Insuring Sunflower in Crop Year 2024
Thursday, February 1, 2024
filed under: Marketing/Risk Management
By John Sandbakken*
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 factors outside of your control. You are not alone; crop insurance is purchased by most agricultural producers, to protect themselves against either the loss of their crops due to natural disasters, or the loss of revenue due to declines in the prices of agricultural commodities.
So, with volatile markets and Mother Nature being unpredictable in recent years, would you ever think of going without crop insurance to help cover your risk? I don’t believe so.
Crop insurance for sunflower is available in more than 300 counties in Colorado, Kansas, Minnesota, Montana, Nebraska, North Dakota, Oklahoma, South Dakota, Texas and Wyoming. 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. A written agreement is a document designed to provide crop insurance for insurable crops when coverage or rates are unavailable in a particular county.
RMA maintains 10 regional offices in various locations across the country that you may contact for information specific to your area. The link you can use is: www.rma.usda.gov/RMALocal/Field-Offices/Regional-Offices
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 you are interested in following spring and fall price information for all crops covered by crop insurance, use this link: prodwebnlb.rma.usda.gov/apps/PriceDiscovery. Then click on ‘Your Price’ or ‘Many Prices.’ It will allow you to see how prices are tracking.
Important Additions in Recent Years
The National Sunflower Association requested, and RMA approved, quite a few additions to crop insurance for sunflower in recent years.
Producers now 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 gives producers coverage for discounts they might encounter at the processing plants.
In addition, Master Yields (MY) are available in Colorado, Kansas, Minnesota, Montana, Nebraska, South Dakota and Wyoming. Sunflower is grown in a longer rotation and has multiple types (i.e., oil vs. confection sunflower), which can lead to a very slow process to populate a grower’s actual production history (APH) data set.
MY gives producers the option of obtaining more-effective crop insurance protection for sunflower when they have four (4) or more years of records for sunflower within a county. MY is not available to North Dakota producers as they currently have the option of using Personal Transitional Yields to populate their APH data set.
Another significant change allows producers to have Enterprise Units by crop type for sunflower. Sunflower producers see the current RMA enterprise unit structure by crop and optional units by type for sunflower as valuable tools for their farming operations. However, over the past few years, the NSA received several calls and inquiries from producers asking about the possibility of having this additional option when purchasing crop insurance.
NSA forwarded this request to RMA, and it became available starting in the 2022 crop year. This additional option enables producers to be indemnified separately by sunflower type. The benefit for producers is that a gain on one type (e.g., confectionery type) does not offset the loss payment on another type (e.g., oil type). Having enterprise units by sunflower type strengthened coverage options and increased consistency, clarity and flexibility, making crop insurance a better risk management tool for sunflower producers.
The Enhanced Coverage Option (ECO) and Quality Loss Option (QL) were rolled out to a wide range of spring-planted crops, starting with the 2021 crop year.
ECO allows policyholders to purchase additional area-based coverage for a portion of the deductible for their underlying yield or revenue-based crop insurance policy. ECO must be purchased as an endorsement to the YP, RP and RPHPE policies.
ECO provides coverage in bands from 86% to a choice of either 90 or 95% of expected yield or revenue. ECO pays a loss on an area basis, and the indemnity triggers when the county-level yield or revenue drops below 90 or 95% of its expected level.
There is an additional premium associated with ECO coverage, and premium subsidies are offered to make the policy more affordable. Unlike the Supplemental Coverage Option, ECO coverage is unaffected by Agriculture Risk Coverage participation for the same crop, on the same acres. You may select ECO regardless of your farm program election.
An improved APH will allow you to increase your coverage. QL is an option you may elect to improve your APH for years in which you suffered a quality loss. When you elect the QL, you may choose to replace post-quality adjusted production to count with pre-quality adjusted production to count for crop years in your APH database. Starting in 2021, you could elect the QL for those crop years in your APH database that experienced decreased production to count (PTC) due to quality discounts. The PTC for these crop years can be replaced with pre-quality adjusted PTC if a Notice of Loss was filed in that crop year.
QL is available for YP, RP and RPHPE policies.
Final Planting Dates
NSA offers maps of final planting dates for Colorado, Kansas, Minnesota, Montana, Nebraska, North Dakota, Oklahoma, South Dakota, Texas and Wyoming. These maps can be found on NSA’s 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 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.
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 (SCO) will be available to sunflower producers in most counties in 2024. 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.
The following link shows an interactive map that allows you to see which counties have SCO for 2024:
Trend-Adjusted APH will give you some options when buying crop insurance in 2024. 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.
Here’s a link with an interactive map that allows you to see counties that have YE: https://public-rma.fpac.usda.gov/ apps/MapViewer/index.html.
When formulating your crop insurance plan for 2024, 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 visit your local crop insurance agent. He or she can describe the different insurance products available, along with the policy rates and terms. Your agent will help you choose the best coverage for your crop based on your farm operation and your risk management and budgetary needs.
* John Sandbakken is executive director of the National Sunflower Association.