C.O.R.N. Newsletter 2011-15

Dates Covered: 
May 27, 2011 - May 31, 2011
Editor: 
Glen Arnold

Crop Insurance Preventive Plant Options

With heavy rainfall across Ohio this week, farmers with crop insurance are evaluating planting options in order to maximize returns.  There are many agronomic and contractual obligations that need to be considered before making a final decision.

Factors that may influence crop planting options not covered in this table include:  crops contracted (HTA, Forward Contract, Basis Contract, etc.), herbicides applied, seed availability, feed needs, land lease obligations, etc).

Before choosing the preventative plant (PP) crop insurance option versus planting a crop, farmers should utilize Best Management Practices (BMP), crop production budgets with expected yield and price, in order to calculate maximum returns for each option.  This decision will be made on a field by field basis where fields with higher productivity potential still may provide higher return by planting corn than other options.  A spread sheet is available to aid in decision making at (http://ohioagmanager.osu.edu/).   Agronomic information relevant to late planting is available at https://agcrops.osu.edu . The following are items to consider.

We strongly recommend you contact your crop insurance agent before making any decisions. 

Crop Insurance Preventive Plant Options

Claim Preventive Planting (PP)

(GRP, GRIP not eligible)

Switch Corn Acres to Soybeans

Plant Corn after June 5th

File claims anytime between June 5 and July 3, 2011. Maximum PP acres equals highest corn acres planted last 4 years .

 Soybean yields will decline from .25 to 1 bushel per day depending upon row width, date of planting and plant type (Ohio Agronomy guide)from a late April planting date in Northern Ohio.  Many factors influence yield and the above reflect long term averages. As such, yield losses may be less or more. See the CORN newsletter for more information.

Corn yields will decline from optimum about 1 to 1.5 bushel s per day after May 7 in Central Ohio (Ohio Agronomy Guide).  Many factors influence yield and the above reflect long term averages. See the CORN newsletter for more information.  The latest practical date to plant corn ranges from June 15 in northern  Ohio to about July 1 in southern Ohio (Ohio Agronomy Guide).

Claims not processed until certified by FSA.  Acerage totals are determined at that time.

Does not influence corn APH

·         Calculate returns utilizing contracted or expected price X projected yield plus reduced level of crop insurance (coverage  declines 1% per day after June 5th).  A spread sheet is avaialalbe to aid in decision making at: http://ohioagmanager.osu.edu/

PP does not change APH. However, if you plant a cover crop on PP acres, and then make hay, silage or graze prior to Nov. 1, your PP payment is reduced to 35% and APH is impacted!

Calculate returns to expected yield and price for soybeans and compare to PP or corn with crop insurance coverage.

 

PP Insurance calculation is APH x coverage level x 60% x price (6.01) x % interest

June 20 is final plant date for soybeans.

 

Insured must have been prevented from planting the lesser of 20 acres or 20% of the insured unit. See planting requirements for enterprise unit subsidy.  This is important, read  next section and contact your agent for clarification.

If you start planting soybeans in a field that field becomes a soybean field.

 

Calculate returns to PP and compare to your revised corn crop production budgets while maintaining revenue insurance coverage (coverage declines 1% per day after June 5th). A spread sheet is available to aid in decision making at: http://ohioagmanager.osu.edu/

   

Take PP and plant another crop (must wait until July 1).  Your PP claim for corn will be reduced to 35% of your coverage and 35% of premium will be due.

   

  

Additional Crop Insurance Information

Provided by:  Schiefer Insurance Services, Bucyrus, Ohio

Since Prevented Plant (PP) is probable for this year’s corn crop, we wanted to pass along further

information to aid in your decision making process. Also, if your corn acreage has been enterprised, it is very important that you read the information on page 2.

Call your insurance agent before making final decisions!

The most important thing is to get a claim in on time. Since we live in an area that has a late planting period, a claim is allowed to be filed anytime between June 5 and July 3.

We recommend that if you have any acres of corn not planted as of June 5, PUT IN A CLAIM. It can always be canceled should you complete your planting, though late, or convert those acres to soybeans*.

The claim will not be processed until you have certified your acres at FSA.

*But once you start planting soybeans, the field becomes a soybean field and any unplanted acres in that field will now be part of a soybean claim (unless that field is typically split).

To Qualify for a PP Payment:

· A claim must be filed no later than 72 hours after the late planting date of June 30.

· Prevented planting must be due to an insured cause of loss present prior to June 5 that is general in the surrounding area and that prevents other producers from planting acreage with similar characteristics.

· The insured must have been prevented from planting the lesser of 20 acres or 20% of the insured unit.

