What is in this article?:
- Prevented Planting Payments versus Planting Soybeans
- Farm Scenarios
- Corn Prevented Planting Payments versus Planting Soybeans
- Soybean Prevented Planting Payments versus Planting Soybeans
Corn Prevented Planting Payments versus Planting Soybeans
For those cases in which corn was originally going to be planted, farmers may be able to take prevented planting payments on corn. In these cases, the relevant comparison is between the return from taking a corn prevented planting payment and returns from planting soybeans.
For planting soybeans to have higher returns than prevented planting, soybean revenues must exceed the net prevented planting payment ($421/acre, see above) plus soybeans costs ($215/acre, see above). In other words, soybean revenue must exceed $636/acre ($421 prevented planting payment + $215 soybean costs). A number of yield and price combinations can result in revenue more than $636. Currently, harvest-time bids are at $12.70/bu. for soybeans. At a $12.70 soybean price, soybean yields have to exceed 50 bu./acre for planting soybeans to be more profitable than taking the soybean prevent planting payment (50 bu./acre breakeven equals $636 revenue / $12.70 soybean price). Lower soybean prices result in higher soybean yields to have higher returns than prevented planting.
While yields above 50 bu./acre are possible, soybean yields lower than 50 bu./acre are more likely. At this point in time, taking the prevented planting payment has higher returns than planting soybeans in most case.
The returns in the above example change with different insurance coverages. Prevented planting is more favorable the higher the coverage level. Some farmers purchased higher prevented planting factors (0.65 and 0.70) which will make prevented planting returns higher, thereby increasing the desirability of taking the prevented planting payment.