Insurance and Replanting Damaged Fields

OMAHA (DTN) -- As farmers in parts of the Corn Belt see flooded spots across fields and hail damage from the stretch of intense storms over the past week, questions about crop insurance, revenue guarantees and possible second-crop options come into play for at least a short window, crop-insurance experts explain.

For most farmers carrying 80% revenue protection coverage on that crop that was already planted, the best advice would be to let the insurance policy go to work for you.

"When you get into late June and early July, just put the planter away and work with your crop-insurance agent or your adjuster," said Steve Johnson a retired farm management specialist from Iowa State University who still counsels farmers on their insurance options. "If you've got crop insurance, and you've got the right coverage and products in place, you are not going to replant."

Most farmers will not replant corn or soybeans this late in the crop year. Still, there are those who struggle with the cosmetics of a bare spot in the field, especially when prices are high. "But it all comes back to working with your crop insurance agent," Johnson said.

Farmers with losses from flooding or other storm damage should have already contacted their crop insurance agent and had an adjuster come out. Hail coverage can be paid out now, but crop insurance revenue protection policies will need to wait until production evidence is provided before an indemnity is paid out.

Not everyone is using the same product level of coverage, and there are distinctions in crop insurance between optional units -- field-to-field coverage -- or enterprise units. Farmers with enterprise-unit policies are typically carrying hail coverage in addition to the revenue protection, Johnson said.

An insurance provider may decide it is still practical to replant a crop, but that decision often falls within 10 days of the RMA final planting date. While final planting dates differ around the country, the window has passed for corn's late-period planting.

Farmers can choose not to plant a second crop and receive 100% indemnity on the first crop. Another option would be to plant a second crop but not insure it. If a farmer plants a second crop on the same acres but chooses not to insure it, then he or she still would receive 100% indemnity on the first crop. The second-crop acres would need to be reported on the acreage report as uninsured or uninsurable.

Still, the seed companies increasingly are willing to provide free seed for replanting. Farmers can still file for a replant claim if they want. Some do so, but others simply don't want to deal with the paperwork.

A REPLANT SCENARIO

A farmer decides to replant a field planted to corn before the late-planting window that is carrying full coverage on the crop. To collect on replant coverage, the damage would have to show the field would produce less than 90% of the guaranteed yield.

A farmer with a 200-bushel-per-acre Actual Production History (APH) and 80% coverage has a yield guarantee of 160 bushels. According to RMA, your scored yield after a loss must be 90% of that guarantee. So, at a 160-bushel guarantee, the 90% would come in at 144 bushels.

"So, if the estimate comes out to be 144 (bpa) or less, you could qualify for replant," said Ben Brown, a senior researcher at the University of Missouri in agricultural economics.

To file a claim, you must meet a certain threshold, which is either 20% of all of your acres that are insured in that unit, or at least 20 acres, whichever is smaller.

The replant payment for corn is the price guarantee -- $4.58 a bushel for corn -- multiplied by 8 bushels, which is $36.64 an acre. The replant payment for soybeans is 3 bushels multiplied by $11.87, which is $35.61 an acre. The replant option is not available for Catastrophic (CAT) coverage or group-risk policies.

If a producer decides to replant the field back to the original crop, the unit would maintain the same initial plant date on the coverage and 80% guarantee even though the farmer is replanting in the late-planting period.

"The whole field still maintains that same planting insurance guaranteed," Brown said. "If the corn got flooded, they will replant the acres of corn and take the $36 for replant, and that's it. That's what they do."

CHANGING CROP

A farmer in the same scenario whose field is flooded could also choose to terminate the corn and replant a second crop such as soybeans. If a farmer doesn't want to insure the soybean crop, he or she can take a 100% loss on the corn crop and get the 80% guarantee. "The soybean crop is planted, but you'd have no risk protection because you took all the risk on the corn," Brown said.

Moving insurance coverage to a second crop is a little bit tricky because a farmer is basically keeping the same policy no matter what crop they plant. A farmer can accept the full indemnity on the first crop or split it on the second crop at 65% coverage.

In that case, the farmer would get 35% of the corn guarantee upfront. At 160 bushels protected, that would be 56 bushels, multiplied by the price guarantee of $4.58 a bushel for corn for a payment of $256.68.

"Then, if there's a loss on the soybeans, we either get the higher of the soybean loss, or the remaining 65% of our corn payment," Brown said. "If there's no loss on the soybeans, we get the 65% from the corn payment."

TAKE INDEMNITY, PLANT A COVER CROP

Farmers can receive their indemnity on the first crop and still plant a cover crop, though USDA still has a policy that cover crops cannot be hayed or grazed before Nov. 1 or producers risk seeing their indemnity reduced. This is another situation that would require a conversation with the insurer about rules for haying or grazing those cover crops.

In 2019, USDA offered an incentive payment for farmers to plant cover crops after the normal planting season because of the high numbers of acreage that wound up with prevented planting claims.

USDA in 2019 and 2020 also made temporary changes to the haying and grazing date for cover crops.

For at least the past two years, members of both the House and Senate have introduced a bipartisan bill that would give USDA more flexibility to move up the haying and grazing date for states and ensure that changing the haying and grazing date would not affect a producer's APH. That bill, the Feed Emergency Enhancement During Disasters with Cover Crops (FEEDD) Act, is still pending.

RISKS INVOLVED

As DTN reported during the wet spring of 2019, planting soybeans after June 15 requires moving to a shorter-season variety to reduce the risk of a freeze before harvest. Other agronomic hiccups, such as pest pressure and tweaked plant populations, are also considerations. See "A Roundup of Recommendations for Late Soybean Planting," here: https://www.dtnpf.com/…

Chris Clayton can be reached at Chris.Clayton@dtn.com

Follow him on Twitter @ChrisClaytonDTN

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