· The insured must have eligible acres and ground available for planting. [The eligible acres will consist of the maximum number of certified corn acres in any of the four most recent crop years.]

· Total acres of planted and PP cannot exceed cropland acres. PP acres and planted acres must be reported on the crop insurance acreage report.

PP Payment Calculation Example:

This example can be applied to either the optional unit structure or the enterprise unit structure. The enterprise unit’s approved yield is a line item simple average based on each optional unit’s intended and/or planted acres. Your best estimate will be sufficient. Refer to the production summary sheets left with you at this past winter’s meeting and look for the “Approved Yield”.

Basic formula:

Approved Yield x Coverage Level % x Guarantee Price x PP Coverage % x % Interest = Payment per acre

Example:

170 b/a x 80% x $6.01 x 60% x 100% = $490 / acre

ENTERPRISE UNIT SUBSIDY QUALIFICATION

In order to receive the enhanced enterprise unit subsidy, some of your crop must be planted.

FCIC Handbook Section 10 (C) (3) (a,b)

(3) Qualifications. To qualify for EUs:

(a) The EU must contain all of the insurable acreage of the same insured crop in:

 

1. Two or more sections, if OUs are available by sections;

(b) Each of the above [(a)1-(a)6] that are used to qualify for the EU must have planted acreage that constitutes at least the lesser of 20 acres or 20 percent of the insured crop acreage in the EU. If there is planted acreage in more than two sections, these can be aggregated to form at least two parcels to meet this requirement.

· If you were fortunate enough to plant enough corn before June 5, you likely have no enterprise discount  concerns.

· If you haven’t planted a minimum amount, you should use the time allowed in the late planting period (June 5 – June 30) and get more than the minimum amount (the lesser of 20% or 20 acres) of your intended corn acres planted in at least two sections. The intended acres are whatever you report as corn planted and unplanted acres.

Keep in mind that the second section (or aggregated sections) needs to contain the lesser of 20 acres or 20% of the total planted corn crop.

The premium savings associated with qualifying for enterprising is significant.

This information is meant to inform and does not replace the terms and conditions set forth in your 2011 MPCI policy.

Average Crop Revenue Election (ACRE)

Farmers have until June 1 to sign up for ACRE.  The Ohio ACRE Revenue Guarantee is estimated at $570 per ACRE. With the $6.50 per bushel corn price, the Ohio average yield would need to be below 87 bushels per acre for the state trigger to be pulled.  Even with the late planting, an 87 bushel state average yield is unlikely.  If you are signed into ACRE and plant corn acres to another crop, they can still be claimed as corn acres for program payments (check with your FSA office for details).

Supplemental Crop Insurance (SURE)

Estimating if loss levels will be reached to receive a SURE payment is difficult at this time. However, farmers will want to do everything to maintain eligibility. Farmers will need to file form 576 – Notice of Loss – at FSA office by June 20 and form 578 – Certification of Acres and Crops - at FSA office by June 30.  Also if you plant any insurable crop (currently not insured) make sure you purchase a NAP policy for that crop to retain eligibility for SURE.

Other Points To Consider:

- Any phosphorus or potassium applied for corn or soybeans not utilized by a crop will essentially be available for the subsequent crop sin 2012. 

- Soybeans may be planted into fields where corn nitrogen has been applied.  Soybeans will not nodulate until nitrogen is utilized.

- Cover crops not for harvest may be planted in PP acres.

- Ground where prevented planted has been taken may be tiled, weeds controlled, and  fertilizer applied in preparation for 2012 planting.

- Wheat and forages for harvest in 2012 harvest may be planted in PP fields.

- File form 576 – Notice of Loss – at FSA office by June 20

- File form 578 – Certification of Acres and Crops  - at FSA office by June 30

The “Estimated Yield and Profit by Planting Date – Corn, Soybeans or Preventative Planting Crop Insurance” decision aid was created using historical yield data for Ohio to determine potential corn and soybean yields for late planted crops. Since the data in this decision aid is historical and yield losses with current technology and productions methods may not be as limiting, the profit estimates are conservative. Unforeseen weather conditions during the remainder of the growing season may cause a different outcome from these initial estimates. Examples include the 2009 growing season when favorable weather conditions allowed for better than predicted crop yields after a late planting season while the 2002 growing season with adverse growing conditions after a late planting season caused poor yield over much of Ohio.  The model also provides a chart on typical grain moistures at later planting dates allowing the user to adjust the drying charges.

The “Estimated Yield and Profit by Planting Date – Corn, Soybeans or Preventative Planting Crop Insurance” OSU Extension Decision Aid can be downloaded from the Ohio Ag Manager (OAM) homepage at http://ohioagmanager.osu.edu.  This model was patterned after the decision aid created by Ryan Batts, Emerson Nafziger, and Gary Schnitkey at the University of Illinois located at: http://www.farmdoc.illinois.edu/fasttools/index.asp.

