Making The Prevented Planting Crop Insurance Decision

Making The Prevented Planting Crop Insurance Decision

As the 2013 calendar moves into mid-June, questions about using the prevented planting provision of crop insurance abound.

With this spring's continued wet weather and delayed planting now stretching into mid-June, there are a number of soybean fields in Iowa that have yet to be planted. Some cornfields haven't been planted the first time and with a considerable amount of ponding and flooding the past two weeks, many corn and soybean fields need to be replanted. Farmers are facing tough agronomic and economic decisions regarding late planting. Some will be forced to decide if they should replant corn, switch to soybeans or don't plant either crop in those fields and take the "prevented planting" provision offered by crop insurance.

DIFFICULT DECISIONS: Spring planting is lingering into summer for many farmers. Due to continued wet weather they're struggling to get crops planted and may be forced to take the prevented planting provision of their crop insurance coverage which rarely occurs in Iowa. "It's one of the most challenging years, even worse than last year's drought," says one farmer.

Farmers are trying to get their intended soybean acres planted, but time is running out. For corn, many have decided to call it quits. Iowa State University Extension specialists are getting a lot of questions from farmers concerning the prevented planting provision. Steve Johnson, ISU Extension farm management specialist in central Iowa and his colleagues provide the following answers to these frequently asked questions.

Prevented Planting Frequently Asked Questions

Question: When is prevented planting available?

Answer: Prevented planting must be due to an insured cause of loss that is general in the surrounding area and that prevents other producers from planting acreage with similar characteristics. Failure to plant when other producers in the area were planting will result in denial of the prevented planting claim.~~~PAGE_BREAK_HERE~~~

There's also the 20/20 Rule--a minimum of 20 acres or 20% of the unit must be affected. Total acres of planted and prevented planted cannot exceed the total cropland acres. Prevented planting claims must be filed with your crop insurance agent by June 25 for corn and July 10 for soybeans. Prevented planting acres must be reported on the FSA Form 578 acreage report. That deadline is extended in Iowa to July 15, 2013.

Question: When is prevented planting not available?

Answer: On ground that is insured through a New Breaking Written Agreement; Conservation Program Reserve land -- first year out of CRP; on ground where a pasture or forage crop is in place during the time of planting; when other producers in the area are able to plant; on county-based crop insurance policies such as GRP & GRIP.

Question: How much do I get paid for prevented planting?

Answer: 60% of the initial revenue guarantee.

* For corn, here's how it's figured: 180 bushels APH x 80% x $5.65/bu = $814 initial revenue guarantee x 60% = $488/acre PP payment

* For soybeans, an example is 50 bushels APH x 80% x $12.87/bu = $515 initial revenue guarantee x 60% = $309/acre PP payment

* Note that payments for prevented planting use the projected price (new crop futures price average in February).

Question: How are eligible acres for prevented planting determined?

Answer: The insurance company considers each of the insured's crops in each county. They look at the maximum number of acres reported for insurance and certified in any of the four most recent crop years. The acres must have been planted in one of the last three crop years.~~~PAGE_BREAK_HERE~~~

What happens if you are prevented from planting and there are not enough eligible acres for the crop being claimed? When the insured runs out of acreage eligibility for one crop, the remaining prevented planting acres will be "rolled" to another crop, such as corn to soybeans.

Question: What happens to my APH (actual production history) if I take prevented planting?

Answer: The insured farmer who receives prevented planting on a crop does not have to report the actual yield for the year. Generally, prevented planting will not impact the APH yield in future years, unless a second crop is planted on prevented planting acres.

Question: What happens if the first crop is prevented planting but the second crop is planted?

Answer: If the second crop is planted it MUST be insured if there was insurance for that crop elected on or before March 15, 2013. The second crop must have been planted AFTER June 25 for corn and July 10 for soybeans. If the insured farmer plants a second crop they will still receive 35% of the indemnity for the prevented planting crop and pay only 35% of the premium.

Planting a second crop on prevented planting ground affects the following year's APH:

* 1st Crop – you get 60% of the approved yield (180 bu/A APH x 60% = 120 bu/A

* 2nd Crop – actual yields are used for APH

* Note: Planting a second crop after prevented planting is not recommended for most situations.

Question: What will crop insurance adjusters need to do for prevented planting claims?

Answer: Visually inspect all prevented planting acres to determine:

 * Acres are within 5% of what was on the acreage report

* Whether the acres are left idle, or whether a cover crop or second crop has been planted

* What the cause of loss was and if it is general in the area

* Determine eligible acres

* Roll acres to other crops if insured is short of eligible acres for reported prevented planting crop~~~PAGE_BREAK_HERE~~~

The "prevented planting" provisions for crop insurance and planting cover crops on that land is a highly variable subject. The goal is to help farmers make the best cover crop decisions suited for their situation with prevented planting acres and crop insurance rules. Mark Licht, an Iowa State University Extension field agronomist in central Iowa, provides the following information to help farmers make cover crop decisions.

Cover Crops Recommendations for Prevented Planting Acres June 2013

Source: Mark Licht, Field Agronomist ISU Extension and Outreach

As of June 14 in central Iowa all the corn that will be planted has been planted except for a very few cases where silage corn will come in as a second crop. Soybean planting conditions have been dismal and we are fast approaching a decision point to plant or declare prevented planting. Corn planted between now and July 1 would yield 40% to 50%. Soybean planted between now and July 1 would yield 50% to 70%.

As far as I can tell there is not an approved list of acceptable cover crops for prevented planting acres. I do know that NRCS has put out a document explaining the benefits of cover crops on prevented planting acres and listed some options, but some of those options would jeopardize prevented planting payments.

It is my understanding that a cover crop cannot be a viable crop such as corn, soybean, alfalfa, oats or wheat. Cover crops cannot be harvested for seed or forage before November 1. However, I've heard from some insurance companies that they may cover oats or soybeans at a reduced seeding rate if approval is granted before seeding. So, if soybean or oats look attractive, talk to your insurance company before seeding. Soybeans may fix some nitrogen and oats will winterkill with a good frost.~~~PAGE_BREAK_HERE~~~

This still leaves a lot of options open depending on the anticipated date of seeding. Seeding summer annuals like sudangrass, sorghum sudan, pearl millet, and Japanese millet in July are great options but will be adversely affected by the first fall frost. I've heard seed supplies are tight for these summer annuals.

If you wait longer yet to seed (say August) you can plant a 'normal' cover crop of cereal rye, tillage radish, purple top turnips, etc. But these leave the soil open and susceptible for erosion for too long. Not to mention weed growth. Tillage radish would help with compaction issues but I don't see that being problematic on prevented planting acres.

At this point, one of my favorite options is probably a winter rye or winter triticale. It can be seeded now but won't go to seed in 2013.

* It will overwinter then can be killed in the spring of 2014 before planting the main crop. * It will overwinter better if it gets mowed in mid-August.

* Without a mowing in mid-August it will overwinter but will not be as winter hardy. This option limits that ability to apply fall nitrogen but your operation relies heavily on spring preplant nitrogen and in-season nitrogen. Any nutrients the rye or triticale takes up would be returned after a spring burndown or fall tillage.

For farm management information and analysis visit Ag Decision Maker here; ISU farm management specialist Steve Johnson's site is available here.

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