Prevented-Planting Decisions

Farms Underwater Won't Have a Choice, but Prevented Planting Not an Easy Decision

Chris Clayton
By  Chris Clayton , DTN Ag Policy Editor
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Richard Oswald stands near his still-flooded farm by Rockport, Missouri. Fields and roads in his area, which is in the Missouri River Valley, have been flooded since mid-March. (DTN photo by Chris Clayton)

ROCKPORT, Mo. (DTN) -- Richard Oswald still can't get to his home without a boat. And water still stands on fields and muddy roads, pretty much as it has since his northwest Missouri farm was flooded in mid-March.

Oswald has written columns for DTN in the past, including View From the Cab in previous years. He's also one of the numerous farmers throughout the Corn Belt who are facing the possibility of delayed or prevented planting this spring.

"This actually looks better than I thought it would," Oswald said late last week as he looked at a muddy, water-covered road that would normally head to his house and most of his acreage. He's anxious to get to his house, the first floor of which remained dry in the floods of 1952, 1993 or 2011. This time, though, his first floor is going to be filled with muck.

"I spend a lot of time just doing this. When I have some quiet time I come out here and look, but then you realize you aren't getting anywhere."

The water did recede enough for him to plant corn on a couple hundred acres, but Oswald is almost certainly looking at a prevented-planting claim on roughly 1,500 acres that remain underwater.

"I don't have much of choice about it with the water where it is," Oswald said.

Interstate 29 in southwest Iowa and northwest Missouri opened on Wednesday, providing a close-up look at devastated farms just off the Missouri River. Tens of thousands of acres in those areas remain underwater, or under feet of sand, sediment and trash. Very few of those acres will be planted this spring.

Leading into USDA's Crop Progress report on Monday, May 13, roughly 79 million acres of soybeans and more than 71 million acres of corn were unplanted. Rains and cold weather hampered planting throughout major corn and soybean states this past week.

Already, there are a lot of questions about how much acreage won't be planted this spring because of widespread flooding. At the end of March, the data group Gro Intelligence estimated for Reuters that more than 1 million acres were flooded across nine states for at least seven dates in March.

The big year for prevented planting acreage was 2011 -- the year of the last major Missouri River flood -- in which 8.57 million acres of corn, soybean and wheat acres were unplanted. In 2013, also a wet spring, 7.33 million acres were unplanted. Since then, the acreage has been modest. In 2018, there were just 1.58 million acres of prevented-planting acres.

While this year's wet spring might look comparable to 2013, the payments for prevented-planting insurance have changed quite a bit, said Steve Johnson, a farm management specialist at Iowa State University. The coverage level is now lower for corn, and the price protection is also dramatically lower now.

"This is a different game for 2019 because the revenue guarantee is so much lower for corn and soybeans than it has been in recent history," Johnson said. "So the reality of prevent-plant is much different than it was. That's why I don't think it will be as big a deal as 2013 because of the financial constraints on a lot of these farms right now."

Johnson cautions producers to push a pencil and have a long talk with their crop-insurance agent about their specific policies before making any decision. If they haven't already, farmers should be photographing the damage to their fields.

"You need to make sure you are working with your crop insurance agent and documenting any sort of loss," Johnson said.

Farmers renting ground also have to consider their rental agreement and landlord before filing a prevented-planting claim.

"If you are a cash-rent farmer, you better make sure you understand the landlord is still expecting their cash rent," Johnson said, noting a high percentage of payments could go to landlords. "So there are issues that are interacting with prevent-plant, and it's going to be high emotion. We're going to have a month of high anxiety."

Extension economists that write for the University of Illinois publication FarmdocDaily (https://farmdocdaily.illinois.edu) have done some analysis showing the level of prevented planting for corn is also about 1.2 million acres larger than average when late corn planting is 10% or more higher than average. (https://farmdocdaily.illinois.edu/…)

For farmers who have to consider prevented-planting claims, final planting dates and late-planting periods for crops vary from state to state. It's important to check with the insurance requirements in your state and county for final planting dates needed for prevented-planting claims.

Farmers must notify their insurance agent of a prevented-planting claim within 72 hours of the end of the late-planting filing period. That would be June 28 for corn and July 13 for soybeans in Iowa, and in Nebraska it is June 22 for corn and July 8 for soybeans.

The final planting date in Iowa for corn is May 31, in Nebraska it's May 25, and in northern Missouri the counties are divided between those two dates.

There can be confusion over the term "final planting date," Johnson notes. That simply means the final date for full insurance coverage. After that date, crop insurance protection then moves into a late-planting period that lowers the guarantee 1% per day over the next 25 days.

For soybeans, the final planting date is June 15 in Iowa and June 10 in Nebraska. Northern Missouri has another divide between counties that goes to June 10 in northwest Missouri and June 20 in central and eastern Missouri. Again, the late-planting period lowers coverage 1% per day for the next 25 days after those dates.

The Farm Service Agency also requires that prevented-planting acreage be reported on form CCC-576, Notice of Loss, no later than 15 days after the final planting date.

Farmers are not required to plant during those late-planting days, but if you do, you are not eligible for prevented-planting payments. You can notify your crop insurer and shift acres from corn to soybeans.

Prevented planting pays 55% of the initial revenue guarantee for corn and 60% on soybeans. For example, a farmer with 176-bushel Actual Production History (APH) on corn who bought 80% coverage would see a payment of $309.76 an acre (176 x 0.80 x $4 = $563.20 x 0.55 = $309.76).

A soybean farmer with a 50-bushel APH who has 80% coverage could expect a payment of $228.96 an acre. (50 x 0.80 x $9.54 = $381.60 x 0.60 = $228.96).

Crop insurance also has a 20/20 rule for prevented planting. A minimum of 20 acres or 20% of the farm unit must be affected.

Farmers who file prevented-planting claims also are allowed to plant a cover crop on the affected acreage. However, if a farmer intends to hay or graze the cover crop, the producer must wait until Nov. 1 before haying or grazing to receive the full prevented-planting indemnity payment. If a farmer grazes or hays that cover crop before Nov. 1, then the prevented-planting indemnity would be just 35% of the potential payment.

The same scenario applies if a farmer has a prevented-planting claim but decides to plant a second crop after the final-planting cutoff. If a farmer plants a late-season soybean crop on a field claimed for prevented-planting of corn, then the farmer could still receive 35% of the indemnity and pay 35% of the premium. The second crop's yield also would affect the Actual Production History for next year.

More details on prevented planting can be found at https://blogs.extension.iastate.edu/… and https://www.rma.usda.gov/…

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

Follow him on Twitter @ChrisClaytonDTN

(AG/BE)

Chris Clayton