Enterprise budgets comparing corn and soybean returns have been compiled and posted to our Enterprise Budget webpage to show an example of what late planting economics might look like for corn and soybeans.
http://aede.osu.edu/Programs/FarmManagement/Budgets/crops-2011/index2011.htm

For the “Late Planting Budget” (Planting date May 28 through June 5) we assume corn suffers a 21% yield loss while soybeans suffer a 10% yield loss. Corn drying costs are also increased in this late planting scenario.

“Returns to Labor and Management” is a measure that is calculated by subtracting all expenses except unpaid operator labor and management from gross revenue. “Returns to Labor and Management” for corn planted during this window (assuming 155bpa yield in a normal year and 122bpa due to late planting) are estimated to be $184/acre. “Returns to Labor and Management” for soybeans planted during this late window (assuming 48bpa yield in a normal year and 43.2bpa due to late planting) are estimated to be $183/acre. These returns can be compared to your Prevented Planting Payment less any expenses to assist in your decision making. Although many costs will be saved by taking the prevented planting route, some costs remain and should be counted against your prevented planting proceeds. Age and obsolescence related fixed machinery costs and fixed land costs are incurred regardless of whether you produce a crop or not. There may also by chemical, fertilizer, crop insurance and interest expenses that were incurred regardless of your prevented planting decision.

The big unknown in this analysis is the relative prices for corn and soybeans at harvest. Our assumptions for this set of budgets are a fall cash price of $6.40 per bushel for corn and $13.05 per bushel for soybeans. Fewer acres due to prevented plantings may change these price expectations.

Your numbers will, of course, differ from these. Download the spreadsheets to calculate returns for you farms. There is also a new Decision Aid tool titled “Estimated Yield and Profit by Planting Date – Corn, Soybeans or Preventative Planting Crop Insurance” that may be valuable as you contemplate this important decision. It is available online at:
http://ohioagmanager.osu.edu/farm-policy/new-decision-aid-to-determine-late-planting-options/

Other major agricultural concerns associated with delayed planting that can impact a producer’s decision include relative prices of corn and soybeans, market basis differences due to a later harvested crop, potential savings of crop inputs due to a later planting date, potentially higher costs of grain drying, and crop insurance coverage level.

To help in the decision making process, The Ohio State University Extension Agronomic Crops Team has constructed a website titled Decision Resources and Tools for 2011 Late Planting.  The website is located at https://agcrops.osu.edu/links/2011-late-planting-resources/decision-resources-and-tools-for-2011-late-planting and has a variety of information based on questions Extension has received from farmers across the state.  The website is updated with current agronomic production and crop insurance information farmers can use to make an informed decision that is best for their farming operation.

Farmers are faced with one of the most complicated agricultural decisions in recent years.  There are several factors associated in the decision to plant corn, switch to soybeans, or opt for preventative planting crop insurance payments due to delayed planting.  The website will provide information to help farmers make an informed decision.

(Editor's note: The killing of cover crops is a topic of debate. At the time this newsletter is being created the deadline to kill cover crops on fields going to corn is June 1st. The deadline to kill cover crops on fields going to soybeans is June 10th.)

Questions have been asked about fungicide application after flowering for scab control. Applications made 2-4 days after will still provide some level of suppression, but efficacy drops considerably as you more away from flowering. In addition to being less effective, with late application you run the risk of getting into the pre-harvest interval, which is 30 days for Prosaro, Caramba and Folicur.  

The forecast is for dryer conditions starting on Saturday (May 28), so the scab risk may be reduced for wheat fields flowering during mid to late next week, however, continue to read the C.O.R.N Newsletter for more updates and keep your eyes on your local weather conditions and the scab risk tool to see how things develop.

If switching to soybean and preventative plant crop insurance are not options, farmers need to reconsider their production practices and focus on those that will generate the greatest profits in a late planting production environment. What optimizes yield when corn is planted early doesn’t always have the same effect when corn is planted in June. Given the shorter growing season, the response of a late planted corn crop to certain inputs may be limited compared to responses of a corn crop planted on normal planting dates. Moreover some management adjustments will facilitate more rapid crop establishment and thereby limit further yield losses associated with planting delays.

