Crop Insurance

	American Sesame Growers Association
	Crop Insurance Our major effort over the last year and a half has been focused on initiating a Multiple Peril Crop Insurance pilot program for sesame. Julian Heron and Dave Juday, both of our Washington, DC law firm, Tuttle Taylor and Heron, and I have made numerous calls on USDA officials and congressional staffs. We were invited to present written testimony on why crop insurance for sesame is important at the hearings of the House Committee on Agriculture, Subcommittee on General Farm Commodities and Risk Management in Washington, DC on Wednesday, April 26, 2006. We were also invited to present written testimony for the Field Hearing of the House Committee on Agriculture, Review of Federal Farm Policy in San Angelo, Texas on Tuesday, May 9, 2006. Both of these testimonies follow. In August of last year our group visited USDA's Risk Management Agency (RMA) in Kansas City, MO and made a major presentation. However, RMA took no action on our request. In September we brought a group of ASGA Board members, producers and industrial members to Washington, DC. The group visited top USDA officials including Floyd Gaibler, Acting Under Secretary of Agriculture and Eldon Gould, Administrator of RMA plus several Texas and Oklahoma congressmen. Later in September Eldon Gould personally presented a request for a sesame insurance pilot program to the Board of Directors of the Federal Crop Insurance Corporation. They felt sesame acreage is too small and denied the request. Fortunately, after numerous visits to the congressional delegations from Texas and Oklahoma, ASGA is now well known by the appropriate congressional staffs. With their support, our message is being understood - that farmers, bankers and landlords require crop insurance and our acreage will not grow without it. At their invitation, our president, Steven Chapman, was invited to testify personally before the House Subcommittee on General Farm Commodities and Risk Management on May 17 on Capital Hill. Steven's testimony also follows. Board members Erick Richards, Steven Chapman, and Ray Langham at Steven's testimony before the Subcommittee on General Farm Commodities and Risk Management of the US House of Representatives on May 14, 2007. In July, working with congressional staffs, provisions were written in the House version of the 2007 Farm Bill requiring USDA to provide a pilot insurance program for sesame. These can be found in H.R. 2419, Section 11007, which was passed by the U.S. House of Representatives on Friday, July 27. Go to http://agriculture.house.gov/inside/Legislation/110/FB/TitleXI.pdf, then to Section 11007 on page 19, line 13. We are off to a good start but now need the Senate to include similar provisions in their version of the Farm Bill. Then we need to continue in the conference version that will be signed into law by the President. Within our first year as an association, we have been invited to testify before Congress at three different hearings. Our principle mission in these testimonies is to secure a crop insurance program for sesame. The text of the three testimonies follows: Testimony of Steven Chapman, President American Sesame Growers Association Before the Subcommittee on General Farm Commodities and Risk Management May 14, 2007 Thank you Mr. Chairman, and members of the Committee. My name is Steven Chapman. I am a fourth generation farmer from Lorenzo, Texas, and I grow cotton, sorghum, wheat, and peanuts. And I grow another crop that I am here today to talk to you about - sesame. I am the founding president of the newly formed American Sesame Growers' Association, headquartered in San Antonio. In addition to Texas, sesame is commercially grown in Oklahoma, Kansas, and Arizona. Our association's top priority and objective, and the sole reason I got off my tractor in the middle of planting season, got in a plane and flew 1,600 miles to be here today, is simple. We respectfully request a pilot program for Actual Production History Multiple Peril Crop Insurance for sesame. Sesame has huge potential to bring profitability to farm balance sheets across Texas, Oklahoma, and elsewhere - if, and only if, we are to obtain basic crop insurance. Mr. Chairman, the irony is sesame is a very low risk crop. Let me be clear, we don't need crop insurance because of sesame's inherent production risks. We need crop insurance because of the commercial practicalities of securing acres and financing. The bottom-line is this: landlords and lenders demand crop insurance. Since crop insurance is unavailable to sesame, land and loans are given only to other crops. The lack of crop insurance means that accountants and actuaries - not farmers - are deciding what to plant on Texas farms. The sesame acreage that is produced to date is self financed on owned land. Mr. Chairman, sesame production is an American success story that may never be told if we do not get crop insurance. And get it soon. Let me explain first the agronomics, second the economics, and third the policy solution for crop insurance. Sesame is a crop with huge potential - from Kansas to Oklahoma to Texas to California to