Delayed and Prevented Planting Provisions
Most crop producers know that to achieve optimum yields it is important to plant early. Once the danger of a frost is past, the more days the crop has to grow and mature – the higher the yield. However, in some years cold weather or frequent rains may prevent tillage and planting from being completed as early as desired. When this happens some adjustments may be made to the amount of coverage provided by Multiple Peril Crop Insurance (MPCI), such as Yield Protection, Revenue Protection or Area Risk Protection Insurance (ARPI), as well as other types of crop insurance. A description of Current Insurance Policies can be found in AgDM File A1-48, Managing Risk with Crop Insurance. These adjustments are subject to revision each year by the Risk Management Agency (RMA) and crop insurance vendors.
The first situation that can arise is when the original crop cannot be planted on time. In this case the producer has three choices:
- Go ahead and plant the original crop, even though yields may be reduced.
- Plant an alternative crop.
- Abandon the acres, and plant a cover crop.
A second situation arises when the original crop is planted, but is severely damaged by frost, hail, wind, floods or other natural occurrences. In this case several options are available:
- Leave the damaged crop as it is.
- Replant the same crop.
- Plant a different crop.
- Abandon the acres, and plant a cover crop.
Each of these situations has different consequences for crop insurance coverage.
Late Planting Coverage
MPCI policies include a 25-day late planting period. In Iowa, this period begins on the day after the final planting date, that is, June 1 for corn and June 16 for soybeans. These dates may be different in other states and for other crops. Any acres planted during this period receive a lower yield or revenue guarantee than those acres planted earlier. The coverage is reduced 1 percent per day for each of the next 25 days. (See Figure 1.)
Insured acres not planted until after the end of the late planting period (June 25 for corn and July 10 for soybeans) due to insurable causes can still be insured at the prevented planting coverage level chosen in the original policy.
This reduction applies to both the yield guarantee under Yield Protection (YP) policies, or the revenue guarantee under Revenue Protection (RP) policies.
It is important to remember that the yield guarantees and actual yields on late planted crops are averaged together with those of all the timely planted acres in the same insurance unit rather than considered separately. Example 1 shows how the final guarantee for a mixture of timely planted and late planted acres is determined.
Policy holders who are prevented from planting some crop acres until after the final planting date may choose to not plant the crop at all and still receive 60 percent of the original guarantee, except under a group protection policy. For anadditional premium, prevented planting coverage can be increased to 65 or 70 percent of the original coverage. This choice must be made when the policy is purchased, however. In some years this may be more profitable than planting the crop very late and harvesting only a low yield. No other crop may be planted on these acres, including forage crops to be hayed or grazed. A cover crop can be planted, however. Example 2 illustrates a prevented planting situation.
If a second insurable crop is planted in place of the first crop on or before the end of the late planting period (June 25 for corn in Iowa), coverage for the second crop simply replaces the coverage for the first crop. If the crop is planted after this date, the second crop can still be insured and payment equal to 35 percent of the prevented planting payment on the crop will be received, as well (see Example 2).
Very small land areas do not qualify for the prevented planting coverage, or for replanting payments. Affected areas must be equal to or greater than 20 acres in size, or 20 percent of the insured acreage that was intended to be planted for units under 100 acres.
If an insured crop is severely damaged due to a natural peril such as hail or frost and is projected to produce less than 90 percent of the guaranteed yield, the producer can receive a payment equal to the projected price each year multiplied by the following:
8 bushels for corn
3 bushels for soybeans
The minimum area rules also apply for replanting payments, and the same crop must be planted again. The same production guarantee is still in effect, based on the original planting date. The replant option is not available for catastrophic level coverage (CAT) or group risk policies (ARPI Products). Example 3 illustrates how a replant payment for soybeans might occur.
Planting a Second Crop
When a crop is damaged late in the planting season, the producer may prefer to plant a different crop in place of the original crop. The area must be released by the insurance carrier first. The second crop can be insured if it was included in the original policy. If the second crop is not insured, the producer will receive 100 percent of the indemnity payment due on the first crop, based on an adjustor’s estimate of yield loss (see Example 4).
If the second crop is insured, the producer will first receive 35 percent of the loss payment on the first crop. If the second crop does not have a loss, the other 65 percent will be paid after harvest. If a loss claim is filed on the second crop, however, the producer can choose to take the second crop payment or the remaining 65 percent of the first crop payment, whichever is greater (see Example 4).
Whenever the producer receives only 35 percent of the payment for the first crop, whether planted or not, only 35 percent of the original premium for the policy on those acres will be charged. The yield history on any prevented planting acres for the following year will be calculated as 60 percent of the existing APH yield for that unit.
For revenue insurance policies, all indemnity payments are calculated based on guaranteed and actual revenues rather than bushels. The same coverage reductions apply, though. It is useful to keep a log of how many acres are planted each day and their location, particularly during the late planting period.
Close communication with a trained insurance agent is important when making decisions about replanting or late planting of crops.
, retired economist