Consider the following management alternatives so that planting is not further delayed when favorable planting conditions occur and economic returns from various inputs are optimized –

  • Avoid high-end range N rates on corn following soybean. OSU research has shown that nitrogen rates can be decreased by 10-15% with minimal impact on productivity when corn is planted in early June.
  • Side-dress anhydrous N (or UAN liquid solutions) and apply a minimum of 30 lb/N broadcast or banded to stimulate early seedling growth.  If you do not have the capability to apply N with your planter, a surface application of UAN as a herbicide carrier can be a way to carry your corn crop until sidedress N is applied.
  • Place starter applications of P and K in bands two inches to the side and two inches below the seed. Remember application of P and K is only necessary with the starter if they are deficient in the soil, and the greatest probability of yield response from P and K starter is in a no-till situation.  
  • Keep time expended on tillage passes and other preparatory operations to a minimum.  Such work will provide minimal benefits if it results in further planting delays. No-till offers the best option for planting on time this year. Field seedbed preparation should be limited to leveling ruts that may have been left by the previous year’s harvest - disk or field cultivate very lightly to level. Most newer planters provide relatively good seed placement in "trashy" or crusted seedbeds.
  • Switch to an adapted short season hybrid. Although a full season hybrid may still have a yield advantage over shorter season hybrids planted in early June, it could have significantly higher grain moisture at maturity than earlier maturing hybrids if it dries down slowly. Moreover, recent evaluations indicate there are some 100-104 day relative maturity hybrids with excellent yield potential. However performance data for such early hybrids is limited compared to late maturities. For more information on selecting corn hybrids for delayed planting, consult "Delayed Planting & Hybrid Maturity Decisions", a Purdue/Ohio State University Extension publication available online at: http://www.agry.purdue.edu/ext/pubs/AY-312-W.pdf  (Consult “ Table 4. Approximate “safe” relative hybrid maturities for delayed plantings throughout Ohio”)
  • Reassess seeding rates. Soil temperatures are usually warmer in late planted fields, and as a result germination and emergence should be more rapid and uniform. So, as planting is delayed, seeding rates may be lowered (decreased to 3 to 5% higher than the desired harvest population) in anticipation of a higher percentage of seedlings emerging. Past university research indicates that optimal plant populations for early (mid to late April) and late planted (late May to early June) corn are similar. However,  recent OSU studies suggest little benefit from increasing plant populations above 30,000 plants/A in June. This lack of response to final stands over 30,000 plants/A was associated with greater stalk lodging for hybrids planted during June compared to May.

Thoughts on Late-Planting of Soybean

This planting season is going down in the record books as one of the wettest and one of the slowest for Indiana and the eastern corn belt [and the slowest on record for Ohio]. As of May 22nd, only 17% of the intended soybean acres were planted across Indiana with the majority in the northwestern and west-central areas (USDA-NASS, 2011). [East-central Indiana reflects Ohio’s lack of planting progress held at 4% of soybeans planted]. We are approximately two weeks behind the five-year average and nearly four weeks behind last year’s furious pace. Soybean planting progress near this calendar day was 25% in 2009, 38% in 2008, and 19% in 2002. The current planting progress is mirroring Indiana’s 2009 growing season up to this point.

Late-Planting Effects. I certainly preach the importance of timely plantings to maximize yields, which is normally within the first three weeks of May for Indiana [and Ohio, noted by Watters]. Two benefits of these plantings include greater node development prior to flowering and quicker canopy to capture sunlight and shade out weeds. The yield potential can be reduced as planting is delayed, but it is not a guarantee that yields will be lower. Delayed planting probably contributed to the low state yields in 2002 (41.5 bu/acre) and in 2008 (45.0 bu/acre), which were nearly 7% and 4% BELOW the annual yield trend. However Indiana averaged 49.0 bu/acre in 2009, which was 3% ABOVE the annual yield trend. A favorable seed fill period in 2009 allowed many soybeans to increase seed size to compensate for fewer nodes and thus, yield well. Approximately 33% of soybean yield departures were related to the date at which half of the soybean acres were planted in Indiana, which is slightly higher than is noted for corn (Nielsen, 2011). Soybeans trip their reproductive trigger (flowering) as the day length shortens [after the summer equinox], which comes much more quickly with delayed plantings and partially explains the difference from corn.

Tips When Planting Soybeans Late. We need to set the stage for the best possible return on late plantings of soybean.

Planting in the first weeks of June require:

· 10 to 20% increase in seeding rates to facilitate quicker row closure and higher pod height with fewer days to flowering. Increased seeding rates will also be needed in those fields that have heavy corn residue and weed biomass (see Casteel, 2011 for my seeding rate discussion).

· Late-planted soybeans should also be planted in narrow rows to hasten the time to row closure. Wide rows (30-in) take nearly 25 days longer and 40 days longer to canopy compared to 15-in and 7.5-in rows, respectively. This delay will certainly decrease the yield potential as canopy closure would occur well after reproductive initiation.

