Extension Communications
Extension 4-H Youth Building
Ames, Iowa 50011-3630
(515) 294-9915
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Extension Communications |
6/3/04
Contacts:
William Edwards, Agricultural Economics (515) 294-6161, wedwards@iastate.edu
Jean McGuire, Continuing Education and Communication Services, (515) 294-7033,
jmcguire@iastate.edu
Follow Crop Insurance Rules for Replanting
By William Edwards
Extension Ag Economist
Iowa State University
Some crops in Iowa have been severely damaged by hail, wind and floods this year. When this happens, several options are available:
Leave the damaged crop as it is.
Replant the same crop.
Plant a different insurable crop.
Abandon the acres and plant a cover crop, only.
Each of these choices has different consequences for crop insurance coverage.
If the damage to the crop does not warrant replanting, then any potential insurance indemnity payments will be based on the actual yield harvested. When a crop suffers extreme damage late in the planting period, the insurance carrier may allow it to be abandoned and the land replanted to a cover crop, only.
Replanting Coverage
If an insured crop is damaged due to a natural peril and is projected to produce less than 90 percent of the guaranteed yield, the producer can receive a payment for the actual cost for replanting it. The maximum replanting payment is $19.60 per acre for corn and $16.80 for soybeans in 2004.
Affected areas must be at least 20 acres in size to qualify. For units over 100 acres, the minimum area is 20 percent of the insured acreage. If one portion of the insured acres meets the minimum size criteria, however, then other smaller areas can be combined with it and the total area is covered.
The same crop must be planted again. The same insurance guarantee is still in effect, based on the original planting date. The replant option is not available for catastrophic level coverage, however.
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 first be released by the insurance carrier. 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.
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 either the second crop payment or the remaining 65 percent of the first crop payment, whichever is greater. If the producer receives only 35 percent of the payment for the first crop, only 35 percent of the original premium for the policy on those acres will be charged.
For revenue insurance policies, all indemnity payments are calculated based on guaranteed and actual revenues rather than bushels. The same partial payments apply, though. For acres rented under a crop share lease, the tenant and the landowner must make the same choice about insuring the second crop.
Other Considerations
Close communication with a trained insurance agent is important when making decisions about replanting crops. All acres that may need to be replanted should be reported to the crop insurance carrier within 72 hours. Acres must be appraised and released before replanting can occur.
Agronomic factors such as herbicide programs, yield and fertility considerations for the following year, feed needs for livestock and long-term crop rotations also need to be given serious consideration when deciding whether to replant or switch to a different crop. For additional information, see ISU Extension publications PM 1851 "Soybean Replant Decisions," and PM 1885 "Corn Planting Guide."
Additional resources to help crop producers make decisions on how to handle hail- and flood-damaged crops can be found on the Web at: http://www.extension.iastate.edu/ag/flooding.html
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