Crop Insurance Coverage of Replants, Late Plantings and Prevented Plantings

The 2005 planting season has been unpredictable at best. Reasonably good weather for most of Ohio in early to mid April had most optimistic about spring planting. A bit of concern about dry weather in late April gave way to wet, cold weather for the late April early May time period. Sporadic periods of warm and dry weather in mid May have given much of Ohio planting windows to finally make some progress in getting crops in the ground. But most haven’t escaped without some replanting this spring. The cold wet weather and crusting soils have caused problems for many producers around the state.

What are the insurance ramifications of replanting, late planting or prevented plantings? It depends on the type of crop insurance policy that you carry and the nature of the damage. Let’s examine each of the provisions, some examples and how they might apply to your situation.

Replanting Provisions

If your insured crop is damaged and will not produce at least 90 percent of the guaranteed yield, you can receive a payment equal to your costs for replanting. Your replant payment can be up to 20% of the guaranteed yield (up to 8 bushels for corn and 3 bushels for soybeans) multiplied by the price election chosen in the policy. These replant provisions are applicable for both Average Production History (APH) (which is the old Multiple Peril Crop Insurance (MPCI) policy), and Crop Revenue Coverage (CRC). Replant provisions are not available for catastrophic (CAT) level coverage or the group risk plan (GRP). If you do replant, the production guarantee is still based on the original planting date.

Example 1: Replanting
You have a late frost and your soybean crop is projected to yield only 20 bushels per acre. This is below the 90 percent guaranteed yield (APH policy) for that parcel of 33 bushels per acre (44 bushels APH x 75% coverage level). You decide to replant soybeans, which entitles you to a replant payment. Since 20% of your guaranteed yield is (33 bushels “production guarantee” x 20% = 6.6 bushels) more than 3 bushels, you can receive a maximum payment equal to the indemnity value of only 3 bushels per acre. The payment received then is $15 per acre (3 bushels x $5 per bushel APH price guarantee).

Late Planting Provisions

The last dates to plant crops in Ohio and retain the right to receive full crop insurance production guarantees are June 5th for corn and June 20th for soybeans. Crops planted after these dates are subject to late planting provisions. There is a 25 day late planting period where the production guarantee is reduced 1 percent per day for a maximum reduction of 25%. Premiums do not change on the planted acres.

Example 2: Late planting

You have an APH corn yield of 128 bushels per acre insured at the 75 percent coverage level. The production guarantee is 96 bushels per acre (125 bushels x 75% = 96 bushels). Wet weather prevents you from planting until June 20th. The production guarantee is reduced by 15% (June 6-20, 1% x 15 days). The new guarantee is 81.6 bushels per acre (96 x 85%).

Insured acres not planted until after the end of the late planting period (June 30th for corn and July 15th for soybeans) due to insurable causes will continue to be covered at the 60% level of the original production guarantee. Late planting provisions are a part of APH, CRC and CAT policies.

Prevented Planting Provisions

Prevented planting (PP) is an option for producers who are unable to plant because of an insured cause, including excess moisture. Policy holders (APH and CRC) who are prevented from planting some crop acres until after the final planting date may choose to not plant the crop at all and still receive 60 percent of the original production guarantee, (CAT and GRP policies are not eligible for PP benefits). For an additional premium, PP coverage can be increased to 65 or 70 percent of the original coverage. This choice must be made when the policy is purchased, however.

If a second insurable crop (soybeans, for instance) is planted before the end of the late planting period of the first crop (June 30th for corn in Ohio) coverage for the second crop simply replaces the coverage for the first crop (with late planting production guarantee changes as appropriate for the second crop). If the second crop is planted after this date, the second crop can still be insured and the producer also receives a payment equal to 35% of the PP payment of the first crop.

If the second crop is insured and the producer suffers no loss on this crop, they get the 35% of the PP payment for the original crop and then the remaining 65% of the PP payment of the first crop after harvest. If the second crop suffers a loss, the producer gets the 35% PP payment for the original crop and then the larger of 65% PP payment for the original crop or 100% production guarantee payment for the second crop.

