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Flooding & crop insurance

STEVE JOHNSON 06/13/2013 @ 8:24am Farm Management Specialist with ISU Extension housed in Polk County, Iowa. Areas of expertise include crop marketing, grain contracts, government farm programs, crop insurance, farmland leasing and other crop risk management strategies. Reach Steve by e-mail at sdjohns@iastate.edu.

The frequent rains that have soaked Iowa this year have left many corn and soybean fields unplanted or with flooded areas.  Many producers have questions regarding what options they have under their multiple peril crop insurance (MPCI) policies.

Fortunately, over 90 percent of the insured corn and soybean acres in Iowa are covered by MPCI, which includes replant, delay and prevented planting coverage. The following are questions that are commonly asked by producers with MPCI that are facing replant, delay, and prevented planting decisions.

Q: What should a producer do if their planted crops are affected by the flooding?

A. Notify their crop insurance agent within 72 hours of the loss. If they qualify, the replant option provides a payment reflecting 8 bushels of corn or 3 bushels of soybeans per acre times the projected price of $5.65 per bushel corn and $12.87 per bushel soybeans, respectively. So replant will provide about $45 per acre for corn and over $38 per acre for soybeans in 2013.

Q: What if a producer didn’t have their crops planted yet, what are the late planting dates in Iowa?

A: May 31 – Final planting date for Corn

    June 15  – Final planting date for Soybeans

In Iowa, the crop insurance “late planting period” for corn begins on June 1.  Corn can still be planted after this date, but the insurance guarantee on those acres is reduced by 1% per day until they are planted.  Corn acres planted after June 25 will receive insurance coverage equal to 60% of their original guarantee.  Producers should keep accurate records of planting dates on all remaining acres.  The late planting period for soybeans in Iowa is from June 16 through July 10.

Beginning June 1, corn producers with unplanted acres have three choices: plant corn as soon as possible with a reduced guarantee, shift to soybeans with full insurance coverage, or apply for prevented planting.  Prevented planting acres are insured at 60% of their original guarantee. Those acres may have a cover crop established on them or may be left idle (black dirt).

Q: Isn’t there a 20-20 rule for coverage?

A: Yes, to qualify for an indemnity payment under the replanted, delayed or prevented planting provisions, a minimum area of 20 acres or 20% of the insured unit, whichever is smaller, must be affected.

A unit could be a field or a farm – if you elected an optional whole farm or basic unit. An enterprise unit could also have been elected. This choice reflects the insured’s’ corn acres combined in a particular county to determine loss or their soybean acres.

Q: I chose enterprise units to save on premium. Can I now change to basic or optional units because flooding has damaged my planted crop acreage?

A: Because unit structure impacts the premium cost, and in the case of enterprise units, also the premium subsidy, the policyholder’s decision to elect enterprise units is made no later than the sales closing date to reflect the binding contractual agreement between the two parties on or before March  15th, 2013. Changing the enterprise unit structure would be a contractual violation between the approved insurance providers and the policyholder, and leave the government vulnerable to a breach of contract. Therefore, any change to the contract at this time shifts risk to approved insurance providers from previously negotiated financial commitments within the terms and conditions of the Standard Reinsurance Agreement.

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