June 30, 1998

INFORMATIONAL MEMORANDUM: R&D-98-026 
 
TO:      All Reinsured Companies
         All Risk Management Agency Field Offices
         Other Interested Parties

FROM:    Tim B. Witt                    /s/ Tim B. Witt               
         Deputy Administrator

SUBJECT: Crambe and Mustard Pilot Program Participation

BACKGROUND:
 
The Risk Management Agency (RMA) is developing pilot insurance programs for crambe and
mustard for North Dakota for the 1999 crop year.  The following provides a brief description of
the crops.

Crambe

Crambe is a cool-season oilseed that grows best in semi-arid regions with warm days, cool
nights, and low humidity.  The crop is grown for its oil which contains high amounts of erucic
acid.  Erucic acid is used to make intermediate chemicals, such as slip agents, emollients, and
surfactants, that are used as inputs in the manufacture of such items as plastic bags, cosmetics,
personal care products, and laundry detergents.  Industrial rapeseed and crambe are the only
commercial sources of erucic acid.

Crambe is primarily grown in North Dakota, with a small amount grown in Colorado, Kansas,
and Nebraska.  About 41,000 acres of crambe were contracted for 1998.  1996 production totaled
29.8 million pounds, with an average yield of 1,520 pounds per acre.  Between 1990 and 1996,
North Dakota crambe prices ranged from 9.5 cents per pound to 12 cents per pound.  With State
average yields ranging from about 1,000 pounds per acre to 1,500 pounds per acre, Crambe
values typically range from about $100 per acre to $180 per acre.  North Dakota accounted for 88
percent of the $194,000 paid for crambe yield losses under ad hoc disaster programs during
1990-94.

Mustard

There are three types of mustard: yellow, brown, and oriental.  Yellow mustard, the most
common type grown, is for a table or "hotdog" mustard, while brown and oriental are used for oil
and spices.  Mustard is a cool season broadleaf crop produced in North Dakota, Minnesota,
Montana, and other northern tier States.  Mustard is a popular crop in crop rotations, since it
enhances yields of wheat and barley, and breaks disease cycles in cereal grains.

North Dakota yellow mustard acreage has ranged from approximately 7,500 acres in 1990 to
35,000 acres in 1997.  Between 1990 and 1997, North Dakota yellow mustard prices ranged from
10.5 cents per pound to 17 cents per pound.  With State average yields ranging from about 500
pounds per acre to 800 pounds per acre, yellow mustard values have typically ranged from about
$70 per acre to about $130 per acre.  Approximately $340,000 was paid for North Dakota
mustard losses under ad hoc disaster programs from 1988 through 1994, and 1995 North Dakota
NAP payments were $16,217. 

A feasibility study for crambe can be obtained by contacting the Research and Evaluation 
Division (RED) at (816) 926-6343.  There is no feasibility study for mustard.  Insurance
providers or any other party interested in participating in the development of a crambe or
mustard program are invited to designate a representative or representatives from their
organization to work with RMA on these products.

ACTION:

Mike O'Connell, RED, is the project manager for the crambe pilot program and Bill Jones, RED,
is the project manager for the mustard pilot program.  Insurance providers or individuals wanting
to participate in the development of the crambe or mustard insurance pilot programs (either one
or both), should provide their name, address, and phone number to Mike or Bill, as appropriate,
by July 14, 1998.  They can be reached at the following address:

                    USDA/RMA
                    Research and Evaluation Division
                    P. O. Box 419293
                    Kansas City, Missouri 64141
                    Phone: (816) 926-6343
                    Fax: (816) 926-7343