Sunflower growers say change in crop insurance formula was needed

Font Size:
Default font size
Larger font size

FARGO - Sunflower growers say the oilseed they grow is no longer at a competitive disadvantage to corn and soybeans, thanks to changes in a federal crop insurance program.

The Agriculture Department's Risk Management Agency is changing the formula for its revenue assurance program, which provides producers with protection for crop failures or price drops. The new plan goes into effect next year.

"It's a change that's long overdue," said Tom Young, a farmer from Onida, S.D. "With input costs going up like they have, the idea you can have the backing and the assurance that you're going to be able to protect yourself is huge."

The policies have been available for sunflowers since 2000 in North Dakota - the top sunflower-producing state - and since 2004 in South Dakota, Kansas, Colorado, Minnesota and Montana.

The Risk Management Agency in 2006 had proposed doing away with revenue assurance coverage for sunflowers starting in 2009, as part of an effort to simplify the overall crop insurance program. The government said data showed that only 12 percent of crop insurance policies sold nationwide for sunflowers since 2004 had been revenue assurance.

Farmers said that was because the formula was flawed, and they asked the government to fix it rather than do away with the program.

"The reason they weren't using it," said Mike Clemens, a Wimbledon farmer, "is that it wasn't any good."

Because there is no sunflower oil futures market, the revenue assurance polices are based on the Chicago Board of Trade soybean oil futures market. Sunflower growers said the formula used for determining the guaranteed base price for the crop did not reflect market value.

"It would be like driving a Cadillac but insuring it as a Chevy Impala," Clemens said.

The 2007 revenue assurance price - or the base price guaranteed farmers - was $14.80 per hundredweight in the spring and $18.40 for the fall harvest. Had the new formula been in place, it would have been $17.05 per hundredweight in the spring and $21.40 in the fall.

"Farmers were saying, 'Hey, I had planned on planting sunflowers, but the revenue assurance for one of these competitive crops is so good, I can't afford to take the risk,'" said Larry Kleingartner, executive director of the National Sunflower Association.

"Our prices were not in the ballpark with soybeans and corn," he said. "This change really levels the playing field with the other major commodities."

The formula had been based on a sunflower variety that is no longer produced, Kleingartner said. Most oil sunflowers planted now are NuSun, a variety that has created new markets because it produces oil with less saturated fat and no trans fat.

"The change in crop insurance was needed to keep up with the changes the industry has gone through," Young said. "There's a huge demand for sunflowers now."

Print Email

/news/state-and-regional
 
Sponsored by:

Connect with Us