Prevented Planting Becomes the Focus of Farmers

 

It’s hard to believe that a mere two to three months ago we were still talking about continued drought in much of the Upper Midwest. Now, in some areas of southern Minnesota and northern Iowa wet field conditions and delayed crop planting has become so severe that producers are considering not planting a portion of their crops in 2013. As of June 1, thousands of intended corn acres are still unplanted in the southeast quarter of Minnesota and adjoining areas of northern Iowa and western Wisconsin. Very few soybeans have been planted in this region as well, and a significant amount of soybeans also still remain to be planted in many other areas of the Upper Midwest. Producers in the affected areas are now evaluating their crop insurance options for late or prevented planting coverage.

The final planting date for corn in most of Minnesota, as well as in all of Iowa, and Wisconsin was May 31, in order to receive full crop insurance coverage for 2013. The late planting period for corn is June 1-25, with a reduction in the insurance coverage level of 1% for each day that corn planting is delayed past May 31. In northern Minnesota, the final date for corn planting with full insurance coverage was May 25. For soybeans, the final planting date is June 10 in Minnesota and the northern two-thirds of Wisconsin, and June 15 in Iowa and the southern one-third of Wisconsin, with the final planting date extending for 25 days until July 5 in Minnesota and northern Wisconsin, and until July 10 in Iowa and southern Wisconsin. For crops planted after the final dates for the late planting period, crop insurance coverage is set at a maximum of 60% of the original insurance guarantee, which is the same as the prevented planting insurance coverage.

Once the final planting date for corn or soybeans has been reached for corn or soybeans, farm operators can opt to take the prevented planting insurance coverage, if they have that coverage option, rather than planting the crop. If they choose the prevented planting coverage, they will receive 60% of their original crop insurance guarantee for that crop on a specific farm unit. Every farm situation is different when it comes to making a decision on whether to utilize the prevented planting option, so it is important for producers to make individualized decisions for each farm unit.

Crop producers will have different yield potential, crop expenses, land costs, etc., on various farm units, as well as differences in their level of crop insurance coverage. All of these factors become important when evaluating prevented planting crop insurance decisions. Farmers should contact their crop insurance agent for more details on final planting dates and prevented planting options with various crop insurance policies, before making a final decision on prevented planting. Producers need to report prevented plated acres to their crop insurance agent. The USDA Risk Management Agency (RMA) has some very good crop insurance fact sheets, including information on prevented planting, available on their website.

The University of Illinois has developed an excellent spreadsheet for analyzing various options for the 2013 corn and soybean crop in Minnesota and other states, when considering the Federal Crop Insurance Prevented Planting option, compared to raising a crop in 2013. Producers can enter their state, county, crop insurance guarantees, expected yields and prices, production costs, etc., and get farm unit specific scenarios. This spreadsheet can be accessed free on the U of Illinois FarmDoc website.

 

I have developed an information sheet, “Crop Insurance Prevented Planting Options,” which contains details on prevented planting coverage, as well as examples. To receive a copy, please send an e-mail request: [email protected].

For many farm operators in the hardest hit areas of southern Minnesota and northern Iowa, the prevented planting crop insurance option becomes a choice of two bad options: Either planting a crop with greatly reduced yield potential, or receiving only 60% of their crop insurance revenue guarantee, which is probably less than half of their intended crop revenue per acre. They still have all the land costs, machinery costs, overhead costs, term loan payments that they do in a normal year with normal production. The only variable may be that some cash expenses that can be reduced by utilizing the prevented planting option, rather than planting the crop at a very late date.

 

Editor’s note: Kent Thiesse is a former University of Minnesota Extension educator and now is Vice President of MinnStar Bank, Lake Crystal, MN. You can contact him at 507-726-2137 or via e-mail at [email protected]

TAGS: Management
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