Arizona. It is a low cost, low risk crop that allows farmers to make a profit without relying on program payments. It is drought tolerant requiring ¼ the water of corn, 1/3 the water of sorghum and ½ the water of cotton. In last summer's drought, we saw that it was often the only crop that survived in some areas. It is an excellent rotation crop for cotton, corn, wheat, soybeans and peanuts. This is our principal use for sesame. It conditions the soil and reduces cotton root rot and root knot nematodes, which improves our subsequent cotton crop. This is why we say, "Sesame is cotton's best friend." And, quite frankly, the issues with WTO are not going to get better for us as cotton farmers and we badly need alternatives. Sesame is an excellent one. The reason sesame offers this opportunity is because plant breeding by a Texas company, Sesaco, has yielded new varieties of sesame. These varieties can be mechanically harvested with a combine. (see the pictures) Because these are relatively new varieties we have only recently had a crop that needed to be insured. All the traditional sesame production is harvested by hand because the sesame capsule opens as it dries and drops the seed on the ground. As for the economics, … the current US production is about 2,500 tons grown on 10,000 acres. All US sesame is grown on contract. Sesame is used for bakery, confection, and is crushed for oil. Because it is toasted before it is crushed, it does not compete with other US produced vegetable oils. Almost all of the sesame consumed in the US is imported. Quite candidly, our domestic customers have food safety concerns given recent news. So do many other importers, like Japan. They both want a US supply. With crop insurance and a chance to expand, ASGA believes, through our conversations with commercial traders and processors around the world, the US could be a net exporter, with a 20 percent world market share within a decade. That equates to about 750,000 acres. Right now, we as ASGA farmer members believe we are in a race with Brazil to capture this market. Thus timing for a crop insurance policy is critical. So let me wrap up my testimony with our proposed policy solution, Mr. Chairman. We want a pilot program for actual production history multiple-peril crop insurance for the 2008 sesame crop year. We think the policy should be limited to mechanically harvestable sesame varieties that are already marketed under contract. That way there will be no coverage for revenue risks, only production risks. Because sesame is used in rotation it only replaces other insured crops and, therefore, will not add additional costs to RMA's programs. Sesame could actually lower RMA's liabilities in dollars per acre. Because sesame grows in the same areas, under the same conditions and with similar practices as sorghum, sesame fits well as an addition to the Coarse Grains Crop Provisions and a modification of the Sorghum Loss Adjustment Manual. The economic and agronomic merits of sesame earned us a spot on the agenda at a board meeting of the Federal Crop Insurance Corporation. Our request for a new policy was denied by the FCIC board, however, because they have a guideline of not granting new insurance policies for small acreage crops. That decision has put us in a vicious circle: RMA and FCIC say sesame cannot be insured because the acreage is "too small." But the acres are "too small" because sesame cannot be insured. We have done everything we can do administratively with FCIC and RMA. Clearly, however, the situation sesame growers - and potential sesame growers - find themselves in is an unintended consequence of the FCIC's acreage guidelines. Thus, it is a matter of policymaking and a proper role for Congress to remedy the problem, and to provide some equity to the crop insurance program. Indeed, sesame is considered a minor oilseed under the farm bill. And it is the only minor oil seed without a crop insurance policy. Sesame is a program crop. It is the only program crop without a crop insurance policy. As I said earlier Mr. Chairman, sesame is a great American success story that could never be told unless quick action is taken now to provide an actual production history multiple-peril crop insurance pilot program for the 2008 sesame crop year. Thank you very much for your interest, attention and consideration. Testimony of Steve Chapman Field Hearing of the House Committee on Agriculture Review of Federal Farm Policy C.J. Davidson Conference Center Angelo State University San Angelo, Texas Tuesday, May 9, 2006 My name is Steve Chapman. I am the founding president of the newly formed American Sesame Growers' Association. We're headquartered in San Antonio. I farm in Lorenzo, Texas, and grow sesame, cotton and peanuts. Our association's top priority and objective, that is vitally important to my farming operation, is a simple one: we respectfully request a pilot program for Actual Production History Multiple Peril Crop Insurance for sesame. Sesame is a program crop. It is the only minor oilseed without a crop insurance policy. It is also a crop that the Texas Cooperative Extension Service at Texas A&M University calculated to