Prevent Planting: Clear as the mud on my boots
This update will focus on Prevented Planting as promised, but I cannot let the opportunity to escape without providing additional, useless information...
Good day all,
It sure was enjoyable to feel and see the sun today. It was interesting to see how quickly and the number of trees that opened their buds into flowers - spring is a beautiful time of year in this valley.
This update will focus on prevented planting as promised, but I cannot let the opportunity to escape w/o providing additional, useless information...as always, we welcome your feedback.
4.29.19 - Deadline for reporting spring crops - barley, canola, peas...this includes correcting databases as necessary.
Big brother - My dear bride has previously told me that virtually all purchases were monitored to indicate tendencies and help aid with marketing techniques. Marketing 101, I guess...well, big brother is trolling and all in the name of fraud prevention.
Fertilizer - For those looking and planning ahead...please read this trend report.
Prevented Planting - This will provide some of the basic information regarding this subject matter, specifics to you and your potential loss are best handled individually. It is the responsibility of the insured to substantiate your possible loss - document, document, document. Pictures are worth a thousand words, perhaps more. Inquiries welcomed.
As farmers, we are eternally optimistic. And a bit of a gambler too. We gamble on the market price staying where it’s at or gaining traction at the time we need to sell, prior to planting our crops in the fall and spring. We gamble (along with hopes and prayers) Mother Nature will look favorably upon us through the winter and spring as we are making laps in our fields with the drill in tow.
This year has proven to be one for the record books. We have lost valuable growing degree days this season with the late snow cover received in February and March. Here we are the middle of April and still trying to get a good start on spring work.
The good news - for the most part, the plants have survived under the snow cover and the frost has left, enabling the soil to retain as much of the moisture as possible.
The bad news - the extended winter that occurred February and March has caused delay and created issues with our spring planting intentions.
With the excess moisture and fast approaching spring Final Plant Dates comes the obvious small leap to possible Prevented Planting. Your underlying Multi-Peril Crop Policy provides some relief if this potential problem becomes a reality this spring. Grab a cup of coffee, we'll highlight the coverage particulars:
First, we need to determine your eligibility for Prevented Planting. Eligible acres are determined from your planting history of the most recent four crop years; and if applicable, any land that's been added to your farming operation. Therefore, the average acreage planted for each crop over the past four crop years creates your eligible acres. Additionally, you must have the inputs necessary to plant the intended acres. i.e. one cannot plant spring canola for the first time w/o securing the necessary seed to complete this intended task. Correspondingly, one cannot increase farmed acres w/o adding the equipment required to farm said acreage.
All spring crops grown in our region qualify for Prevented Planting, the amount of coverage provided does differ by crop. RMA did reduce the Prevented Planting coverage level on some crops – canola and corn are 55%, potatoes are 45%, and onions are 35% or 15% depending on type and location. All dry pea types (green & yellow, lentils, large and small garbs), barley, soybeans and wheat remain at 60%. The table below provides a reference of sorts:
For example: 85% RP coverage level x 50 bu spring wheat aph x $6.21 x .60 PP = $158.36 per acre possible prevent plant loss payment.
We need to keep in mind that all acres prevented from being planted will not automatically qualify for Prevented Planting coverage just because we cannot get the crop planted by the Final Plant Date. There exists a 20/20 rule - prevented acreage needs to equal 20 acres OR 20% of the unit, whichever is less. This is not new or a change, all plant type payments have this qualifier. Give careful consideration to planting fringe areas hoping to seed all ground possible; I've seen first hand where this can be detrimental, we all know 'mudded in' acres don't produce as well and you then contend with the field conditions for several years to come.
The chart provides a brief snapshot of the various crop plant dates in our region. If your county or the crop you are intending to plant is not listed, please contact us directly and we’ll provide you with the applicable information. We've tried to capture the correct dates, human error may have prevailed over our best intentions.
Planting on or prior to the Final Plant Date, provides coverage as normal. History says your crop will reach harvest maturity with an average yield under normal growing conditions. Crops planted after the published Final Plant Date have a decreased probability of an average yield, due to typically less than favorable growing conditions. Crops planted after the Final Plant Date are still insurable, but at a reduced rate (more later regarding) At this point, you have a couple of decisions to make as of the Final Plant Date:
- Turn in a Prevented Plant claim within 72 hours of the final date (please reference chart above) or the date you determine you are no longer going to continue to try and plant, which must be after the published final plant date for the crop and county.
- Continue to plant as usual, keeping detailed records of what day each acre was planted. Every day past the Final Plant Date you plant, your coverage is reduced by 1%, (1% per day, up to 25 days for the late plant period). Keep in mind the corresponding premium incurred is also reduced (guarantee drives premium). Lastly, these dates are important when certifying your planted acres at FSA, as the loss adjuster will reference the dates recorded on your producer summary (578) in the event of a claim.
- Plant an alternative crop, generally not a viable option in our region. Be advised, this isn’t as good as it sounds as there is a trade off for later seeding prevent plant acres. Additional info regarding this is next.
→Path # 1: You NEED TO FILE A CLAIM WITHIN 72 HOURS. (Are you picking up a theme yet?) As we said above, you are only eligible for prevented planting coverage if you’re unable to plant 20 acres, or 20% of the unit, whichever is smaller. The Multi-Peril policy allows for a payment of UP TO 60% of your guarantee depending on the crop. This is calculated by multiplying your per-acre yield guarantee X the projected price X your prevent plant coverage level. Sample calculation shared earlier in this explanation.
→Path #2: Let’s talk hypothetical's. If you have 85% coverage on your large garbs in Whitman County but you aren’t able to finish seeding by the Final Plant Date of May 20th, you can still attach coverage on any acres seeded after May 20th until the Late Plant Date, 25 days. Let’s say you seed Field A on May 21st, and Field B on May 24th, your coverage will now be: Field A = 84%, Field B = 81%. Remember, premium is also reduced.
→Path #3: You turn in a Prevented Planting claim on the crop intended to be planted and the residual chemicals in the field allow you plant an alternative crop at a later date. ***And this is important, planting a crop off label is considered a poor management practice and NOT a covered loss.*** Is it ok to plant it? As always… it depends. Here’s what the RMA has to say about it:
Example 1: First Insured Crop is Prevented from Being Planted*
- No second crop** planted, received full prevented planting payment of the first insured crop.
- Plant and hay or graze a cover crop on or after November 1, full prevented planting payment on first insured crop.
- Plant an alternative crop or hay or graze a cover crop*** after late planting period for first intended crop but before November 1, 65 percent reduction in prevented planting payment (insured producer will also have to accept a yield of 60 percent of actual production history (APH) for the year to be counted as part of their APH).
All clear as mud I trust?!?!
Moral of the story: your risk management partner needs to be a vital member of your trusted board of advisors. If you are facing a Prevented Planting or a Late Planting scenario, please give us a call before you start or stop pulling that drill.
Supervolcano - According to NASA, a greater threat and an event worse than an asteroid...
WASDE - The World Ag Supply and Demand Estimates report was as anticipated, bears are running wild...
Weather - Monster storm part deux...
We should soon see drier conditions and warmer temps...
Until next time...
"Your talent determines what you can do...
Your motivation determines how much you are willing to do...
Your attitude determines how well you do it"
McGregor Risk Management Services, LLC
Cell - 509.540.2632
Office - 509.843.2599
Fax - 509.843.2583