Pulse insurance pilot has successful first year, officials say
The first year of a pilot program offering price protection for pulse crops appears to have been a success for Pacific Northwest growers, industry and USDA officials say.
The USDA Risk Management recently announced harvest prices:
• 26 cents per pound for spring large Kabuli chickpeas.
• 22 cents per pound for spring small Kabuli chickpeas.
• 14 cents per pound for smooth green and yellow peas.
• 28 cents per pound for spring lentils.
Tim McGreevy, CEO of the USA Dry Pea and Lentil Council, said a revenue option has become critical for pulse farmers to plan their risk management. Pulse crops compete for spring acreage with wheat and barley, which also have revenue insurance options.
“The price volatility over the past five years has been pretty incredible,” McGreevy said. “Our grower has an opportunity to lock in some risk protection on downside revenue risk, instead of what we’ve had traditionally, which has been just a yield-based risk management tool.”
Dave Paul, director of the risk management agency office in Spokane Valley, Wash., reported record participation in the pilot program, with more than 310,000 acres insured in the Pacific Northwest, about half of the revenue coverage. That’s the highest amount in history under the dry pea program, which previously had only yield protection.
The council collects and submits data to determine the harvest price.
Paul encouraged farmers to look at their guarantee to see if they have a loss. Producers are insured based on their average yield multiplied by the projected price. Farmers then multiply their harvested production and harvest price. If the harvest number falls below the insurance guarantee, they collect an indemnity payment.
Some pulses trended downward through the year.
Paul said producers have about 60 days after the Dec. 16 harvest price announcement to submit a loss claim. He expects reports of poor yields across the region.
“Even if you had an average yield, there’s a potential of collecting a payment on some of these chickpeas, just because the price dropped so much,” Paul said.
In 2014, the amount of coverage a producer can buy will increase. In 2013, it was limited to 75 percent of their average yield. That number is increasing to 85 percent of average yield, comparable to wheat, barley and other crops, Paul said.
McGreevy said roughly 50 percent of overall acreage in the Pacific Northwest was in the program in its first year, and he expects participation levels to increase.
It’s too soon to tell whether acres will also increase as a result of the program, but McGreevy said dry peas, chickpeas and lentils are holding their own against grains.
Paul will make a formal evaluation and recommendation whether to continue the pilot program after three years. The risk management agency board is likely to make a final decision in four or five years, he said.
The agency will next announce projected prices in March 2014.