BISMARCK, N.D. (AP) _ It sounds like a no-lose situation for wheat farmers: grow more durum with fewer costly chemicals and then collect on a lucrative insurance contract in the fall.
Farmers in North Dakota are counting on that scenario. They are buying durum seed, even in areas that are not prime durum-growing regions.
``If nothing changes, I would say our durum acres will be up 60 percent in this area, or more,″ said Kevin Knodel, manager of the Prairie Cooperative grain elevator in Cleveland, N.D. ``That’s the only topic around here right now.″
North Dakota farmers typically produce more than two-thirds of the nation’s durum, a wheat variety used in pasta. They planted and harvested around 3 million acres of it last year.
A crop insurance change is making durum even more popular.
U.S. Agriculture Department officials predict farmers will collect payments of up to $2 a bushel on durum this fall through crop revenue coverage. Unlike traditional crop insurance, the new policies protect farmers from price slumps as well as yield losses.
In past years, durum was treated the same as spring wheat. This year, policies will include an adjustment that reflects the price premium that durum typically has over spring wheat, said Gene Sonsalla of USDA’s Risk Management Agency in Billings, Mont.
The result is potentially lucrative contracts _ and potentially huge bills for taxpayers if the crop is poor and prices are low.
``We’ve heard all kinds of horror stories that everyone in North Dakota is going to be planting durum this year,″ Sonsalla said last week. He added that officials do not yet know how much the government might have to pay durum farmers.
Those eligible for the new durum policies are in North Dakota, northeastern Montana and northeastern South Dakota.
``People say it’s a windfall, but if you go through a farmer’s expense sheet, you’ll see all the (costs),″ said Tom DeKrey, who farms near Steele, in central North Dakota. ``The bottom line is, that’s about where the prices should be for farmers to get a fair return.″
But the new policies actually discourage farmers from striving to produce a quality crop, said Jim Peterson, marketing director for the North Dakota Wheat Commission.
``The incentives are there not to maximize yields,″ he said.
Farmers might be inclined to use fewer chemicals like fertilizer or herbicides, Peterson said, because ``the lower yields you get, the more (insurance benefits) you get.″
``Originally, people were thinking a 15 to 20 percent cut in durum acres,″ Peterson said. ``If (the policies) stay as is, there will be a definite increase. I’ve heard some predictions as high as 50 percent. It remains to be seen.″
An increase in the durum crop could further depress prices in the United States and possibly overseas, which worries Canadian officials.
``Based on the reports we’ve seen, it would appear that the coverage available for durum is substantially greater than for other crops,″ said Jim Pietryk, a spokesman for the Canadian Wheat Board. The board controls wheat and barley sales from western Canada’s prairie provinces.
It is unlikely the crop insurance policies will be changed at this late date, USDA’s Sonsalla said.
``We’ve talked to management in (Washington,) D.C.,″ he said. ``This is a private insurance company that came up with this product. Right now, (management) is saying, `Hold tight and back it.‴