· Full-season varieties for your respective regions should be planted until June 15 for the northern quarter, June 20 for the central half, and June 25 for the southern quarter of Indiana.

o   Varieties should be dropped a half maturity group after these dates and planted for another two weeks before we consider other alternatives.

References:

Casteel, S.N. 2011. Fine-tune soybean seeding rates during chilly and wet spring. [On-line]. Available at http://www.agry.purdue.edu/ext/soybean/Arrivals/2011_0421SOYSeedRate.pdf [URL accessed May 2011].

Nielsen, R.L. 2011. Corn planting date is important, but… [On-line]. Available at http://www.kingcorn.org/news/timeless/PltDateCornYld.html. [URL accessed May 2011].

USDA-NASS. 2011. Crop Progress and Condition. USDA, National Agricultural Statistics Service. [On-line]. Available at http://usda.mannlib.cornell.edu/MannUsda/viewDocumentInfo.do?documentID=1048. [URL accessed Apr 2011].

Haste in this case, will make waste. When we run equipment on soft soils, the wheel traffic damage to plant crowns is usually permanent. The resulting damage will be like a plague for the remaining life of the stand. It will lead to frustrating attempts to “fill-in” the damaged stand and ultimately a premature termination of the stand.

The crop is indeed maturing and losing quality. Livestock need to be fed. Our grasses are heading out. Leaf diseases are also taking their toll on forage quality. So we do need to cut as soon as feasible. But in my opinion, getting on the soils before they are firm enough will lead to many more problems in the long run.

Alfalfa in particular can be damaged by wheel traffic on soft soils. If the alfalfa is exhibiting waterlogging stress, it needs some time to recover before being cut. Harvesting represents a significant stress to the plant. Virtually no leaf area remains below the cutterbar. Cutting alfalfa in a weakened state, before it recovers from waterlogging stress, will compromise its recovery, vigor, and future productivity.

Studies conducted here at The Ohio State University have demonstrated that alfalfa is severely damaged and stand loss occurs when waterlogged conditions develop as the crop is trying to grow back after cutting. Many of our alfalfa stands are already severely stressed from wet soils, so giving them some recovery time before we rush out to take the first cutting will certainly help the future prospects for the stand.

Start harvesting grass stands first where possible. Grass quality is probably dropping faster than in alfalfa and clover. Grasses are also more resilient to wet soil stress and more leaf area is present after cutting. So the grasses are in better condition for enduring a cutting now than most of our alfalfa stands. Red clover is also stressed less by wet soils than alfalfa, and can probably be cut sooner.

Alfalfa quality may be a bit better than you expect it to be for this time of year. The alfalfa has stopped growing due to the waterlogging stress. The stems are smaller yields will likely be lower than normal. So fiber content is probably lower than normal as well. Waiting a bit longer to cut may not be as detrimental to quality as we would expect.

In summary, be patient and harvest your forages when the soils are firm enough to prevent wheel traffic damage. Wheel traffic damage turns into a frustration that is hard to overcome. The additional loss in forage quality while waiting for soil to dry is the lesser of two evils. Hopefully we will have enough sunny days to dry the soil AND then to… “make hay while the sun shines!”

Editor's note: The following article was contributed by Art Barnaby of Kansas State University and was added to CORN 2011-15 approximately four hours after our original publication at noon on Friday (5/27).

Normally I am dealing with drought that caused the primary crop to fail.  Kansas never seems to have too much moisture, and sometimes that moisture comes in the “solid form”. 

Once the final planting date has passed on the first crop, then the question is do farmers plant a second crop and what will the impact be on ones insurance and SURE protection.  As it turns out the rules for planting a second crop on prevented planted acres are different than they are for planting a second crop on failed acres that were planted, such as planting sorghum after a failed winter wheat crop.   

The prevented planting decisions are very complicated, especially if a “second crop” is planted.  Below I am assuming corn as the first crop with a June 5th final planting date, and soybeans as the second crop with a final planting date of June 20th.  Those dates are for most Ohio counties, but they vary across the country.  In many counties the final corn planting date is May 31, so readers need to check the final date for their crop in their county.  After the final planting date farmers may plant but the guarantee is reduced 1 percent for each day late up to 25 days late.

Options.  Farmers with corn acres that are eligible for prevented planting have at least 4 options: 1). Elect to take the prevented planting payment that in most cases is equal to 60% of the coverage and leave “black dirt”; 2). Plant corn after the final planting date with a 1% guarantee reduction for each late day; 3). Switch crops and plant soybeans on all acres prior to the final soybean planting date, assuming one can plant; and 4). After the late planting corn date (normally 25 days after the final planting date, or “drop dead date”), collect 35% of the prevented planting payment on corn and then plant a crop with a “benefit”, for example planting soybeans.  If soybeans are on the policy then they will be insured but with a late planting reduction in guarantee.

