Thursday, May 30, 2013
So, you are thinking more about prevented planting, are you now?Tweet
You are not finished planting corn. Your fields are saturated. Rain is coming in torrents. More rain is in the forecast. You know the final planting date for crop insurance is (past) (in a few days). You may have already lost 10-15% of your potential yield. What is the first thing you do?
Number 1: Call your crop insurance agent.
Number 2: While waiting for him/her to return your call, read the following summary of Prevented Planting. It is condensed from an analysis by University of Illinois economist Gary Schnitkey.
First of all check your policy for your prevented planting date. It will vary by state and will even vary within a state. And check your type of policy. If you have GRP or GRIP, you don’t need to go any further because the county group policies do not have a prevented planting provision. If you have Revenue Protection or Yield Protection, pass Go and collect your money (if that is what you want.)
Your prevented planting benefits will cover the amount of acreage reflected by the average of your last four years for that particular crop. Since there are some asterisks, consult your agent for your exact acreage.
When your final planting date arrives your menu of choices includes:
Taking a Prevented Planting payment which totals 60% of your guaranteed payment. That guarantee is calculated from your coverage level for Revenue Protection or Yield Protection multiplied by the spring price guarantee of $5.65 and multiplied by your actual production history (APH) yield. Then multiply that by 60%. Do you want to accept that amount, pay your input costs and manage the weeds in that field for the rest of the year?
A sub-choice is planting another crop within 25 days of the final corn planting date. If you do that, you will not collect any payment for prevented planting.
Another sub-choice is waiting 25 more days and planting another crop, but that will cut your prevented planting payment from 60% down to 35%.
You can plant corn after the final planting date, which is allowed by the provisions for prevented planting. If during that 25 day period corn is planted, you will not receive any payment for prevented planting. It is gone. However, you may still have a reduced level of crop insurance coverage on the late-planted crop. Your coverage is reduced by 1% per day until the field is planted, and if you are planting more than 25 days after the final planting date, your coverage will be set at 60% and remain at that level.
You can plant soybeans in that field after the final date for planting corn. By doing that you sacrifice your payment for prevented corn planting, but you will have crop insurance coverage for your soybeans, unless they are planted after their final planting date. And the coverage guarantee is reduced with the same formula as with corn. However, if this is your choice, before you put the first soybean in the ground, alert your crop insurance agent because she/he will have to change your policy from corn to soybeans.
- Work through the math to get a close idea of what your payment will be for prevented planting, as well as reductions for your coverage of a late planted corn crop if you plant after the final planting date.
- Think back to when you signed up for crop insurance to remember if you paid extra for a higher level of coverage for prevented planting. You might be paying a higher premium for 75% coverage, instead of just 60%.
- If you are concerned about the 60% not covering your input costs, calculate your updated input costs, which will mean reduced machinery, fuel, and drying costs, and whatever herbicide, fertilizer and seed you don’t use. While gross revenue will be reduced, so will gross expense outlays.
- If you have planted just part of an insurable unit, prevented planting will only affect the unplanted portion, as long as it is more than 20% of the unit and not less than 20 acres.
- If you have planted just part of an insurable unit, which is covered by an enterprise policy, the minimum acreage provisions must be in two separate sections. Without that, the enterprise policy is not in effect and the policy will revert to optional or basic units.
- Your APH will not be impacted unless a second crop is planted on the acreage that was claimed as prevented planting
Many Cornbelt farmers have either hit or soon will hit the final planting date for corn and will make a decision on prevented planting. It is an option for management of the 2013 crop and operational revenue. However, there are many implications, and consultation with a crop insurance agent should be a priority.
Posted by Stu Ellis on 05/30 at 11:19 PM | Permalink
Posted by: Frank at May 31, 2013 4:04AM