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Risk Management Education Release

CRC IMPROVES COMFORT ZONE FOR OREGON GROWER

Apr 2, 2001 - Greg Goad of Umatilla County, OR, thinks of his farm as a business and price protection is a vital component of his risk management strategies. "I like being my own boss, but think of my farm business through a different filter than many farmers."

Since he began farming in 1986 on the family farm, Goad and his brother, Todd Goad, have continued a family business that their parents began in 1933.

Northeast Oregon, with an average 12 inches of rain a year, has some unique farming conditions. Temperatures can drop below -20 F in the winter and exceed 100 F in the summer. Much of the available crop land is owned by individual Indians or the Nez Perce, Umatilla, or Cayuse tribes and is managed by the Bureau of Indian Affairs.

While local farmers have traditionally leased additional land for cultivation from the Bureau of Indian Affairs, recent low commodity prices have made the cost associated with leasing too high. The Goad family has adjusted to the new economic picture. They are now farming only the 700 acres owned by the family. "Low market prices have limited our ability to lease the acreage we want to farm," Goad continues. "In the past, we have farmed 800 to 1000 acres more." But if rents come down, or commodity prices go up, he will be ready to expand production again.

Though their scale of production is pared, Goad views this interlude as a time for refining innovative environmental as well as economic strategies. "We're creating the template for sustainable farming practices in Northeastern Oregon. We work with scientists from USDA's Agricultural Research Service, Oregon State University, and other reduced tillage growers to develop cutting edge methodology," Goad adds.

While Goad has taken advantage of the no-till cultivation practices that conserve water and topsoil, he also learned how to counter a soil-borne pathogen that affected his summer wheat crop. Before 1988, the Goads operated a traditional summer fallow/winter wheat farm. Now they use a spring rotation of mustard (which starves the pathogen) and fall canola, which might be a viable replacement for the wheat, to replace the summer fallow. Goad likes the mustard crop because inputs are less and he uses fewer chemicals. Also, while experimenting with re-cropping during drought years, the farm has achieved production increases over traditional spring plowing.

In his role as Chairman of the Insurance Committee with the Oregon Wheat Growers League, and through his membership in the National Association of Wheat Growers, Goad worked hard to get the pilot Crop Revenue Coverage (CRC) program for Umatilla County. "We had bought Multiple Peril Crop Insurance (MPCI) before CRC came along, but the price protection feature in CRC makes it well worth the extra cost."

Originally signing up for 65-percent CRC coverage, Goad adds, "A 20-year drought event in 1999 that resulted in a $30,000 loss for our farm prompted us to upgrade our coverage to 80 percent." He sees the revenue insurance as more than protecting his cost of production. "With CRC, at last we have a great safety blanket. Growers don't appreciate what CRC can do for their marketing strategies. Now, I can take advantage of market flexibility and contract as much as 80 percent of the crop. I might try buying some options, but prefer forward contracting."

Following passage of the Agricultural Risk Protection Act of 2000, increased subsidies for all crop insurance premiums make higher coverage more affordable. In Umatilla County, Oregon, CRC premiums dropped 45 percent for winter non-irrigated wheat and 30 percent for spring non-irrigated wheat. An average wheat farmer in Umatilla County, Oregon, might expect the following premium costs for this year's crops:

Umatilla County: 2001 CRC Premiums Drop Dramatically From 2000

 Crop*  CRC Premium for 80% CY 2000  CRC Premium for 80% CY 2001
Winter Wheat $10.50/acre $5.80/acre
Spring Wheat $10.50/acre $7.70/acre

*The chart bases calculations on a 57-bushel non-irrigated yield for winter wheat and a 36-bushel non-irrigated yield for spring wheat with a given $3.61 per bushel coverage price for crop year 2000 and $3.41 per bushel coverage price for crop year 2001 on CRC in Umatilla County. While the actual Goad yield and price will vary from this example, the dramatic savings are similar.

Producers should contact a crop insurance agent to discuss their options with this program.


Last Modified: 04/15/2011
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