Midwest’s Sunflower Industry Happy With Crop Insurance Rule

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Officials in the sunflower industry who fought for years to gain better crop insurance say final rules for a simplified insurance plan might mark the end of the battle.

It should mean better security for farmers, and possibly a more stable supply of the crop that ends up in stores as cooking oil, snacks and bird seed.

“I think in a way it will” keep the crop more attractive, said Tom Young, who has grown sunflowers for nearly a quarter century in central South Dakota. “I think the insurance that is out there, producers are going to look at that as one factor during the winter months when they’re making their plans. They’re going to see this has some good profit potential.”

Farmers in South Dakota and North Dakota grow most of the nation’s sunflower crop.

Federal Risk Management Agency officials have been working since 2006 on what is commonly known as the “combo” insurance plan, which combines and simplifies five types of insurance available to farmers. It takes effect with the 2011 crop year.

RMA wanted to offer just traditional crop insurance for sunflowers, protecting against production problems, and eliminate revenue protection policies. Those policies cost farmers more but also provide coverage for price drops, which many producers desire.

Because there is no sunflower oil futures market, the revenue assurance policies for sunflowers were based on the Chicago Board of Trade soybean futures market, and the formula used was not working.

Both RMA and the Bismarck-based National Sunflower Association said the formula did not reflect what the sunflower crop was actually worth. The agency wanted to eliminate what it said was a dysfunctional program, but the sunflower industry persuaded it to change the formula instead, starting with the 2008 crop year.

Final rules for the combo policy that were published in the Federal Register in late March include sunflowers in the list of 10 crops eligible for revenue protection. John Sandbakken, international marketing director for the National Sunflower Association, said it should be the end of the need for persistent lobbying by the industry.

“From 2005 until now we’d been in limbo. We had no guarantee (revenue protection would continue) until it was published in the Federal Register,” he said. “We visited with (RMA) every single year. We’ve just constantly stayed in touch to make sure we were always on the front burner with them, make sure they saw what the interest was.”

RMA also says it shows how the government and farmers can work together.

“I don’t know if it’s unprecedented but it is remarkable,” said spokeswoman Shirley Pugh. “The agency and the association have worked well together and I think both sides recognize that.”

Tim Hoffmann, a division director for RMA, said there is no guarantee that sunflower insurance won’t be changed in the future if the need arises, but that “we would look first to work with (industry) if things are starting to go awry.”

Young and Sandbakken said the program is working fine and is proving popular. Federal Crop Insurance Corp. data show that the amount of sunflower acres insured under revenue protection policies increased from 12 percent in 2006 to 70 percent in 2008, the year the formula was changed.

“In the future we anticipate most producers will be buying revenue coverage or most of the acres will be covered,” Sandbakken said. “It makes a lot of people sleep better at night.”