Updated December, 2020
Delayed and Prevented Planting Provisions for Multiple Peril Crop Insurance
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, Current Crop Insurance Policies. 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% per day for each of the next 25 days, then drops to 55% for corn and 60% for soybean after the end of the late planting period (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 late planting period and choose to not plant the crop at all, will receive 55% of the original guarantee for corn or 60% of the original guarantee for soybeans. For an additional premium, prevented planting coverage can be increased to 60% of the original coverage for corn acres, or for soybean acres, 65% of the original coverage. This choice must be made when the policy is purchased, however.
In some years, not planting may be more profitable than planting the crop very late and harvesting only a low yield. In order to receive the full prevented planting payment, no other insurable crop may be planted on these acres; however, a cover crop can be planted. 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 a payment equal to 35% of the prevented planting payment on the first crop will be received, as well (Example 3).
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% 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% of the guaranteed yield, the producer can receive a payment equal to the projected price each year multiplied as follows:
8 bushels for corn x spring projected price
3 bushels for soybeans x spring projected price
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 4 illustrates how a replant payment for soybeans might occur.
Practical to Replant
The insurance provider may determine that it is still practical to replant a damaged crop. This will generally be true for up to ten days after the RMA final planting date for that crop, which would be through June 10 for corn and June 25 for soybeans in Iowa. Dates may differ for other crops and other states. If it is deemed practical to replant a damaged crop, the producer can (1) replant the original crop, receive a replant payment, and maintain 100% of the original insurance coverage on that crop, (2) plant a second crop instead and insure it, or (3) do neither, in which case the insurance coverage on the original crop is voided and no premium is due.
Planting a Second Crop
If the producer elects to plant a different crop in place of the original crop, the area must first be released by the insurance provider. If the second crop planting date is on or before the end of the practical to replant period (June 10 for corn and June 25 for soybeans), the insurance coverage and premium for the first crop are eliminated, and the second crop can receive full insurance coverage, the same as if it were the original crop.
If the second crop planting date is after the practical to replant period, different rules apply. If the second crop is not insured, the producer will receive 100% of the indemnity payment due on the first crop, based on an adjustor’s estimate of yield loss (Example 5), and have no coverage on the second crop.
If the second crop is insured, the producer will first receive 35% of the loss payment on the first crop. If the second crop does not have a loss, the other 65% of the first crop loss 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% of the first crop payment, whichever is greater (Example 5). Whenever the producer receives only 35% of the payment for the first crop, whether planted or not, only 35% of the original premium for the policy on those acres will be charged.
For acres rented under a crop share lease, the tenant and the landowner must make the same choice about insuring the second crop.
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 or not to plant a different second crop.
The provisions for replanted crops should not be confused with those pertaining to late planted crops, as explained above.
Planting a Cover Crop
Producers who elect to plant a cover crop after the late planting period can choose to hay or graze it before November 1 and receive 35% of the indemnity payment, or wait to hay or graze it on or after November 1 and receive the full indemnity payment for their first crop.
Effects on APH Yield
The yield history on any prevented planting acres for the following year will be calculated as 60% of the existing Actual Production History (APH) yield for that unit, if a second crop is planted and a 35% payment is collected. If a producer collects a prevented planting payment and does not plant a second crop, no yield history is counted for that year and the APH yield for that unit is not affected for the following year.
Work with an approved insurance provider to determine delayed or prevented planting decisions for individual operations.