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Serving: IA
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PUSH THE PENCIL: Farmers thinking about filing a prevented planting claim need to run the numbers and talk to their crop insurance agent.

Making the prevented planting decision

Should you plant corn and soybeans late, or take the crop insurance option?

With rain and wet fields continuing to delay corn and soybean planting, the decision whether to use the prevented planting provision of crop insurance looms larger for more farmers. Discussion on this question will increase over the next two weeks.

“We’re now into the week of May 20, and there are areas of the Corn Belt where farmers still don’t have most of their intended corn acres planted,” says Steve Johnson, Iowa State University Extension farm management specialist. “In Iowa, we have flooded areas that remain underwater, and fields that have sand, sediment and debris washed on them that won’t be planted. We also have areas where fields remain just too wet to plant.”

For crop insurance purposes, the final planting date for corn in Iowa is May 31. For soybeans it’s June 15. What does the term “final planting date” mean? “That’s the final date to get corn and soybeans planted to be eligible for full insurance coverage,” Johnson says. “After that date, crop insurance protection moves into a late-planting period that lowers the guarantee 1% per day over the next 25 days.”

Decisions after final planting date

You can still plant corn after the final planting date, he adds, but the crop insurance guarantee is reduced 1% for each day the crop is planted after that final date. Same is true for soybeans. “You are not required to plant during the 25-day late-planting periods that follow the final planting dates,” Johnson explains. “But if you do go ahead and plant, you are not eligible for prevented planting payments.”

If you decide to file for prevented planting, USDA’s Farm Service Agency requires the prevented planting acreage be reported on Form CCC 576, Notice of Loss, no later than 15 days after the final planting date.

There’s a 20/20 rule for prevented planting: a minimum of 20 acres, or 20%, of the farm unit must be affected to be eligible. Also, total acres of planted and prevented planting can’t exceed the total cropland acres.

Prevented planting claims must be filed with your crop insurance agent by June 28 for corn and July 13 for soybeans. Prevented planting acres must be reported on the FSA Form 578 acreage report. Deadline to file that form in Iowa is July 15.

Taking prevented planting

“To decide whether or not you should take the prevented planting option, farmers need to work with their crop insurance agent,” Johnson says. Also, to help you run the numbers in making the prevented planting decision, a new online FAST tool is available. On the University of Illinois Farmdoc Daily website, it compares net return of planting corn and soybeans versus taking prevented planting.

“This tool does a good job of helping you calculate and compare the dollars and cents per acre for planting corn versus taking prevented planting, and for planting soybeans versus taking prevented planting,” Johnson says. “Remember, when using this online tool, the expected net return for planting includes land costs and uses a June 6 planting date and is based on central Illinois data.”

The caution with taking prevented planting is if you are renting the ground, most of the insurance payment you get for prevented planting is going to be enough to cover the cash rent, but that’s about it. Most of the prevented planting acres farmers take this year are going to be corn, because corn can make more money than soybeans, so the prevented planting payment is higher.

Other considerations to weigh

Farmers who file prevented-planting claims are allowed to plant a cover crop on those acres. However, if you intend to hay or graze the cover crop, you must wait until Nov. 1 before haying or grazing to receive the full prevented planting payment, Johnson says. If a farmer grazes or makes hay from the cover crop before Nov. 1, the prevented planting payment would be only 35% of the potential payment.

What if a farmer has a prevented planting claim but decides to plant a second crop after the final cutoff? For example, if a farmer plants a late soybean crop on a field claimed for prevented planting of corn, the farmer could still get 35% of the insurance payment and pay 35% of the premium. The yield of the second crop would also affect the field’s actual production history, or APH, for the next year.

Prevented planting pays 55% of the initial revenue guarantee for corn and 60% for soybeans. A farmer with a 176-bushel APH on corn, who bought 80% insurance coverage, would see a payment of $309 an acre. A soybean grower with a 50-bushel APH, who has 80% coverage, could expect to get a payment of $229 an acre.

“If you are renting ground, consider your rental agreement and your landlord before filing a claim for prevented planting,” Johnson says. “As a cash rent farmer, be sure you understand that the landlord is still expecting to receive their cash rent. Much of the prevented planting indemnity payment you receive could end up going to landlords.”

Compare alternatives

If farmers still need to plant on June 1 in Iowa, they will face this decision: Should they take prevented planting? Or go ahead and plant their corn late?

“Again, work closely with your crop insurance agent,” Johnson says. “If you own the land, maybe you’ll decide to take prevented planting. You could get some tilework done if needed on the land if it isn’t planted to corn or beans this year. Or you could plant a cover crop on that land, but you can’t harvest the cover crop or graze before Nov. 1. A lot of emotional decisions will revolve around prevented planting as we approach the May 31 deadline for corn in Iowa and June 15 final planting date for soybeans.”

Additional details on prevented planting are at Prevented Planting FAQs for 2019, a question-and-answer blog provided by Steve Johnson on ISU’s Ag Decision Maker website. USDA’s Risk Management Agency, which oversees crop insurance, has information at USDA Risk Management Agency on options available for growers considering filing a claim.

 

 

 

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