Multi-Peril Crop Insurance (MPCI) policies have a prevented planting provision that might come in handy if 2022 is a wet planting season. Read on for more information, and as always, keep in touch with your local Crop Growers agent to see if prevented planting is something you should consider.
What is Prevented Planting?
Prevented planting is the failure to plant an insured crop with the proper equipment by the final planting date.
Prevented Plant Considerations
High input costs
Inflation is on the rise and prices are increasing for fuel, labor, fertilizer, etc. Luckily, commodity prices have also increased significantly, but we are aware profit margins remain tight. By utilizing prevented planting, you aren’t wasting as much of those costly inputs.
For example, let’s say it’s June 10 (the final plant date for corn and soybeans in much of the Northeast), the planting season has been wet and next week is showing rain again. If you plant after June 10, you lose 1% of your insurance guarantee per day. Why plant in the mud? You would be taking a risk on harvesting a marginal crop due to poor planting conditions, and less growing degree days.
Between the COVID-19 shutdown and now the Russia-Ukraine war, the supply chain has not been reliable for over two years. If you mud in your spring crop, you risk breaking your equipment. Who knows how long it could take to get a replacement part? And how much is that part going to cost you? By taking prevented planting, you know your equipment will be ready when you need it.
Qualifications for a claim (please read carefully before making your decision!)
It MUST be a weather condition that prevents you from planting your crop. MPCI policies only cover naturally occurring perils. If Mother Nature decides to open her skies during planting season, it may be covered by your insurance policy. If your equipment breaks down or your farm hand doesn’t show up for work, that is not covered by your policy. Prevented planting must be general in your area and this will be determined by the insurance company. Multiple prevented plant claims being opened in your county and weather data that can support the rainfall in your area are the only ways to determine if a prevented plant claim can be approved.
Whichever is less, either 20 acres or 20% of each specific crop’s intended acreage (combination of planted and prevented), are the minimum acre qualifications to claim prevented plant. These can be cumulative acres. So, if you add up all your wet spots and corners of fields you cannot plant, and that equals 20 acres or 20%, that would meet the 20/20 eligibility requirement.
Your highest number of PLANTED acres in the last four years is your qualifying cap. If you planted 500 acres of corn last year and that was the most you have planted in the last four years, then 500 acres is your cap. Say this year you planted 400 acres of corn and you intended to plant another 200 acres, you can only claim prevented plant on 100 acres, bringing your up to your max 500-acre cap.
Duties in the Event of Prevented Planting
To submit a prevented planting claim, call your agent between June 11 and 72 hours after the late planting date (July 5 for Northeast corn and soybeans). Producers need to sign off on their prevented plant acres no later than 60 days after the end of the insurance period. If you do decide to put another crop on the spring crop prevented plant acres or rent out the same acreage to another producer, you may not be entitled to your full prevented plant indemnity. It is very important that you discuss your intentions with you crop adjuster. Prevented planting acres must be included in the acreage report or there will be no coverage for the prevented planting. Note that including the prevented plant acres on your acreage report does not mean you opened a claim, you MUST call your agent and open a notice of loss.
Each crop is different as far as indemnity percentage of your dollar amount guarantee per acre. Corn is 55%, soybeans are 60%, processing beans are 40%, etc. But you can elect to increase your prevented plant percentage by the sales closing date for each crop by 5% (this only applies to certain commodities). So, your corn could be at 60% and soybeans at 65%. To calculate your prevented plant indemnity, multiply your minimum dollar amount guarantee per acre by the crop’s prevented plant percentage. You would be paid that amount per acre for at least 20 acres or 20%.
Prevented planting can get confusing. Contact your Crop Growers agent to see if it is the right fit for your operation. If you’re not sure if you will have enough acres to meet the 20/20 rule, always open the claim just in case. Your premium will not increase because you opened a claim.
Crop Growers LLP is an equal opportunity provider.