Sunflower Insurance Program Subject of Dispute in N.D.

Some North Dakota sunflower farmers are growing frustrated at the federal government about an insurance program that both sides agree needs changing.

The Agriculture Department’s Risk Management Agency says it is proposing a change in the interest of simplifying the overall sunflower crop insurance program, and is welcoming public comments.

But farmers – who largely favor a fix and not a phase-out – say they’ve met resistance from government officials and fear the program could be scraped.

“We’ve even offered a couple of suggestions on ways they could look at it,” said John Sandbakken, international marketing director for the National Sunflower Association. “But it’s just an issue that hasn’t moved. I’m at a loss as to why.”

Brent Doane and Shirley Pugh, spokespeople for the RMA, said the agency is limited in what it can say because the proposed rule is in a public comment period that ends Sept. 12.

“We’re seeking comments from the public, and those comments could include ways to preserve the revenue assurance protection for sunflowers,” Doane said.

The revenue assurance coverage differs from traditional crop insurance in that it protects farmers from low prices, low yields or a combination of the two.

But the formula used to calculate a base price that farmers are guaranteed for their sunflower crops is not working, said Wimbledon, N.D., farmer Mike Clemens, who testified on the matter before Congress last spring.

“It’s all about risk in farming, and we want to take as much risk out as possible,” he said.

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

“We’ve been working with RMA going on three years now in trying to get them to look at how they’re setting their pricing mechanism,” he said. “We need to come up with a new formula.”

Revenue assurance for sunflowers has been available in North Dakota since 2000. Starting with the 2004 crop, RMA expanded it to South Dakota, Kansas, Colorado, Minnesota and Montana. The National Sunflower Association had pushed for the expansion, believing it would make sunflowers more competitive with other crops.

Under an RMA proposal to combine different types of crop policies to simplify the insurance system, sunflowers would no longer be eligible for revenue-based coverage.

“Removal of this crop from eligibility is appropriate because the mechanism for price discovery does not adequately reflect either market value or changes in the market valuation during the period between planting and harvest,” the proposed rule says.

Sandbakken and Clemens said they agree – but they say changing the formula would fix the problem.

In the past three years, only 12 percent of crop insurance policies sold for sunflowers nationwide have been revenue assurance policies, according to RMA data.

“Without it being fixed, you can’t use it,” Sandbakken said.