Published: January 31, 2008 11:11 am            

Biotech seed purchase has added insurance, savings

Originally published in the January 25, 2008, print edition.

Buy biotech seed, pay less for crop insurance.

That scenario is now in place according to the U.S. Department of Agriculture’s Risk Management Agency and it potentially reduces a farmer’s crop insurance premiums up to 20 percent.

Under the pilot program known as the Biotech Yield Endorsement, non-irrigated corn growers in Minnesota, Iowa, Indiana and Illinois are eligible for the premium discount if they plant biotech hybrids that contain specific traits developed by Monsanto, said Brent Doane, RMA director of External Affairs.

“In essence what this policy does is provide the opportunity for a producer to receive a premium rate discount on non-irrigated corn using certain hybrid varieties, in this case the Monsanto triple-stack varieties,” Doane said.

He indicated that producers planting at least 75 percent of their field to a Monsanto triple-stack variety would qualify for a discount that could be up to 20 percent of their premium costs.

This new pilot crop insurance is truly revolutionary. The Federal Crop Insurance Corp.’s board of directors spent two years reviewing data and analyzing the values of this approach.

“The board had never dealt with something like this before but the positive impact of this technology to the environment plus lessening the risks involved with modern high-cost corn production seemed very favorable,” Doane said.

Obviously getting FCIC approval wasn’t easy. Tim Hennessy, Monsanto’s new business development manager, said the process was an exceptionally complex, multi-year process.

According to Hennessy, Monsanto’s seed corn end-users drove the move. “Many growers recognized that they’re buying crop insurance to reduce risk, and have often asked, ‘if I’m planting triple-stack seed, doesn’t that reduce risk and tie into crop insurance?’”

National Corn Growers Association CEO Rick Tolman hailed the USDA’s approval of BYE calling the crop insurance discount a third-party endorsement of the bottom-line value of biotechnology in crop protection.

At this stage the BYE is not a blanket endorsement of all biotech corn technology. Only producers using the Monsanto varieties with the YieldGard, YieldGard Plus and the Roundup Ready combination are included so far. More than 250 seed companies currently license and sell hybrids containing this qualifying trait package.

Though insurance providers were questioning if the RMA could fit this new program into its existing computer systems quickly enough to make BYE available for the 2008 growing season, a Jan. 3 informational memorandum from RMA Deputy Administrator Tim Witt indicated the program is now available for the 2008 crop year.

The pilot BYE premium rate reduction percentages vary by state, county and coverage level and may change from year to year. All approved insurance providers are authorized to offer the BYE premium rate reduction to qualifying policyholders. Approved insurance providers choosing to offer the pilot BYE for the 2008 crop year must notify all insured producers of the availability of the pilot BYE program no later than March 1.

“Virtually all my customers are already into the VT3 package so this doesn’t necessarily mean additional sales for me. But I think the economic logic is sound. Most farmers know that these traits collectively help ensure a better crop. That means fewer insurance claims are likely to be made by producers next fall. So a reduction in premium rates is logical simply because the crop insurance industry will be paying out less money for damaged crops,” said long-time Renville County DeKalb dealer Cal Marwede.

He also points out that buying this “protection” in the seed rather than applying insecticides to control rootworm is both environmentally sound and cost effective, plus it gives 100 percent control rather than the more likely 80 percent control from insecticides. “Also, most new corn planters don’t carry insecticide attachments anymore.”

Beth Schmidt, Farm Credit Services director of insurance in Redwood Falls, said, “this is a wonderful option for producers. Seed costs have gone up significantly in recent years but there hasn’t been a reduction in crop insurance premiums for some time. I think Monsanto is to be commended for moving forward on this effort.”

        

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