Rain continues to fall across the U.S. Corn Belt, and with many Final Plant Dates (FPDs) already weeks into the past, growers should seriously consider talking to their crop insurance agents about filing prevented planting claims. These claims come with very nuanced sets of rules, deadlines and limits based on the crop and location, but if handled correctly will save growers money after planting less than initially expected. Though complicated, crop insurance is a vital tool in an uncontrollable situation like this.
Simply stated, prevented planting refers to the failure to plant an insured crop with proper equipment by its FPD or during the late planting period (25 days following the FPD). The FPD for corn in the western Corn Belt — Nebraska, North Dakota, South Dakota. and northern Minnesota — was May 25; for the rest of Minnesota, Wisconsin, Iowa, Kentucky and Missouri, it was May 31; and for the eastern Corn Belt — Illinois, Indiana, Michigan and Ohio — is was June 5. But the American Midwest, especially Nebreska and Iowa, has been hit with record-breaking rainfall and flooding this growing season.
Wet fields cause delayed planting, which means a large amount of projected corn acreage did not make the cut-off. Rather than losing your investment, George Bercaw, a risk consultant at Bercaw Insurance Group, implores growers to insure their potential acres even if they plan to plant in their late period to maximize the money saved. Prevented planting claims must be made within 72 hours of the FPD — if the grower ends up continuing to plant, those acres can be withdrawn from their claim later without much hassle.
Here are a few major areas of interest your farming customers will want to keep in mind when considering filing a prevented planting claim.
Late Planting Adjustments
Filing a prevented planting claim comes with its challenges, so it is important for growers to consult an agent like Bercaw and read through the specified fine print. The most important thing to keep in mind when late planting is how much coverage they will lose. According to Bercaw, “For every day you're planting in that late planting period, you lose 1% of your coverage. For example, say you're a grower that has 85% coverage, and June 5 is your final plant date. If you decide to plant on June 10, then you're already down from 85% to 80% coverage. That continues all the way through the 25 late planting days, at which point you get down to 50% coverage.”
FPDs can, in some cases, be extended. Bercaw recommends resources such as the University of Illinois Extension to keep up-to-date with any revisions. Be sure to consult these lists to help your customers prepare for whatever FPD or late planting date they must prepare for.
Specific to corn, payment for the claim is 55% of the grower’s revenue guarantee, according to Bercaw. Price is always important to customers to some degree, so keep this in mind when you meet with them in the coming weeks. The equation for calculating this guarantee from actual production history (APH) is as follows:
APH x crop’s spring price x % coverage = revenue guarantee
So, returning to the 85% coverage example above, say your customer’s APH is 200 bushels of corn per acre. The spring price of corn is $4, so their revenue guarantee equation looks like this:
200 x $4 x 0.85 = revenue guarantee of $680 per acre
In this situation, your customer’s prevented planting payment would be:
$680 x 0.55 = $374 per acre
This 55% could change depending on a number of factors: what crops are planted, whether a grower ends up planting a wider variety of crops or adds cover crops and more. This is why it is vital growers speak with an insurance agent who can put their farm, specifically, into this context.
Always keep detailed documentation of acres you intended to plant to avoid any confusion during the process of filing your claim. This is Bercaw’s most valued tip for his farming clients. Documentation can come in the form of feed receipts, fertilizer receipts or their previous history, to name a few. Following this, all prevented acres need to be reported to the local FSA office. They will use these documents to determine if the grower did, in fact, plan to plant on all of the acres they’re attempting to claim. Nothing is guaranteed in prevented planting — there are many ways to fall out of eligibility for the insurance — but this puts the grower in the best position to have their claims approved.
Not meeting the set thresholds is the top reason Bercaw sees growers fall out of eligibility for “enterprise units” of prevented planting claims, which are the least expensive. “Enterprise units are based on a structure of 20 acres or 20% in two sections,” he explains. Broken down, this means that a grower’s claim:
- Must have at least two sections
- Must claim 20 acres or 20% of each section as prevented planting
If one or both of these tenants are not fulfilled, then the property does not qualify for enterprise units, and must roll-over into basic or optional units, which are less cost-efficient.
This information is riddled with specifications, rules and equations, and can be very overwhelming, Bercaw says. Growers should take this baseline of prevented planting knowledge and meet with a crop insurance agent to determine their personal plan of attack this growing season. In the meantime, here are Bercaw’s parting takeaways:
- “Making assumptions that you know the rules and that you’re following them is dangerous.”
- “Your agent will talk to the company, the adjuster and the FSA to make sure everybody’s on the same page.”
- “Plant until you can’t. Even if the crop doesn’t look pretty, as long as it’s planted, you can look at harvest claims from that point.”
For more information on prevented planting claims, such as on tariffs, disaster payments for spring floods and government action, an episode of Farm Equipment’s “Used Equipment Remarketing Roadmaps” podcast featuring Bercaw is free to listen to here. Information on policy updates via No-Till Farmer are available here.
Bercaw can be contacted via email@example.com