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New Insurance Products and Sorghum Update

John Duff talks with Tony St. James about farm policy, new crop insurance products, DOE investments in sorghum and sorghum exports at the Southwest Beef Symposium in Roswell, NM.
The full interview can be found here.

Advantages for Sorghum in the 2014 Farm Bill

The 2014 Farm Bill included significant price protection for sorghum producers that chose the price loss coverage (PLC) program. Producers that have generic (old cotton) base, in particular, have a distinct advantage as they will be able to plant sorghum and collect a PLC payment on those acres. The projected price loss for sorghum in the current marketing year is $1.22, and with a $3.95 reference price, this situation could continue for the next couple years.

Production Cost Insurance

Production Cost Insurance (PCI) is a new private crop insurance product that protects a producer's gross margin. The PCI guarantee is calculated using a producer's five-year average revenue less averages of his seed, fertilizer, chemical and hedging costs. As the producer begins spending on seed, fertilizer, chemical and hedging, this guarantee slides up. PCI will give producers the ability to fertilize when the crop needs it and sell when the market calls for it.

Department of Energy Invests in Sorghum

The Department of Energy (DOE) recently announced funding awardees under its new Rhizosphere Observations Optimizing Terrestrial Sequestration (ROOTS) program. ROOTS focuses on gaining a better understanding of root systems and enabling breeders to use new crop improvement techniques related to below-ground plant biomass. Sorghum is a significant component of ROOTS as DOE sees sorghum as a model crop.

Sorghum Export Demand

Sorghum exports are still very strong as export sales are ahead of the seasonal pace needed to meet USDA projections. Sales slowed as they always do around the first of the calendar year but have since recovered and begun to accelerate. China is again leading in these sales, and their needs for protein are expected to continue driving their trading behavior for the foreseeable future.