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Insuring Sunflower in 2020

Wednesday, January 29, 2020
filed under: Marketing/Risk Management

       Writing out that ‘big’ check for crop insurance seems tough sometimes. In the long run, you can expect to pay out more in premiums than you receive in payments. 

       So why buy crop insurance?  Well, having crop insurance probably allows you to sleep better at night knowing you have some protection from the factors outside of your control.  Producers in the Northern Plains states gained firsthand experience on the value of having crop insurance during the 2019 growing season as unprecedented moisture and cooler-than-normal temperatures trimmed yields and reduced return per acre. 

       You are not alone; more than 90% of U.S. farmers who grow principal crops are enrolled in federal crop insurance.  Coverage ranges from adverse weather to catastrophic weather events, from failure of irrigation water supply to fire, from insects and disease to damage from wildlife — and, of course, price fluctuation. 

       So, with volatile markets and Mother Nature being unpredictable, would you ever think of going without crop insurance to help cover your risk?  I don’t think so.

       Crop insurance for sunflower is available in more than 300 counties in the Dakotas, Minnesota, Texas, Oklahoma, Kansas, Nebraska, Montana, Wyoming and Colorado.  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. Click here for a link.  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 four crop insurance choices: Yield Protection (YP), Revenue Protection (RP), Revenue Protection with Harvest Price Exclusion (RPHPE) or Whole Farm Revenue Protection (WFRP).  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 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 2020?     
       The National Sunflower Association requested, and RMA approved, some additions to crop insurance for sunflower in 2020.  This year, producers will have coverage for loss due to Sclerotinia bodies and dark roast in varieties bred specifically for medium seed size for hulling, such as conoil varieties.  The market for these varieties continues to grow each year, and this will give producers coverage for discounts they might encounter at the processing plants. 

       Master Yields Available in Several States:  In addition, Master Yields (MY) will now be available in Colorado, Kansas, Minnesota, Montana, Nebraska, South Dakota and Wyoming.  Sunflower  is grown in a longer rotation and has multiple types (oil vs. confection sunflower), which can lead to a very slow process to populate a grower’s actual production history (APH) data set.  MY will give growers the option of obtaining more-effective crop insurance protection for sunflower when they have four or more years of records for sunflower within a county.  

       MY will not be available to North Dakota producers, as they currently have the option of using Personal Transitional Yields to populate their APH dataset. 
 
Federal Crop Insurance Changes from ’18 Farm Bill
       Nationally, changes coming out of the 2018 farm bill include the Multi-County Enterprise Unit under which growers can include acreage in an adjoining county as a “single enterprise unit.”  

       Other changes include: (1) yield cups that provide producers with an election to limit the decrease in APH to not more than 10% of the prior crop year’s APH; (2) new rules impacting crop insurance benefits when native sod is tilled in the states of Minnesota, Nebraska, North Dakota and South Dakota; and (3) Veteran Farmer and Rancher benefits for federal crop insurance for those who have recently started a farming operation.  

       The specific county changes can be found on the RMA Information Browser here
 
Final Planting Dates
       NSA offers state maps of final planting dates for the Dakotas, Minnesota, Texas, Oklahoma, Kansas, Nebraska, Montana, Wyoming and Colorado.  These maps are on the NSA website; click here and then go to the “growers” link, then “Crop Insurance Planting Maps.” 

       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.  
       
Supplemental CoverageOption
       The Supplemental Coverage Option (SCO) will be available to sunflower producers in most counties in 2020.  SCO is an area-based policy endorsement that can be purchased to supplement an underlying crop insurance policy.  It covers a portion of losses 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. 
       Click here for an interactive map showing which counties have SCO for 2020.
 
Trend-Adjusted APH
       Trend-Adjusted APH will give you some options when buying crop insurance in 2020.  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. 

       Click here to view which counties have YE.
 
       When formulating your crop insurance plan for 2020, you’ll have to crunch the numbers to see what the best risk management plan for your operation is, 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, along with the policy rates and terms.  Your agent also 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.                    
 
 
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