There are large economic incentives to plant if possible for the following reasons:

a. Assume Ohio corn cannot be planted by 6/5, the final planting date.  A second crop is not planted, i.e. no benefit such as haying, cash rent, planting soybeans, etc.  Farmers must leave the unplanted corn acres as “black dirt”.  Farmers meeting those conditions pay 100% of the premium and are paid 100% of their prevented planting claim that for most farmers is 60% times their guarantee ($ of coverage).  Farmers can buy prevented planting coverage up from 60% to 70% for additional premium prior to sales closing, March 15 in most states.  Under those conditions the Actual Production History (APH) is not impacted if prevented planting acres are total acres in the unit for the crop (corn in our example).  That is not true if some of the acres are planted.  Farmers must have 20 acres or 20% of the unit prevented from planting to be eligible for a prevented planting claim.  Also underwriting rules require farmers to plant if that is possible prior to the final planting date; it is not a voluntary action.  This underwriting rule is often difficult to enforce but if it is “clear” that it was possible to plant then the claim may become “difficult”.  

b. Most farmers with prevented planting will only collect 60% of their spring guarantee for prevented planting.  A farmer with expected revenue of $6 times 180 bushel APH equals $1,080.  Assume they purchased 65% coverage; then the Revenue Protection (RP) guarantee is $702.   A prevented planting claim would equal 60% times $702 = $421.  Prior to sales closing, farmers can buy up from 60% to 70% for prevented planting but Risk Management Agency (RMA) would not allow farmers to increase their prevented planting coverage in North Dakota.  They could only buy at the previous level of prevented planting coverage or lower.  I don’t know if that RMA underwriting rule applied nationwide.

c. In the above example the SURE guarantee under prevented planting starts with $421 rather than $702, and “greatly” reduces the SURE guarantee.

d. There is a 1% reduction in the guarantee (65% to 64%) for each late day the crop is planted.  So one day late would reduce the coverage from $702 to $691.  However, the $691 is a higher number for the SURE guarantee than prevented planting coverage of $421.  If planting of corn takes place up to 10 days late it may still pay to plant.  In our example if the farmer has 65% coverage that would be reduced to 55% for planting 10 days late.  One can plant later with a 1% reduction for each late day up to 25 days, but after 10 days I would think most farmers would either take the prevented planting payment or switch their planting to soybeans in our example. 

e. If a significant amount of the corn is forward priced then there is greater economic incentive to plant the corn because it must be planted before the harvest price attaches and the producer is subject to cancelation penalties (margin losses).  The higher the corn price the greater the incentive to plant corn even with the reduction in the guarantee.  The payment trigger changes, but if harvest prices are 10% higher, then one has about the same dollar guarantee planting 10 days late.  Currently corn prices are about 12% higher than the insurance strike price.  Also some farmers may have sold out of the money puts against their insurance contract, but they only have 60% of the insurance coverage in most cases, if they don’t plant.  

f. If the farmer can plant at least 20 acres in two insurance units for a total of 40 acres, even with the reduction in coverage for late planting, famers will receive the enterprise unit discount, otherwise the premium rate is higher and is deducted from the prevented planting claim.  If they plant no acres often their premium will more than double and reduce their net prevented planting payment.  In this case farmers will want to plant at least 40 acres of corn before the late planting date (June 30 in our example).  They would have a 25% reduction in their guarantee but they would cut their premium by half or more on all of the acres.  Planting 40 acres would have little effect on a farmer with 1,500 acres of prevented planting corn but the premium reduction would be large making the net prevented planting payment much larger.

g. Prevented planted acres are based on maximum number of planted acres for the crop in 1 of the prior 4 years.  Total prevented planting acres (the combined soybeans and corn in our example) cannot exceed total crop acres.  An exception is growers with an approved double crop history for soybeans and adds another level of complexity.  A prevented planting loss must be reported to the insurance company’s loss adjuster within 72 hours after farmers decide they are unable to plant.  The claims adjustor must determine eligible prevented planting acres.  Agents cannot be involved in any potential loss, and agents are not allowed to receive cropland acres and other information from FSA that allows a person to calculate eligible prevented planting acres. 

h. Farmers can plant a “second or alternative” crop by switching from corn to soybeans prior to 6/20 in our example.  There is no reduction in soybean coverage for late planting and farmers receive full soybean coverage that was purchased prior to the March 15 sales closing.  The full soybean coverage is then carried over to the SURE guarantee.  In this case there is no impact on the corn APH because the acres were all planted to soybeans, a zero acreage report is filed on the corn, and no corn premium is due.