generate a positive return without federal payments. These calculations were conducted for Texas A&M's District 10 in the Southwestern part of the state, covering 21 counties. The major growing areas are South Texas, the Rolling Plains and High Plains of Texas and in Oklahoma, with a history of growing in southern Kansas and Arizona. Lenders and landlords in this area of the country typically demand crop insurance. Many farmers feel they need insurance. Nonetheless, some farmers have self-financed production on 10,000 acres of their own land. However, without crop insurance, we cannot really expand land to grow sesame. With Multiple Peril Crop Insurance available to growers, US grown sesame could be a much larger contributor to the farm economy - especially in this region of the US. With crop insurance, US farmers could take what is now a net import into the US and turn it into a net export crop and help diversify production agriculture in this region. Sesame is highly drought tolerant. It can be grown with one-quarter the water needed for corn, one-third the water for sorghum and one-half the water for cotton. Today, about 80 percent of the land in sesame production is not irrigated; only about 20 percent is irrigated. Sesame is also insect tolerant and deer resistant. Given the natural drought and pest tolerance, sesame's advantage is its lower costs of production compared to grain sorghum, wheat, corn or cotton. Principally, it is grown as a rotation crop. Sesame can extend water for peanuts and cotton. Moreover, when grown in rotation, it conditions the soil and thus reduces cotton root rot and root knot nematodes. Many farmers have reported yield increases in cotton, sorghum, peanuts, and corn and wheat grown after a sesame rotation. Personally, I believe that sesame is one of, if not the best rotational crop for our area. For example, in 2003, I planted sesame and grain sorghum as a catch crop to replace hailed out cotton. During the last two growing seasons that sesame rotation has been the highest yielding land on my farms. Around the world, sesame is harvested by hand. When mature, the sesame plants' pods open wide so the seeds can fall; thus the seeds would spill if harvested by a combine. In the scientific discipline of botany, this quality in plants - that is, the spontaneous opening at maturity of a plant structure to release its contents - is known as "dehiscence." Plant breeding by a Texas company, Sesaco Corporation, has developed a non-dehiscent sesame plant. Or, in other words, a sesame plant capable of being mechanically harvested with minimal loss. In fact, the current non-dehiscent variety grown in the US now is grown with standard row crop techniques and is handled with standard grain handling equipment. While the development of mechanically harvestable sesame presents a dramatic opportunity from a technological standpoint, from a practical, economic, standpoint, growth is still limited in by a lack of multi-peril crop insurance. There is an opportunity to replace $100 million of imported sesame into the US. Furthermore, globally, there is an opportunity to participate in an $850 million export market, as China is now moving from a major exporter to a significant importer of sesame, as it is many other commodities. In all, a twenty percent share of today's world market - which, with current technology is highly feasible - would equate to 700,000 acres of US sesame. This is new market growth in that it does not compete with other US produced oilseeds. The confectionary uses of sesame are different than the use of sunflower seeds, for example. Moreover, sesame oil is a highly specialized dark oil, made from toasted seeds and typically not refined. It is used in ethnic cooking and other specific applications not served by other US oilseeds. To recap, sesame is a low risk, relatively low cost of production, weather tolerant, pest tolerant, program crop that is the only minor oilseed not to have a multi-peril crop insurance policy. The lack of such a policy is hindering the expansion of US sesame production. Therefore, on behalf of my fellow sesame growers - and other farmers who would like to grow sesame - I respectfully urge the committee to direct the USDA's Risk Management Agency to establish a pilot program for Actual Production History Multiple Peril Crop Insurance for sesame. The insurance requested is for production risk only, and moreover, it is suggested that eligibility for sesame crop insurance be limited to only those farmers who grow non-dehiscent varieties of sesame under contract with one or more companies engaged in and experienced in commodity purchasing and marketing, who contract with the farmer, prior to planting, to purchase all of the farmer's sesame production at the time of harvest. Thank you. Should members of the committee, or staff, have any further questions, please do not hesitate to contact me. Testimony of Fritz Schwarz, Executive Director American Sesame Growers Association Subcommittee on General Farm Commodities and Risk Management Wednesday, 26 April, 2006 Chairman Moran, Ranking Member Etheridge, and Members of the Subcommittee, I thank you for this