Producers urged to check prevented planting corn eligibility
As a marketing instructor finished commenting that crop insurance alone this spring could bring profit, there was one grain and livestock producer in the crowd that offered some news.
Gary Morris, a southern Iowa producer, attending his first-ever marketing seminar a few weeks ago, said his crop insurance agent informed him that part of the added corn acres he was planning to plant wouldn't be covered at the corn rate.
"If I understood her correctly, she was saying that if I faced a prevented planting situation, and if I didn't have a four-year history of planting that ratio of corn acres, some of those acres would be paid out as if they were soybeans, a much lower rate."
Morris understood his agent correctly, according to industry experts.
Because prevented planting crop insurance eligibility is based on prior planting history, this year's widespread movement to more corn could bring a new twist to the prevented planting insurance issue.
Dave Hall, National Crop Insurance Services spokesman, said producers are urged to contact their agent with concerns.
"It's shaping up to be an unusual year. This gets complicated," Hall said. "To be safe, the producer should check with an agent to be sure they fully understand what the ramifications could be with respect to their crop insurance policy."
Hall added, "You can speak in general terms with prevented planting. But, everybody is different. Depending upon the producer's eligibility, yes, this year could make a difference on what payment they receive."
Producers planning to plant more corn than usual this spring could see less revenue on crop insurance coverage if the switched crop isn't planted on time.
For example, a 1,000 acre producer with a historical insured database of 500 corn/500 soybean acres who this year shifts to more corn, could face some crop revenue issues with prevented planting.
If the acres that historically were planted with soybeans, but this year were switched to corn, didn't get planted, the producer likely would receive a crop insurance prevented planting payment at the soybean rate, not the corn rate.
In the insurance business, this is called running out of corn eligibility.
PREVENTED PLANTING PAYOUTS
Keep in mind that prevented planting payouts will vary with the different crop policies, Jay Jacoby, Rain & Hail LLC claims manager, said.
To figure what a producer would receive if the land was left barren, the regular crop insurance guarantee amount is multiplied by the prevented planting guarantee. A producer can be insured at the base prevented planted guarantee level of 60%, or choose a 65% or 70% level option.
A producer insured at the 75% guaranteed level and 60% prevented planting guarantee, with a soybean average of 50 bushels per acre, could eventually see a prevented planting payout of about $182.00 per acre, Jacoby explained. For corn, with a 150 bushel per acre average, at 75% coverage, the prevented payout would be about $274.00 per acre.