Multi-Peril Crop Insurance: Delayed and Prevent Plant Choices

Crop insurance late plant dates are fast approaching for planting crops in South Dakota. The weather and soil conditions this spring will likely lead to some prevent plant situations for farm producers.

 

Producers will want to work with their crop insurance agent to explore planting options and reporting of prevent plant areas. When the original crop cannot be planted on time the producer has three choices:

 

Multi-peril crop insurance (MPCI) policies have a 25-day late planting period. The late plant period begins the day after the final plant date. May 26th and June 1st for corn and June 11th for soybeans. Acres that are planted during this period receive a lower guarantee than acres planted on time. Coverage is reduced one percent per day for the 25 days.

 

After the late plant dates the crop can still be insured but at a reduced level of coverage. It is important to remember that the yield guarantees and actual yields on late planted crops are averaged together with the acres in the same insurance unit that are planted timely.

 

 

Producer with Actual Production History (APH) yield of 150 bushels per acre of corn and RP policy at 75% coverage level with an indemnity price of $4.00, would have a revenue guarantee of $450 per acre:

 

150 bushels × 75% × $4.00 = $450 per acre

 

There are 300 acres of corn in the insured unit. Two hundred acres are planted on time, while weather prevents from planting 40 acres June 12th and the remaining 60 are planted June 20th. The guarantees are the following:

 

 

A producer that is prevented from planting until after the late planting period and chooses to not plant the crop at all, will receive 55 percent of the original guarantee for corn and 60 percent of the original guarantee for soybeans. An additional buy up could have been made when the policy was originally issued.

 

Sometimes taking prevent plant may be better than planting very late and harvesting a low yield. Prevent plant requires that no other harvested crop may be planted on these acres, however, a cover crop can be planted (Example 2).

 

If a second insurable crop is planted in place of the first crop on or before the end of the late planting date, the crop insurance coverage for the second crop simply replaces the coverage of the first crop. If the crop is planted after this date, the second crop can still be insured and a payment equal to thirty-five percent of the prevented planting payment on the first crop will be received. Be sure to work with your crop insurance agent in determining your choices for prevent plant acres.

 

 

The producer has 300 acres corn in the insured unit, with a guarantee of $450 per acre. In this example 200 acres are planted before the final plant date, (May 25th or May 31st) and then weather prevents them from planting the last 100 acres.

 

The producer is unable to plant any crop on the 100 acres, the guarantee on the 200 timely planted acres would remain at $450, but the guarantee on the 100 prevent plant would be 55% or $247.50.

 

The prevent plant payment would be $247.50 x 100 acres = $24,750.

 

The effects on APH yield depend on the choices made for those acres. If a producer collects a prevent plant 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. If a second crop is planted and a 35% percent payment is collected the yield history on the prevent plant acres for the following year will be calculated as 60% of the existing APH yield for that unit.

 

Producers will want to protect and improve their prevent plant acres the best that is possible and for the best return to their operation. This may include planting a forage crop and not insuring the acres or planting a cover crop to graze or hay. If producers want to collect the prevent plant payment any forage crop must be left until after November 1st and can only be grazed or hayed after this date or it will be considered a second crop.

 

It is important for individuals to work with an insurance provider to help in determining their choices for a delayed or prevent plant situation.