Example 3: Prevented Planting
Due to extreme wet conditions throughout the spring, you have 50 acres of corn left to plant as of July 1st. Your production guarantee is 105 bushels (APH Yield of 140 bushel per acre x 75% coverage level on an APH Policy). You can still plant corn but with a production guarantee of only 63 bushels per acre (105 bushel production guarantee x 60% due to planting after the late planting period) OR

You can plant soybeans, receive 35% of the corn production guarantee of $48.51 (105 bushels x 60% per PP provision x $2.20 per bushel APH price guarantee x 35%) now and either the remaining 65% after harvest or soybean production loss payment, whichever is greater OR

You can take the PP payment of $138.60 per acre (105 bushel production guarantee x 60% per PP provision x $2.20 per bushel APH price guarantee).

Other notes:
Forage crops to be hayed or grazed cannot be planted on PP acres. Cover crops can be planted on PP acres. Check with your crop insurance provider for details.

An important provision to note: Notify your crop insurance agent within 72 hours after the Final Planting Date (FPD) if you are prevented from planting. With the exception of new producers, for an insured crop to be eligible for PP, you are required to have planted the crop at least once during the last four years. Unless you purchased a higher PP coverage option prior to the March 15 sales closing date, PP coverage is 60 percent of your crop insurance policy, minus premium costs, regardless of crop or if the product is a standard multi-peril policy or CRC.

Small land areas do not qualify for late or prevented planting coverage, or fro replanting payments. Affected areas must be greater than 20 acres, or 20% of the insured acreage that was intended to be planted for units over 100 acres. If one portion of the insured acres meets the minimum size criteria, then other smaller areas may be combined with it.

For revenue insurance policies, all indemnity payments are calculated based on guaranteed and actual revenues rather than bushels. The same coverage reductions apply, though.

The Ohio Department of Job & Family Services Offers Migrant Labor Assistance to Agricultural Employers

As farm labor becomes an increasing strain on agricultural managers, it is imperative that managers explore all possibilities to meet their labor needs. Most agricultural employers may be unaware that the Ohio Department of Job & Family Services (ODJFS) is available throughout the State of Ohio to help link managers with migrant labor workforce.

ODJFS coordinates the Agricultural Recruitment System which helps agricultural employers find qualified, temporary, migrant workers. Using a national network, ODJFS is able to help managers locate and recruit interested workers from across the United States. This program should not be confused with the H2A program. The H2A program allows firms to request approval to recruit nonimmigrant alien workers for temporary work and may only be accessed when there is an anticipated shortage of domestic agricultural workers. The agricultural recruitment system can be utilized at any time.

In short, the Agricultural Recruitment System is a free, public-operated, recruitment and referral system designed to help qualified agricultural workers find temporary employment. The general requirements of this program include that workers be paid at least the State minimum wage, Federal minimum wage or the prevailing wage, whichever is the highest and that wages, working conditions, and housing meet Federal and State Standards. Click the following link to view complete details of the Ohio Agricultural Recruitment System: http://jfs.ohio.gov/agriculture/ag_recruitment_packet.pdf

The ODJFS also offers the Ohio Migrant Hotline (1-800-282-3525) which serves as a clearing house of information on migrant workers. Additional information on how ODJFS is helping to meet the needs of the Ohio agricultural and migrant communities can be found at:  http://jfs.ohio.gov/agriculture/ and local contact information can be found at: http://jfs.ohio.gov/localservices/.

2007 Farm Bill Debate is Underway

Discussion of the next farm bill has come out into the open. Secretary of Agriculture Mike Johanns announced his intentions to hold a series of farm bill hearings throughout the U.S. The first one will be in Nashville , Tennessee on July 7, 2005 . For the forums, the public is being asked to comment on six specific questions:

  1. How should farm policy be designed to maximize U.S.competitiveness and our country’s ability to effectively compete in global markets?
  2. How should farm policy address any unintended consequences and ensure that such consequences do not discourage new farmers and the next generation of farmers from entering production agriculture?
  3. How should farm policy be designed to effectively and fairly distribute assistance to producers?
  4. How can farm policy best achieve conservation and environmental goals?
  5. How can Federal rural and farm programs provide effective assistance in rural areas?
  6. How should agricultural product development, marketing and research-related issues be addressed in the next farm bill?

Comments on these questions also can be submitted electronically via the Internet at the USDA home page (http://www.usda.gov) by selecting “Farm Bill Forums,” by email to FarmBill@usda.gov or by mail to Secretary of Agriculture Mike Johanns, Farm Bill, 1400 Independence Avenue , SW., Washington , DC 20250-3355 . The public comment period is open until December 30, 2005. The full text of Secretary Johanns’ announcement of the farm bill forums is available at (http://www.usda.gov).

