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Risk Management Education Release

IT'S A FAMILY BUSINESS FOR SUN-KISSED CITRUS

Chris Stambach, who became a citrus grower about the same time he started working for Sunkist in 1991, will find the new Actual Production History (APH) floor a boon for low production years.

Sep 20, 2000 - After years in agricultural lending and insurance, Chris Stambach found the allure of citrus irresistible. Though he still works with the business end of agriculture as Managing Director of Sunkist Real Estate and Grower Relations Representative, he talked his wife Jeanette and parents, Bud and Gerry Stambach, into partnering with him on a 10-acre California ranch in Tulare County. Besides liking to farm, he believes that this common experience with 6500 Sunkist members helps him better understand their problems.

The Sunkist federated cooperative, which has been in existence since 1893, was begun by growers who realized the benefits of a cooperative approach to marketing their fruit. They still market and distribute members' produce and also market imports.

Stambach first purchased catastrophic (CAT) crop insurance for his trees just after buying the orchard in 1991. "Sunkist encouraged the purchase of crop insurance. I started out with CAT but after the 1999 freeze, have moved to 65/100," he said.

Recent adverse weather has taken a toll on some of California's citrus. "It hasn't been a good 2 years for citrus in Tulare County, California," said Stambach, who is growing 5 acres of Fisher Navels, 4-1/2 acres of lemons, and 1/2 acre of Satsuma Mandarins. His trees suffered through a freeze in 1999 along with much of the central California citrus growing area. "It takes lemons 2 years to get back into production after a freeze, and the third year production won't be back to normal though the quality is good," said Stambach.

The freeze has been followed by erratic weather that has led to the Fisher Navels not sustaining a normal maturation pattern and lemons exhibiting puff and crease symptoms. Navel oranges in the region have been going for juice, which lowers their commercial value so much that normally picking costs more than they're worth. But crop insurance has made a difference. "My insurance adjustor came last April and the indemnity payment that came in May almost recouped my cultural expenses," Stambach said.

Before the Agricultural Risk Protection Act of 2000 (ARPA) was passed, Stambach and other agricultural producers enduring a disastrous production year had to average in the bad production with normal production years to come up with their Actual Production History (APH) yield. This yield is used to calculate how much crop insurance coverage they could buy. Now, producers will be able to substitute 60 percent of the county T-yield for those low yield years.

Stambach may have more good news when he sees the premiums for next year. The following chart shows how much a Tulare County citrus producer might expect to save per acre on next year's premiums for 65/100 and 75/100 levels. Producer premiums at the 65/100 level have generally dropped 30 percent and the 75/100 coverage decreased about 38 percent. Producers wanting more protection may find previously unaffordable premiums for 75/100 coverage within their budgets for the 2001 crop year.

  Commodity/ Average Yield Per Acre

 Prem. for CY 2000 at 65 %

Prem. for CY 2001 at 65%

% Saving

Prem. for CY 2000 at 75%

Prem. for CY 2001 at 75%

% Saving

Fisher
Navels/
600 ctns/ac

$68/ac

$48/ac

30%

$131/ac

$81/ac

38%

Lemons/
500 ctns/ac

$147/ac

$104/ac

30%

$285/ac

$176/ac

38%

Satsuma/
Mandarins &
Tangerines
600 ctns/ac

$146/ac

$103/ac

30%

$276/ac

$171/ac

38%

Note: Premium comparisons are based on crop year 2001 rates and prices. California citrus producers purchase crop insurance a year or more ahead of the expected harvest dates. Crop year 2001 premiums do not include the supplemental 25 percent premium discount for that year. Actual cost savings will be based on rates and prices filed for the 2002 crop year. Producers will need to check with their crop insurance agent for actual cost savings.


Last Modified: 09/08/2010
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