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Dead wheat and production alternatives

Oh, to have bought Revenue Assurance or Crop Revenue Coverage crop insurance! How can we understand the ACRE and SURE government programs? Add to this drought, freeze, and relatively low prices. Making decisions by one’s self in this environment may be nearly impossible.

Reports are just coming in about the freeze damage to the Texas, Oklahoma and Kansas wheat crops. Texas has the most damage, followed by Oklahoma and then Kansas.

Average Texas wheat production is about 96 million bushels. In April 2008, 48 percent of the Texas wheat crop was poor to very poor, and 19 percent was good to excellent. The April 2008 wheat crop condition index was 45 and Texas 2008 wheat production was 105 million bushels. The current April 2009 index is 28 and 74 percent of the wheat crop is in poor to very poor condition. Only 8 percent of the Texas wheat crop is in good to excellent condition.

Texas wheat production may be less than 50 million bushels.

Oklahoma’s wheat crop is rated 60 percent poor to very poor, 28 percent fair, 12 percent good and zero percent excellent. In 2008, the Oklahoma wheat crop was rated 17 percent poor to very poor and 55 percent good to excellent.

Oklahoma 2008 wheat production was 128 million bushels, compared to average production of 129 million bushels. Analysts have estimated 2009 wheat production to be between 60 and 90 million bushels.

Kansas’ wheat crop is rated 19 percent poor to very poor and 44 percent good to excellent. In April 2009, the Kansas wheat crop was rated 20 percent poor to very poor and 43 percent good to excellent.

Kansas 2008 wheat production was 367 million bushels from 9.6 million planted acres. Planted acres in 2009 are estimated to be 9.0 million or 6.3 percent less. Assuming 39-bushel yields, Kansas wheat production is expected to be about 340 million bushels.

Texas and Oklahoma wheat producers who bought RA or CRC crop insurance are in relatively good condition. Producers who bought only NAP have some protection and producers who did not buy insurance have problems.

Producers who have lost their entire wheat crop may want to plant a summer crop. A problem may be the Supplemental Revenue (SURE) disaster payment that will probably be available for Texas and Oklahoma producers. Some analysts report that the SURE payment may be substantial.

Participation in the Average Crop Revenue Election (ACRE) government program may reduce the SURE payment.

Also, the SURE payment may possibly be jeopardized by planting a summer crop after wheat that has been destroyed by drought and freeze. At this writing, FSA/USDA does not have the final provisions identified for either the ACRE or the SURE program.

Issues that producers must consider when planting a summer crop after wheat loss are required crop insurance, double cropping provisions, and ghost crop provisions.

Producers who plan to plant a summer crop on destroyed wheat land should first calculate the potential profit and the odds of a profit. Then before buying the inputs and planting the crop, time should be spent with their crop insurance agent, and at the FSA/USDA office.

The current situation requires assistance from several government and private agencies. Risks are too high to try to obtain the information and conduct the analysis by one’s self.

It would be a cardinal sin to first lose a wheat crop and then to lose the SURE disaster payment, too, because all the i’s weren’t dotted and the t’s crossed.

TAGS: Corn
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