Vienna, VA - George Lamont an apple grower from Albion, NY, testified today before the House Agriculture Committee's Subcommittee on General Farm Commodities and Risk Management, about changes that are still needed in the federal apple crop insurance policy to make it more valuable to growers and encourage more participation.

At the start of the 2005 apple crop year, apple growers across the country were able to sign up for an improved federal crop insurance policy that included recommendations from a task force headed by the U.S. Apple Association (USApple). However, there are still additional areas that need to be addressed in the policy to provide apple growers the insurance coverage they need.

Lamont, former USApple chairman and former executive director of the New York State Horticultural Society, described successes that have been achieved by working with U.S. Department of Agriculture's Risk Management Agency (RMA) on the insurance policy, and also highlighted the changes that were still needed.

"An improved apple crop insurance program has been one of the critical needs of U.S. apple growers," Lamont told the Subcommittee. "We are facing increased international competition, and at the same time have experienced more damaging weather patterns in recent years." A series of severe weather from 1998 to 2002 in many parts of the country "put many growers out of business and threatened the financial stability of agricultural lenders as well," he said. "We need to find a better way to hedge our weather risks."

Progress has been made, but more work is still needed for adequate coverage. "We appreciate the willingness of RMA to work with the industry to make needed improvements. However, there are additional features that would make the policy more workable and valuable to growers. These would encourage growers to make use of the policy and we would like to enlist your support in encouraging RMA to add these features," Lamont told Representatives.

One of the changes that USApple is advocating is an option for growers to purchase coverage for U.S. Extra Fancy grade apples, since the majority of fresh market apples are grown to this standard. Lamont told the Subcommittee that RMA was unable to offer this option because it did not have enough pricing data on U.S. Extra Fancy Grade apples for actuarial analysis. RMA promised the apple industry it would collect that data to establish that option. "This continues to be a high priority for the industry and we urge RMA to establish it at the earliest possible opportunity," Lamont said.

Picking up on Lamont's point, Rep. Rick Larsen (D-WA), a member of the Subcommittee, noted the "gap" between the market value of U.S. Extra Fancy grade apples and loss payments based on U.S. Fancy grade apples.

In addition to the U.S. Extra Fancy expansion, USApple is calling on RMA to enact the following:

1. The ability to create additional parcels. Apple growers are often unable to qualify for legitimate weather related damage, because the policy does not allow for the creation of smaller orchard blocks. If a 25-acre block is hit completely by a disastrous weather event, growers qualify for insurance payments. But, if 25 acres out of a 100 acre block are hit, the grower will receive nothing because the loss is adjusted for the block. USApple requests that orchards divided by a permanent public right of way be allowed to be insured as separate parcels as long as the grower had maintained separate information on the blocks.
2. Salvaging apples after settlement. Under the current policy, the value of apples salvaged after a claim has been settled and sold as U.S. Fancy or U.S. No. 1 Processing must be deducted from the payment. This is a change from past policy. Salvaging apples requires substantial additional work, but growers have relied upon that revenue to pay for contracted labor and to remove the difference between the insurance and the revenue expected from the crop. Insurance never fully compensates growers for losses, but this policy implies that it does. Salvaging some of the apples may reduce losses.
3. Prices Paid for Damaged Processing Apples. RMA uses a composite price of U.S. No. 1 Processing and cider apples for damaged processing apples. This results in lower than market price for U.S. No. 1 Processing grade apples as cider apple prices are about 50 percent below the No. 1 Processing price. Many producers grow for processing, and sell at the U.S. No. 1 processing grade, using this price would put the price in line with the base grade of the new policy for which growers are paying a higher premium.
4. Sales Closing Date. The apple industry is also asking RMA to extend the deadline for signing up for crop insurance to a more reasonable date after harvest. The current closing date of November 20 occurs during harvest in most parts of the country and forces growers to make a major financial decision without adequate time to select an appropriate policy for their needs.

Note: The text of this release can be downloaded from the News Releases section of USApple's Media Web site at http://www.usapple.org/media/newsreleases/index.shtml. The U.S. Apple Association (USApple) is the national trade association representing all segments of the apple industry. Members include 36 state and regional apple associations representing the 7,500 apple growers throughout the country, as well as more than 300 individual firms involved in the apple business. USApple's mission is to provide the means for all segments of the U.S. apple industry to join in appropriate collective efforts to profitably produce and market apples and apple products..