i. Growers may plant soybeans on the prevented planted corn acres after the late planting date for corn (final planting date plus 25 days or “drop dead date” for corn) and collect a 35% prevented planting claim and pays 35% of the premium.  If for some reason the soybeans were not insured then it would eliminate eligibility for SURE but in most cases soybeans will be listed on the policy but planted in the late planting period.  In this case the soybeans are planted 11 days or more late.  The soybean guarantee would have a guarantee reduction of at least 11 percent, but the farmer receives a benefit from any soybeans that are produced plus a 35% prevented planting corn payment. 

j. If one cannot plant either soybeans or corn before the late planting date (drop dead date for both crops), farmers can still plant but their coverage is their prevented planting coverage and any production will be deducted from the prevented planting payment.  In most cases farmers would not plant but would take the prevented planting payment and leave “black dirt”.  There may be one exception.  If on July 1 (or drop dead date for your county) the corn price is $10, then farmers might plant because the harvest price will attach if their corn is planted, even if planted after the late planting date.  There would likely be a hit on their APH yield for next year.  At harvest, if the harvest price is higher than the spring price, then the coverage would be greater than the prevented planting coverage and that would increase the SURE guarantee.

k. If there is added land then the rules become even more difficult.  That case was omitted and likely will depend on many individual factors and one’s agent will need to provide final answers. 

l. The prevented planted acres do not change the state ACRE yield calculation so there is no impact on the yield that might cause ACRE payments. 

m. The location of the prevented planting acres is likely to cause prices to remain “high” and further reduce the chance for an ACRE payment.

n. The harvest price does not attach unless the crop is planted (new this year).  So higher prices will not increase the prevented planting payment.  However, if the crop is planted after the late planting date (drop dead date), then the harvest price does attach.  This is the latest interpretation of the rule by RMA. 

o. Group Risk Income Protection (GRIP) and Group Risk Plan (GRP) have no prevented planting coverage.  These farmers may still be able to collect from SURE, but the 150% factor is reduced to 100% before calculating the SURE guarantee.  A few companies offer a private endorsement to GRIP for prevented planting, but few farmers purchased the private coverage and that coverage will not appear in the Risk Management Agency’s (RMA) statistics.

p. Prevented planting acres can trigger the county disaster designation, so farmers can collect SURE payments.

q. If the state level ACRE should trigger and/or the SURE eligibility is triggered, then prevented planting acres are counted at the farm level as “considered planted”.

r. One needs to remember some of the southern states have the corn planted but were flooded out.  Those farmers have very different options but the same peril caused the loss, excess moisture.  Because of SURE, most will take 100% of the insurance claim that is 100% of the coverage (not 60% as is the case for prevented planting) and if possible, plant a second crop at risk (uninsured).  When planting a second crop on failed acres that were planted, SURE treats the second crop as a ghost crop, unless there is a double cropping issue. (I am not sure how a farmer would double crop corn and beans.)  This is not an option for a prevented planting claim.

Warning:  There are over 200 pages of regulations on prevented planting in the RMA manual. This paper clearly does not include all of the possibilities and SURE just adds another level of complexity.  Therefore, the author strongly suggests growers talk with their crop insurance agent before making any final decisions.  There is no “one size that fits all”.  One would expect there will be cases when it pays not to plant and decision points will change over the next 30 days.  Higher market prices may also cause some to plant late with reduced guarantees, when otherwise they would not plant.  There is the additional complexity that some farmers have forward priced some of their crop and in some of the affected regions the basis has gained strength, normally a good thing but may not be this year.  Also some farmers have sold out of the money puts against their insurance contracts and they have additional incentives to plant corn, even if a few days late.   

Should farmers plant the second crop and claim 35% of the prevented planting claim?

Farmers who have purchased 80% or 85% coverage and elected the 70% buy up level of prevented planting will gain a sizeable prevented planting payment.  This is also true even if one selects the 35% option.  Corn for example at $6 times 180 bushel APH times 80% coverage times 70% additional prevented planting times 35% equals $211.68 paid after the late planting date (final planting date plus 25 days in most cases).  Farmers would then pay 35% of the premium and they could plant soybeans in the late period with a reduced soybean guarantee.  If farmers can get at least 20 acres of corn planted in two units, even with the reduction in coverage for late planting, famers will get the enterprise unit discount.   If they get nothing planted of the first crop (corn) then they will pay the basic unit rate without the premium discount.    

