Prevented planting options in 2019 for Kansas corn growers
Submitted by Monte Vandeveer, Kansas State University Department of Agricultural Economics
Wet conditions the past few weeks have slowed planting progress for Kansas corn producers. The May 20 Crop Progress Report from the National Agricultural Statistics Service indicated that Kansas corn acres planted were only at 61 percent, behind last year’s planting progress of 80 percent, which also matches the five-year average on this date.
Some crop insurance deadlines are looming for Kansas farmers who have Revenue Protection, RP with the harvest price option, or Yield Protection coverage, and one deadline has already passed for southeast Kansas farmers. This deadline is the “final planting date,” and it marks the final day on which crops can be planted and receive their full insurance coverage.
Final Planting Dates (FPDs) vary across the state for corn, with three regions represented. Fourteen counties in southeast Kansas had an FPD of May 15, another 60 counties in central and northeast Kansas have an FPD of May 25, and 31 counties in western Kansas have an FPD of May 31.
A second important insurance term here is the “late planting period” (LPP). The LPP allows the farmer to still plant the original crop and receive insurance coverage, but the level of coverage will decline. Specifically, the production guarantee declines 1 percent for each day that planting is delayed after the FPD. As an example, consider a non-irrigated grower with an APH yield of 120 bushels per acre.
With a 75 percent coverage level, the grower’s production guarantee is 90 bushels per acre. Acres planted on the fifth day into the LPP by this grower would have their production guarantee reduced by 5 percent, or 4.5 bushels per acre.
For corn in Kansas, the LPP extends for 20 days after the FPD ends. Hence, the final day of the LPP is June 4, 2019, for southeast Kansas; June 14, 2019, for central and northeast Kansas; and June 20, 2019 for western Kansas.
Below, we describe and evaluate some of the options for corn acres not planted by the FPD. We list five here:
1. Acres that were not planted due to an insured cause of loss can be left unplanted and receive a full Prevented Planting payment, equal to 55 percent of the original production guarantee.
2. These acres may also be planted to a cover crop during or after the end of the LPP. These acres will also receive the full Prevented Planting payment so long as the cover crop is not hayed or grazed before Nov. 1. The cover crop may not be harvested for grain or seed at any time.
3. Acres unplanted by the FPD may still be planted to corn. For acres planted during the LPP, the corn crop is still insured but the production guarantee will decline by 1 percent each day, as described above. No Prevented Planting payment is made in this case. If insurable causes of loss continue to delay planting, corn could still be planted after the end of the LPP. Acres planted at this point would receive a production guarantee of 55 percent of the original APH yield. Prospects of late maturity and other production issues may make this a less attractive option.
4. These acres may be planted to another crop. This could be soybeans or grain sorghum for many Kansas producers. In this case, no Prevented Planting payment is received. Crop insurance is available on this second crop if coverage has already been purchased for this crop on other acres in this unit.
5. The grower may take 35 percent of the corn Prevented Planting payment and plant another crop for harvest, but this second crop must be planted after the corn LPP ends. In this option, the farmer must pay still 35 percent of the corn premium.
Some conditions must be met to satisfy Prevented Planting rules. These include: acres must be eligible for PP acres. This means the tract must be at least 20 acres, or it must represent 20 percent of the field. These acres must have a history of planting corn.
Producers should also be aware that acres designated as PP will receive a T-yield for that year when updating the APH yield history, unless part of the field was in fact planted, in which case RMA will use a weighted average yield for the APH history.
To work through a number of examples to see how all these options work out for your operation please go to http://www.agmanager.info/prevented-planting-options-2019-kansas-corn-growers.