Corn and Soybean Farmers Need to Pay Attention to Crop Insurance with Late Planting

Many farm operators in the upper Midwest are dealing with very late planting conditions for corn and soybeans in 2011. Some of these operators will soon be facing decisions on whether to plant corn – the intended crop – at a later than normal planting date, switch to an alternative crop such as soybeans or decide to collect prevented planting coverage on their 2011 corn crop. For producers with federal crop insurance coverage on corn and soybeans in 2011, the prevented-planting provisions of their crop insurance policies could affect the late-planting decision. It is very important for producers to consult with their crop insurance agent before finalizing any decisions on planting a crop after the final planting deadline, or switching from corn to soybeans after May 31 in Minnesota and other states.

According to the USDA Risk Management Agency (RMA), producers have the following options with regards to delayed or prevented planting later than the established final planting dates (these provisions are not applicable until after the final planting dates):

• Plant the insured crop during the late planting period, which is typically 25 days following the established final planting date for a given crop. For example: A final planting date of May 31 for corn would result in a late planting period from June 1 to 25. The crop insurance coverage is reduced by 1% for each day after the final planting date for the next 25 days.
• Plant the intended crop after the 25-day late-planting period. Crops that are planted after the 25-day late-planting period are insured at the same level as the prevented-planting insurance coverage, which is 60% of the original crop insurance guarantee for most corn and soybeans. For example, an original revenue guarantee with an 80% RP crop insurance policy of $800/acre would result in a $480 prevented-planting guarantee.
  • Leave the unplanted crop acreage idle (black dirt). Eligible producers can then receive the full prevented-planting coverage, typically 60% of the original crop insurance guarantee for corn and soybeans.
  • Plant a cover crop rather than the intended crop, and receive the full prevented-planting payment (60% of guarantee on the intended crop). The cover crop cannot be used for haying and grazing until after Nov. 1 of the crop year, and cannot be harvested at any time.
  • Plant another crop (second crop) after the late-planting period has ended. In this situation, haying, grazing or harvesting of the second crop could occur at any time before or after Nov. 1. The prevented-planting payment is reduced to 35% of the original prevented-planted payment. For example, $800/acre original guarantee x 0.60 = $480/acre x 0.35 = $168/acre.

The final planting date for corn in Minnesota, Iowa and South Dakota is May 31, meaning that the late-planting period is June 1-25. For soybeans, the final planting date is June 10 in Minnesota and South Dakota and June 15 in Iowa, with the final planting date extending for 25 days until July 5 in Minnesota and South Dakota and until July 10 in Iowa. It is important to pay close attention to the final planting dates and the late-planting period when making late-planting or prevented-planting crop insurance decisions.

To qualify for prevented-planting insurance coverage and payments, affected areas must be a minimum of 20 acres, or 20% of the total insured acreage, on farm units of less than 100 acres. Very small areas of land do not qualify for prevented-planting coverage, which could be a factor on some smaller land tracts with optional unit insurance coverage. Meeting the 20% threshold may be easier with enterprise units if most crop acres are affected; however, it could become more difficult if some farms are affected, and some are not.

It is very important for producers to document all prevented-planted acres and crop losses with their crop insurance agent before switching crops or doing any other practices on the affected acres. Producers also need to keep good records and documentation of crop losses and prevented planting for future calculations of crop insurance indemnity payments.

Every producer’s situation is different when it comes to late- and prevented-planting situations. As a result, the best option will vary considerably from farm to farm. In addition to differences in production practices and yield potential, there are differences in level of insurance coverage, optional or enterprise units and other crop insurance provisions. The choice a producer makes could result in a difference of thousands of dollars in the potential insurance coverage that is available. That is why it is so very critical for producers to consult with their crop insurance agent before finalizing late- and prevented-planting crop decisions.

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 kent.thiesse@minnstarbank.com.