(March 15) Risk should be rewarded by the marketplace, not protected by the government.

That’s the view of some in the melon industry, who are wary of fraud and overproduction if a potential plan to bring federal crop insurance to the melon industry is introduced.

Critics point to what they say was a flawed crop insurance pilot program in 1999, which they said encouraged new growers to plan watermelons and swamp the market.

The pilot program covered 15 counties in seven states and was suspended after one year. In the aftermath of the 1999 season, some suggested the pilot may have induced an increase of 4,000 acres of watermelons in the Rio Grande Valley of Texas. At the time, growers said the resulting oversupply decreased prices from an average 8-10 cents a pound to only 5-6 cents.

“(The pilot program) contributed to a lot of angst among many producers because it was an open invitation to abuse,” said Vern Highley, public affairs director for the National Watermelon Association, Plant City, Fla.

“We’ve generally been opposed to vegetable crop insurance,” added Steve Martori, president of Martori Farms, Scottsdale, Ariz.

Though it can work for permanent crops with an established yield pattern, crop insurance upsets the balance of the risk and brings on new supply areas that normally wouldn’t produce, Martori said.

“The risk of producing a crop is the give and take of the drive to make a profit,” agreed Buddy Leger, president Leger & Son of Cordele, Ga.

WORKABLE OPTION

However, he said a crop insurance program might work if it took into consideration past yields and experience before a grower was issued a policy.

Congress gave a mandate to the U.S. Department of Agriculture’s Risk Management Agency in 2000 to expand crop insurance to more fruit and vegetable crops, but some melon grower-shippers are concerned about the potential for abuse if a plan is introduced for their commodity.

Bob Vollmert, Kansas City, Mo.-based director of the research and evaluation division of the USDA’s Risk Management Agency, said March 10 that the agency is in the early stages of evaluating a crop insurance plan for cantaloupe, honeydew and watermelon.

He noted that Congress did mandate in the Agricultural Risk Protection Act of 2000 that the RMA focus product development on specialty crops and underserved areas.

One of the reasons for that mandate was the intention by Congress to move away from disaster relief and instead let crop insurance become the principal safety net for agricultural producers.

Because the melon category is large in the specialty crop arena, he said it makes sense to see if a crop insurance product can work.

“We have been approached by growers asking for a risk management program fore melons,” he said.

He said the agency has hired a firm to do research and development of the new insurance product.

He said that research was ongoing was still many months away from completion, though a first draft of findings is expected in late March.

Vollmert said the research — which has included “listening sessions” in Georgia, Florida and California to get grower input — will consider whether the crop insurance product is feasible and, if so, how it should be modeled.

“The agency is very interested in being responsive to the customer base,” he said. The 1999 pilot program illustrated the need for tighter underwriting guidelines to prevent fraud, he said.

DISCOURAGING FRAUD

Some growers say there needs to be conditions to crop insurance, such as being able to show several years of history of producing watermelons to discourage fraud.

Another idea is to limit an individual grower’s expansion acres covered in crop insurance to 5% per year Vollmert said that might be an option.

“There is a precedent for limiting participation to growers with a proven history. ... We are very sensitive to not distorting he industry,” he said.

Vollmert said the RMA already features crop insurance programs for a wide variety of fruits and vegetables, including citrus, apples, cranberries, grapes, sweet corn and other commodities.