMA will conduct a review of the sunflower planting dates, including the Earliest Planting Dates, Final Planting Dates and Late Planting Period. Any changes being made because of this review will go into effect for the 2019 crop year.
If producers would like to provide any input or feedback on how the program is working for them, the comment gathering ends March 31, 2018. Send your comments to the Regional RMA Field Office representing your state:
NSA Final Planting Date Maps
The National Sunflower Association offers maps of final planting dates for the Dakotas, Minnesota, Texas, Oklahoma, Kansas, Nebraska, Montana, Wyoming and Colorado. Click here to see the maps on the NSA website.
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 this 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.
When formulating your crop insurance plan for 2018, you’ll have to crunch the numbers to see what the best risk management plan is for your operation, given current prices. The best advice is to sit down with your local crop insurance agent. Your agent can describe the different insurance products available and the policy rates and terms. Your agent will help you choose the best coverage for your crop based on your particular farm operation and your risk management and budgetary needs.
* John Sandbakken is executive director of the National Sunflower Association.