opportunity to submit testimony today. My name is Fritz Schwarz. I am Executive Director of the American Sesame Growers' Association. Sesame is grown on land with other crops, which have insurance policies available to them; this situation severely limits the potential for US grown sesame to expand because lenders and landlords require multi-peril crop insurance coverage. Sesame, however, is the only minor oil seed not covered by such a policy. Currently US growers self-finance about 2,500 metric tons of production on 10,000 acres of their own land. Our association's top priority is simple: we respectfully request a pilot program for Actual Production History Multiple Peril Crop Insurance for non-dehiscent varieties of sesame (sesamum indicum). The insurance requested is for production risk only. Sesame is a very compelling crop, and if allowed to meet its potential, it can and will benefit individual US producers who chose to grow it. Moreover, it will benefit other crops - like cotton - and the federal crop insurance program. Let me explain. Sesame is a program crop on which farmers can earn an adequate to good return without dependence on program payments. In 2005, as calculated by the Texas Cooperative Extension Service at Texas A&M University, sesame was the only one of five crops considered which could count on a positive return before federal payments. These calculations were conducted for Texas A&M's District 10 in the Southwestern part of the state, covering 21 counties. The major growing areas are South Texas, the Rolling Plains and High Plains of Texas and in Oklahoma, with a history of growing in southern Kansas and Arizona. Sesame is highly drought tolerant; it can be grown with one-quarter the water needed for corn, one-third the water for sorghum and one-half the water for cotton. Today, about 80 percent of the land in sesame production is not irrigated; about 20 percent is irrigated. Generally, sesame's advantage is its lower costs of production compared to grain sorghum, wheat, corn or cotton. Principally, it is grown as a rotation crop, and it is a very beneficial rotation crop, indeed. Sesame conditions the soil and reduces cotton root rot and root knot nematodes, thus benefiting cotton production - and lowering RMA's risk on cotton. Around the world, sesame is harvested by hand. When mature, sesame plants' pods open wide so the seeds can fall; thus the seeds would spill if harvested by a combine. In the scientific discipline of botany, this quality in plants - that is, the spontaneous opening at maturity of a plant structure to release its contents - is known as "dehiscence." Plant breeding by a US company, Sesaco Corporation, has developed a non-dehiscent sesame plant. Or in other words, a sesame plant capable of being mechanically harvested. In fact, the current non-dehiscent variety grown in the US now is grown with sstandard row crop techniques and is handled with standard grain handling equipment. While the development of mechanically harvestable sesame presents a dramatic opportunity from a technological standpoint, from a practical, economic, standpoint, growth is still limited in by a lack of multi-peril crop insurance. There is an opportunity to replace $100 million of imported sesame into the US. Furthermore, globally, there is an opportunity to participate in an $850 million, and growing, export market, as China is now moving from a major exporter to a significant importer of sesame, as it is many other commodities. In all, a twenty percent share of today's world market - which, with current technology is highly feasible - would equate to 700,000 acres of US sesame. And this is new market growth in that it does not compete with other US produced oilseeds. The confectionary uses of sesame are different than the use of sunflower seeds, for example. Moreover, sesame oil is highly specialized dark oil, made from toasted seeds and typically not refined. It is used in ethnic cooking and other specific applications not served by other US oilseeds. To recap, sesame is a low risk, relatively low cost of production, weather tolerant, program crop, that is the only minor oilseed not to have a multi-peril crop insurance policy. The lack of such a policy is hindering the expansion of US sesame production. Therefore, the American Sesame Growers Association respectfully requests a pilot program for Actual Production History Multiple Peril Crop Insurance for sesame. The insurance requested is for production risk only, and moreover, it is suggested that eligibility for sesame crop insurance be limited to only those farmers who grow non-dehiscent varieties of sesame under contract with one or more companies engaged in and experienced in commodity purchasing and marketing, who contract with the farmer, prior to planting, to purchase all of the farmer's sesame production at the time of harvest. Finally, ASGA requests that this program be available by November 2006 in anticipation of 2007 production. Thank you. Should members of this subcommittee have any further questions, please do not hesitate to contact me. Washington, D.C. Office 15820 Carroll Road Monkton, MD 21111 Tel: (410) 329-5077