Prevented Planting Acres
Tuesday, November 1, 2011
filed under: Marketing/Risk Management
By Doug Hagel, Director of the Billings Regional Service Office USDA Risk Management Agency
We have never seen a year like this one in the past as far as prevented planting is concerned. North Dakota was the hardest hit, and when the final numbers are determined we could see in the neighborhood of 5.6-5.8 million acres impacted by prevented planting. Thank goodness producers have crop insurance available to them and are covered for this peril, which will help to cover part of their loss.
Producers with cattle should be aware that they will be able to hay or graze any cover crops planted on prevented plant acreage starting November 1st.
Producers should also be aware that there will be changes made to the prevented planting eligibility rules for the 2012 crop year. Over the last several years, there has been some confusion regarding the purpose of prevented planting coverage in regards to the federal crop insurance policy. The policy states a prevented planting payment may be made for eligible acreage if the insured is prevented from planting the insured crop on insurable acreage by an insured cause of loss.
While federal crop insurance provides prevented planting coverage for weather events occurring within the insurance period, coverage is not provided for events occurring outside the insurance period. Acreage flooded due to weather events occurring outside the insurance period — such as rains or flooding in previous crop years which leave continuously wet conditions on the land — is not eligible for prevented planting coverage.
What is the insurance period? For a carryover policyholder, it begins on or after the sales closing date for the previous crop year for the insured crop in the county, provided insurance has been in force continuously since that date through the late planting period for the insured crop. For example, in the spring of 2012 the insurance period started on March 15, 2011, and ends after the late planting period for the insured crop in 2012 — approximately a 15-month time frame. If the acreage remains flooded or too wet to plant in the spring in following years, it is no longer considered “available for planting.”
If the acreage remains flooded or too wet to plant in the spring in following years it is no longer considered “available for planting.” Therefore, acreage that remains flooded due to weather events that occur outside the current crop year is not considered “available for planting,” because under normal weather conditions it remains flooded or too wet to plant throughout the final and late planting period. Such acreage is no longer physically available for planting within the normal planting period for the area impacted, and therefore not eligible for prevented planting coverage.
In addition, just because a producer could till the land does not mean it is available for planting. For example, acreage that in normal weather patterns is too wet to plant in the spring may be dry enough to till the previous summer or fall. Such acreage would not be available for planting a spring crop even though such acreage may have been tilled, planted, the previous summer or fall and/or insured to a fall-planted crop such as rye.
Because of this confusion in the Prairie Pothole states of the Upper Midwest (Iowa, Minnesota, Montana, North Dakota and South Dakota), RMA became concerned with program integrity and held a series of meetings with congressional representatives, state ag departments, grower organizations and insurance providers to thoroughly vet a new Special Provision of Insurance (SPOI) statement the agency is incorporating into these states.
One of the items listed on the SPOI requires that an insured crop be grown and harvested on the acreage in at least one of the four most recent crop years in order to be considered physically available for planting. However, all other prevented planting policy provisions must still be met.
The statement has been published for the 6/30/2011 filing deadline for fall crops (which basically affects Montana and South Dakota winter wheat counties) and is in the process of being filed for the 11/30/2011 filing deadline, which includes all spring planted crops in all counties within the rest of the Prairie Pothole states.
While the statement goes through the filing process, agents and farmers should be aware that it will be in effect beginning with the 2012 crop year. Producers will no longer have prevented planting coverage eligibility on the specific acreage they have been unable to plant and harvest in at least one of the four prior crop years. Due to high commodity prices this year, we saw many instances of producers planting a second crop, such as sunflower, on prevented planting acreage. The crop insurance policy provisions allow this to occur; however, producers should be aware that if a second crop is planted on the same acreage during the same crop year, the prevented planting payment on the first crop is reduced by 65%. The first-crop/second-crop rules also apply when a cover crop is hayed or grazed prior to November 1st.
The policy also states if a second crop is planted on the same acreage during the same crop year, the producer will be assigned a recorded yield for that crop year for the first crop (in this case prevented plant crop) equal to 60% of the producer's actual production history for the insured crop involved, which will impact the producer's actual production history for subsequent crop years.
It is also important to note that a second crop cannot be planted until after the end of the late planting period for the first crop. Therefore, crops such as sunflower offer an opportunity for the producer to regain some of their lost economic opportunity because they can be planted later in the spring and reach maturity, with the added benefit of the growing crop drying out the soil profile for the following year as it matures.