Farmers who purchased lower coverage levels may wish not to file the prevented planting claim on the corn, especially if they can switch to soybeans and finish planting before the final soybean planting date.  Farmers who have purchased 65% coverage and elected the standard prevented planting coverage of 60% will have a smaller payment.  For example, $6 times 180 bushel APH times 65% coverage times 60% prevented planting times 35% equals $147.42.  Some farmers may think the payment is not large enough to accept the impact on their APH and the reduction in guarantee on the late planted soybeans.

Farmers with CAT coverage would be the least likely to file a 35% prevented planting claim and plant a second crop late.  They would only be paid 60% times 35% times a very low CAT dollar of coverage and they would still have their APH impacted with the yield.  Those with CAT coverage will also find that SURE provides very little protection.

Only 1.5% of the Ohio corn acres are covered with APH based CAT in 2010.  However, there were 25% of the Ohio corn acres that were uninsured, and another 8% were covered with some type of GRIP/GRP.  The private insurance market offers a private prevented planting endorsement for GRIP, but my upstanding is that most GRIP insured farmers did not purchase the additional private coverage.  This suggests that about 33% of Ohio corn acres have no prevented planting coverage based on 2010 insured acres.  This same estimate would hold for 2011 because most farmers do not make large changes in their crop insurance decision from year to year.  In addition, they are not eligible for SURE payments if they are uninsured, so they have a super large incentive to plant something!

Insured acres are an approximation.  This year will be a good example in Ohio.  If there are prevented planting claims then those acres will be counted as RMA insured acres but they will not be counted as planted acres by NASS.  I am using the NASS planted acres as the potential number of insured acres, so the 2010 data may be more reflective of the percent of insured acres than will be the case when using the 2011 complete data.

I would think most farmers will want to plant corn up to 10 days late or switch and plant soybeans, assuming they can plant before the final planting date.  Farmers would have full coverage on the soybeans.  If they cannot plant soybeans until after the late corn planting date, then one could plant soybeans late with the reduction in guarantee but that is partially offset with the 35% claim on the prevented planted corn.  The tradeoff between the impact on APH and collecting a 35% prevented planting on the “first crop” corn will likely depend on the level of insurance purchased.  Those with higher coverage levels are more likely to claim the 35% prevented planting payment and plant the late soybeans with the reduced guarantee. 

While farmers are not required to plant a “second crop” of soybeans on the eligible prevented planted corn acres.  They have the option to take the prevented planting payment and leave “black dirt”, but I expect most farmers will plant.  Most farmers are “farmers”, and planting is something they will do if at all possible.  Most farmers are in the crop production business and not the government payment collection business.  I just love to smell the diesel fuel fumes in the morning and hear the roar of those twin turbo charged combines (pick your color) cutting wheat, and I will bet Ohio farmers have the same gene!   

FCIC Handbook Section 10 (C) (3) (a,b)

(3) Qualifications. To qualify for EUs:

(a) The EU must contain all of the insurable acreage of the same insured crop in:

1. Two or more sections, if OUs are available by sections;

(b) Each of the above [(a)1-(a)6] that are used to qualify for the EU must have planted acreage that constitutes at least the lesser of 20 acres or 20 percent of the insured crop acreage in the EU. If there is planted acreage in more than two sections,……, these can be aggregated to form at least two parcels to meet this requirement.

RMA just released the official interpretation of this rule.

The minimum planted amount is (the lesser of) 20% or 20 acres of your insured corn acres planted in at least each of two sections. The insured corn acres are the total of your reported planted and unplanted corn acres.

Keep in mind that the second section can be an aggregate of multiple sections.

For Example:

1. Farmer A has the intent to plant 200 acres of corn. To meet the requirements he must plant a minimum of 20 acres in one section and 20 acres in a second section. The second section could be an aggregate of two or more sections equaling the 20 needed.

2. Farmer B has the intent to plant 80 acres of corn. To meet the requirements he must plant a minimum of 16 acres in one section and 16 acres in a second section. The second section could be an aggregate of two or more sections equaling the 16 needed.

If you haven’t planted a minimum amount, you can use the time allowed in the late planting period (June 5 – June 30) to qualify.

The premium savings associated with qualifying for enterprising is significant.

This information is meant to inform and does not replace the terms and conditions set forth in your 2011 MPCI policy.

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About the C.O.R.N. Newsletter

C.O.R.N. Newsletter is a summary of crop observations, related information, and appropriate recommendations for Ohio crop producers and industry. C.O.R.N. Newsletter is produced by the Ohio State University Extension Agronomy Team, state specialists at The Ohio State University and the Ohio Agricultural Research and Development Center (OARDC). C.O.R.N. Newsletter questions are directed to Extension and OARDC state specialists and associates at Ohio State.