Is preventive plant an option for you this year?
WEBSTER CITY — To plant or not to plant? That is the question. To assist producers in making some of those decisions, Farm Credit Services of America held a crop insurance spring update last week discussing planting dates, prevent plant, replant, first and second crop insurance options and more.
“We are looking with what we are faced with basically over the next month down the road, the things we need to look at, different regulations, different things your crop insurance policy has in place,” said Craig Law, crop insurance officer with Farm Credit Services of America.
How long can an insured plant?
“When do I plant? Or when do I have my full guarantee? You will have 100 percent of your corn guaranteed up until May 31 and with beans, June 15. Those are your big dates we need to look at here,” said Law.
There are some different options available after those final planting dates, Law said.
“You can continue planting into that 25 day window we call the late planting period,” he said, adding that is June 1 to June 25 for corn and June 16 to July 10 for soybeans.
“You can keep planting during that time frame, but you are not required to plant during that late plant period at all,” he said.
The amount of crop insurance to each acre that is planted during the late plant period, Law said, is reduced by 1 percent, per day.
“Let’s say you went in and started planting on June 5, you will receive a 5 percent discount of your guaranteed revenue at that point. It reduces 1 percent per day starting June 1 on corn and June 16 on soybeans.”
There is an option of planting an alternate crop.
“You get to June 5, for example, and say you were planning to go to corn, but you can decide to switch to beans. As long as it is before the June 15 plant day, you sill have your full guarantee on beans at that point,” he said.
Law said if the crop is planted after the late planting period, which is June 26 for corn and July 11 for soybeans — or after — the coverage will be equal to the prevented planting guaranteed.
Corn is gapped to 55 percent of your guaranteed revenue, so Law said a producer will not fall below that. Beans, are gapped at 60 percent.
Law said it is important to note, that even though you have a reduction in value, or a reduction in guarantees, you will still pay the full insurance premium, as it is the same as for acreage that was planted timely.
“We know that doesn’t feel very well, but that is the guidelines that are set forth through the Risk Management Agency,” he said.
Qualifying for PP payment
Starting June 1, for corn, Law said producers can go ahead and file for preventive plant.
“You can say I am done. I am going to file for prevent plant and I am not going to plant anymore,” he said. “That is an option you guys have starting June 1 on those corn acres.”
Law said 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.
“It’s historically wet, we are seeing that — it is general to the area,” he said. “However, failure to plant when other producers in the area are planting could result in a denial.”
Each prevented plant claim, Law said, is on a case-by-case basis. In addition to weather conditions, the adjuster will look at aspects such as topography and other field characteristics that might have kept one producer out of the field while his neighbor was able to plant.
The adjusting process
While the adjusters work the preventive planting claims they will visually inspect all preventive planting acres to determine:
• Those acres are within 5 percent 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.
Law recommends as soon as June 1 is here and you are considering filing for a preventive plant claim to let your crop insurance provider know.
“We need to get that claim turned in,” he said.
In order to qualify for a preventive planting payment:
• The acres must beat the 20/20 rule which means, 20 acres or 20 percent of the unit.
• Total acres of planted and preventive plant acres can’t exceed cropland acres.
• Preventive plant acres must be reported on the acreage report.
• Preventive plant claims must be field by June 28 for corn and July 13 for soybeans.
“Those are the last possible dates you can file a prevent plant claim,” said Law.
What if you filed for preventive plant but yet decide to plant? That is an option, but before the acerage report is made.
“You can withdraw that preventive planting claim and you can go ahead and then plant,” he said. “You have that option. We are going to withdraw that claim, but as soon as you do that acreage report with your agent, once that acreage report gets submitted, you are basically finalized saying you are taking preventive planting and that payment is going to be cut and coming your way once that acreage report is done and filed.”
There are some stipulations in place that will not allow some acres to qualify for a preventive plant payment.
• On ground that is insured through a new breaking written agreement, such as ground that is in its first year out of the Conservation Reserve Program.
• On ground where a pasture or forage crop is in place during the time planted.
• When other producers in the area were able to plant.
• On county based plans of insurance Area Risk Protection Insurance (ARPI)
How much is paid through preventive planting?
“The million dollar question is how much will I get paid with preventive planting,” said Law.
Corn has a 55 percent revenue guarantee and it is 60 percent of the revenue on beans.
The preventive planting payments are based on the spring price only.
For example, if you have a 200 bushel Actual Production History (APH) times 85 percent (or the coverage level you selected) times $4.00 (the spring price) = $680 times the 55 percent of revenue guarantee, your preventive planting payment is going to be $374 an acre for corn.
For soybeans, if your APH is 55 bushels times 85 percent (or the coverage level you selected) times $9.54 (the spring prices) = $446 times 60 percent (the revenue guarantee) = $268 an acre for preventive planting on soybeans.
Law said to determine how many acres you are eligible to qualify for preventive planting, you take the maximum number of acres reported to your insurance agent over the last four recent crop acres.
“In order to quality, you must have planted corn or beans in that field over the last four years,” he said.
If the insured runs out of eligibility of one crop, it will roll to the other crop.
“If you run out of eligibility with corn, it will roll to beans,” he said.
First crop prevented/second crop planted
“Each farm, each individual operation, is definitely independent of each other,” said Law.
Law said a producer can file for preventive planting on the first crop and if the weather would straighten out and they want to, they are able to go in and plant soybeans, for example.
“You are more than able to do that,” he said. “You are going to receive your preventive plant payment, however, if the second crop is planted, it must be insured.”
The second crop must have been planted after June 25 for corn and July 10 for soybeans. And if the insured plants a second crop, they will still receive 35 percent of the indemnity for the prevented plant crop and pay only 35 percent of the premium.
“There are some penalties, You are only going to get 35 percent of that preventive plant payment. That’s only 35 percent of that 55 percent. But if that indeed happens, you are going to pay 35 percent of the premium as well. The big kicker is, why we do not recommend doing this, is because it could hurt you both ways. You are going to receive 60 percent of a plug yield on your corn acres, even though you filed for preventive plant and that acts like you didn’t plant anything on that unit all year for the next 10 years, planting a second crop after preventive planting, you are actually going to have a ding on your APH,” he said. “If you have a 200 bushel APH, you are going to have a plug yield of a 120 sitting on there.”
You are required to control weeds using good farming practices on preventive planting acres.
If the intended crop is prevented from planting, Law said a cover crop may be used on those planted acres, but to keep in mind, a cover crop cannot be hayed or grazed until after November 1 and can never be harvested.
“It cannot be made for profit,” he said.
Law said for those that have corn and beans planted and are thinking of replanting if conditions improve, they must turn in the loss claim prior to replanting the crop in order to collect.
“The sooner you guys know you are going to replant, let us know so we can turn it in, get a claim,” he said.
Right now, Law said corn replant payment is looking to be about $32 an acre and beans are at $28.62 an acre based on spring price.
Other replant guidelines include;
• The 20/20 rule is also applied.
• Crop must be appraised and released prior to replanting.
• It will be considered practical to replant until 10 days after the final plant date for each crop. Practical replant on corn until June 10 and soybeans until June 25.
• Producer will work with adjuster to determine if it is practical to replant.