What are your crop insurance options for flooded acres?
Farmers who insured their 2008 crops have decisions to make if recent floods damaged their cropfields, says a Purdue University Extension agricultural economist.
"In some instances, farmers may not have been able to plant their original crop in a timely manner, and in other instances farmers have lost crops due to flooding," George Patrick says in a university report. "These producers, if they have followed good farming practices, may be eligible for different crop insurance benefits depending on the type of insurance they have and their individual circumstances."
Producers prevented by weather from planting their intended crops on time have three options, Patrick says.
"They can go ahead and plant the original crop even though the yield may be reduced," he says. "Second, they can plant an alternative crop, such as shifting from corn to soybeans. Or third, they can abandon the acreage and take a prevented planting payment."
Multiple peril crop insurance plans based on a producer's Actual Production History (APH), Crop Revenue Coverage, Revenue Assurance and Income Protection all provide a 25-day late-planting period, Patrick says.
"In Indiana, this begins June 5 for corn and June 20 for soybeans, with yield coverage levels being reduced one percent per day that planting is delayed, with a maximum reduction of 25%," he says.
"After the late-planting period, the yield guarantee is 60% of the original yield guarantee level. If soybeans were included in the original insurance coverage, a producer could shift from corn to soybeans before June 20 with no reduction in the yield guarantee level."
If planting was delayed because of weather and not by a farmer's choice, an insured producer could choose not to plant a crop and receive 60% of the original yield guarantee level. "The county-based crop insurances -- Group Risk Plan and Group Risk Income Plan - do not have prevented planting coverage," Patrick says.
Farmers who planted on time and have suffered flood-related crop damage have four options available to them, Patrick said. They are:
- Leave the damaged crop as is.
- Replant part or all of the damaged area to the same crop.
- Replant part or all of the damaged area to a different crop.
- Abandon the crop and plant a cover crop.
"If the crop is left 'as is,' the yield, or revenue, for the insurance unit would be compared to the insurance guarantee," Patrick says. "If the yield or revenue was below the guarantee level, an indemnity would be paid. Because many farmers insured at the 75% level or less, a substantial portion of the insurance unit could have a zero yield before an insurance indemnity would be paid.
"For example, a producer with an APH yield of 160 bushels per acre insured at the 75% level would have a yield guarantee level of 120 bushels and could suffer a complete loss on one-quarter of the insurance unit with no insurance indemnity if the rest of the unit had the 160-bushel yield. For county-based, or group, insurances, an indemnity would be paid only if the county yield was below the trigger yield specified in the insurance policy. Thus, individual producers could suffer major losses without insurance indemnities if county yields were not reduced to below the trigger levels."