Copyright Prairie Grains Magazine
February 2001

Grain Growers Urge Change in Crop Insurance Policies for Quality Losses

Quality payment plan, milling durum coverage option drafted

By Tracy Sayler

North Dakota grain leaders hope a visit with agriculture and regulatory officials during the election transition period on Capitol Hill will get the ball rolling on measures to provide better federal crop insurance coverage for quality losses in spring wheat, durum, and malting barley.

Lance Hagen, executive director of the North Dakota Grain Growers Association, along with leaders of the North Dakota Barley Council and the U.S. Durum Growers Association, traveled to Washington, D.C. before the new year. “We met with new Congressional staff members, outgoing administration officials, and federal staff that will carry over to the next administration, to make sure this quality issue stays on the front burner,” says Hagen.

Excessive moisture during the small grains harvest last year resulted in quality losses estimated between $200-$300 million, says Hagen, including lost markets and discounts for grain damaged by sprouting, discoloration, and DON, a byproduct of Fusarium head blight or scab that makes barley unsuitable for malting, and spring wheat and durum unsuitable for milling.

The problem is that these quality losses are not being covered adequately through crop insurance, administered by the Risk Management Agency (RMA) of the U.S. Department of Agriculture. “We’re trying to emphasize that the RMA’s quality procedures do not address the true reduction in value producers receive in the marketplace. They have not kept up with today’s quality demands that farmers are experiencing,” says Bisbee, N.D. producer Bruce Lewallen, president of the U.S. Durum Growers Association.

Lewallen says Reduction in Value (RIV) tables used by the RMA to determine the value of damaged crops for insurance purposes do not address grain discounts in the marketplace, especially when crop damage is severe and widespread.

Disaster legislation was approved by Congress last fall to help with the crop losses. Implementation rules have yet to be written, however, and payments to eligible producers aren’t expected until late winter, at the earliest. “We want to keep on top of the implementation of this program, to make sure it adequately addresses our 2000 crop quality losses. But disaster legislation is not the preferred vehicle to answer the long-term risk management needs of producers suffering from crop quality losses,” says Lewallen.

Legislation last year that reformed federal crop insurance didn’t fix the problem of quality losses, points out Hagen. “It will make buy-ups, or higher coverage levels, more affordable. But it did nothing to help the quality loss situation,” he says.

The USDGA has drafted two proposals to improve the shortcomings of current multi-peril crop insurance policies in addressing durum quality. One plan is a new quality payment formula for durum grading less than #2 milling, based on the published price and discount tables of a nearby grain terminal at the time a crop insurance claim is finalized. It is a proposal that might be used as a basis for improving quality adjustments in spring wheat as well, says Hagen, and as an impetus for improvements to malting barley adjustments.

An additional plan would establish a new price and quality endorsement for milling quality durum, which would offer coverage at a price per bushel greater than that offered under current small grain insurance provisions. The option would be available to producers with at least four consecutive crop years of durum production history.

Joining Lewallen and Hagen on their recent visit on Capitol Hill were Valley City producer Allan Skogen, president of the NDGGA; Berthold producer Mark Birdsall, past president of the USDGA; Osnabrock producer Charles Ottem, chairman of the North Dakota Barley Council; and John Mittleider, NDBC administrator.  The N.D. grain leaders discussed their crop insurance proposals with lawmakers and USDA officials including outgoing RMA Administrator Ken Ackerman, and Larry Mitchell, deputy administrator for farm programs in the USDA’s Farm Service Agency. “They seemed very receptive,” says Lewallen.

Lawmakers and staff members will be analyzing the proposals, and Lewallen says a visit on Capitol Hill will probably be necessary in March to keep the proposals on schedule. “We want to see these proposals in place for the 2002 crop year. We need to stay on this, because it’s very important to grain producers in North Dakota,” Lewallen says.