Farmers can save on crop insurance with GMO corn

Corn ears
Many farmers plant several varieties of corn and are skeptical of a plan that requires them to plant 75 percent Monsanto seed.
MPR photo/Mark Steil

Corn gets a lot of attention from biotechnology companies and as a result, has had a number of genetic modifications which make corn plants resistant to insects, disease and specific herbicides.

Monsanto put all the genetic modifications in a single plant, a process that's called stacking genetic traits.

"...If there's less risk to the producer, those producers that use that technology should be entitled to a discount on their crop insurance."

The federal government says the triple stack genetic technology is less risky to grow so farmers should pay less to insure that specific variety.

Federal Risk Management Agency Administrator Eldon Gould says the goal is to save farmers and taxpayers money.

"The premium that the farmer is going to pay is subsidized by the taxpayer so by the fact the farmer is paying less on his portion of the premium, the taxpayer is paying less on the taxpayer portion of the premium so there is in fact a savings to the taxpayer," says Gould.

Monsanto is the first company to qualify for the crop insurance reduction allowed by Congress. Monsanto New Business Development Manager Tim Hennessy says the federal endorsement is a competitive edge,

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"This really opens the door for future submissions like this. The process is very thorough and a rigorous evaluation that requires substantial amounts of data. So it's not something that can be built around just any product, but certainly those products that represent that, I do think it opens the door for a lot of future opportunity," says Hennessy.

To prove its genetically modified crop is less risky to insure, Monsanto needed to provide three years of data. Federal officials say the data proved the crop produced higher yields under adverse conditions. That means farmer are less likely to get payments from their crop insurance policy, and that would save taxpayers money.

Monsanto says farmers can save $3.00 to $7.00 per acre on their crop insurance if they plant triple stack corn.

So, Minnesota farmers are flocking to the program, right? Maybe not.

Several farmers say they plan to use the triple stack corn variety, but they're not signing up for the crop insurance savings.

Jerry Larson says there's some fear of government red tape. Larson raises corn in western Minnesota. He recently attended an informational meeting about the program.

"I suppose there was 50 farmers there and there was some skepticism about the amount of detail that was being required," recalls Larson.

Food into fuel
Farmers are growing more corn in response to increasing demand for ethanol.
Photo: BananaStock

At least 75 percent of a farmers corn crop must be the Monsanto variety to qualify for the insurance price break. Larson says he could save $6.00 per acre on crop insurance by using only Monsanto triple stack seed, but he's not ready to switch all of his loyalty to one company.

"I think other companies feel like it wasn't fair. But Monsanto took the initiative. My suspicion is other companies will get on board and maybe the insurance industry will broaden the parameters a little bit to make it more user friendly," says Larson.

Farmers are also concerned about the complex record keeping required by the program. They need detailed records of exactly where the genetically modified crops are planted, because insurance companies will do random testing.

There are also Environmental Protection Agency rules to follow. When farmers plant a genetically modified crop, 20 percent of the field must be a buffer zone of plants that are not genetically modified. Federal Risk Management Agency Director Eldon Gould says he understands the skepticism among farmers. He doesn't even have a good guess as to how many farmers will embrace a single corn variety in exchange for crop insurance savings.

"That remains to be seen and I'm just as curious as the next person to see what happens when this all shakes out and we get the totals by the middle of the summer," says Gould.

He believes it may take a couple of years for farmers to get comfortable with the new program, but Gould says they should get used to it, because in the future it's likely there will be more government incentives to plant genetically modified crops.