Whenever someone releases a list, it is always tempting to say that the rank order matters unless a disclaimer is appended. Such speculation is always risky, but it is my assessment that this farm bill will focus on title I, the commodity program title. Consistent with my assessment, the first three questions relate intimately to Title I.

Many are touting environmental programs as the focus for the upcoming farm bill. I would note that the last farm bill significantly increased funding for environmental programs and changed the focus of farm environmental payments from land retirement to adoption of environmentally-enhancing practices on lands in production (i.e., working lands). History suggests that major changes in focus are usually followed by consolidation and assessment in the next farm bill. This observation leads me to speculate that the role of environmental programs is more likely to be discussed in terms of their relationship with Title 1 than in regard to Title 2, the conservation title.

The debate begins with widespread expectations that major changes are a distinct possibility. Reasons for this expectation include the widespread backlash in both the U.S. and world media at the direction and spending levels in the 2002 Farm Bill, Brazil’s likely successful challenges to both the U.S. cotton program and the European Union’s sugar program, the world trade negotiations whose current framework suggest that some cuts in U.S. farm programs are likely, and the large federal budget deficit.

However, it is way too early to conclude that major change will occur. Weather always plays a large role due to its impact on expenditures via its impact on farm prices and incomes. The impact of the budget deficit may shrink or grow depending on the state of the economy and decisions made in regard to Social Security and Medicare. The 2006 mid-term Congressional elections will take place. Trade protectionism is growing in the U.S. And, the future direction of the European Union is in question given the recent votes in France and the Netherlands to turn down a new governing constitution.

Whatever happens, the opportunity is now open for citizens to make their voices heard. I encourage everyone who is so inclined to take advantage of this opportunity.

Should Farmers Sign an Air Quality Compliance Agreement with EPA?

Public concern over air quality impacts from animal feeding operations is increasing in some areas of the US. The U.S. EPA announced on January 21, 2005 that it had reached an agreement to study air emissions from livestock and poultry operations. The study will be done as a component of the Air Quality Compliance Agreement. This is a voluntary agreement between the EPA and individual animal feeding operations.

The compliance agreement involves payment of a “penalty” for past violations that may have occurred. Most local livestock operations are expected to fall well below the daily ammonia, dust and hydrogen sulfide levels the EPA is expected to regulate. However, on the days that manure is handled, these farms could produce enough ammonia to reach a level the EPA establishes for regulation.

An informational meeting sponsored by Ohio State University Extension has been scheduled for Wednesday, June 8th, at multiple locations across the state. Counties hosting the program include: Auglaize, Columbiana/Mahoning, Coshocton, Hardin, Knox, Lorain, Miami, Putnam, Shelby, Tuscarawas and Wayne/Holmes. At all locations the program will begin at 7:30 p.m. and conclude at 9:30 p.m.

Questions asked by many producers include “What size operations should sign the agreement?” and “What are the pros and cons of signing or not signing the agreement?” Speakers will review the consent agreement and identify the benefits and risks of participating or not participating in the EPA agreement. Each producer must decide individually if they should or will participate. The deadline for animal feeding operations to sign the agreement has been extended until July 1, 2005.

This program is geared towards dairy farms, but pork, beef, and poultry producers will also benefit from attendance and participation. Prerecorded presentations by Mike Brugger, OSU Extension Agriculture Engineer and Peggy Kirk Hall OSU legal educator and attorney will begin at 7:30 pm. A live question and answer session will follow. The Q&A session will be conducted via a conference call/speaker phone with Peggy Kirk Hall and Lingying Zhao, OSU Extension Agriculture Engineer responding to questions.

Please contact the location nearest you for additional details and to pre-register by Monday, June 6.

Program Locations:

County Contact Phone Number
Auglaize John Smith 419-738-2219
Columbiana/Mahoning Ernie Oelker 330-424-7291
Coshocton Paul Golden 740-622-2265
Hardin Gene McCluer 419-674-2297
Knox Jeff McCutcheon 740-397-0401
Lorain Jim Skeeles 440-326-5851
Miami Tim Fine 937-440-3945
Putnam Glen Arnold 419-523-6294
Shelby Rober Bender 937-498-7239
Tuscarawas Chris Zoller 330-339-2337
Wayne/Holmes Tom Noyes 330-264-8722