The Spring of 2016 will go down as one of the wettest on record. Oh wait, I thought that was 2015…oh, no it was 2014. Everyone involved in production agriculture gets it – three years in a row, wet spring planting conditions in the south have led to more and more producers not getting their intended crop mix planted in time. For those producers who have an MPCI crop insurance policy, there is a provision to help restore lost revenue from this situation but there are some things about the prevent plant provision that you need to know so that your expectations are met and the process doesn’t lead to disappointment.
Prevent plant eligibility requirements are based on the highest number of planted and prevented acres in the past 4 years of the crop and practice in question.
Example: Irrigated Corn
- 2012 – 156 acres
- 2013 – 358 acres
- 2014 – 124 acres
- 2015 – 417 acres
The maximum number of irrigated corn prevent plant acres for this operation in the specified county would be 417 acres. So, if you are a producer and you intended to plant 1000 acres but only planted 500, you are over your “corn” eligibility of 417 acres.
Now it gets complicated. If you have eligibility in another crop, the payment can be made under that crop’s eligibility. Under this same example, let’s look at the cotton planting history.
Example: Irrigated Cotton
- 2012 – 356 acres
- 2013 – 485 acres
- 2014 – 752 acres
- 2015 – 154 acres
So we know that our corn prevent plant claim cannot be “paid” as corn because we are over our eligibility. Let’s say that in 2016 we will plant only 155 acres of irrigated cotton.
Max acreage of 752 – 155 = 597 acres of cotton eligibility. Our corn prevent plant claim was for 500 acres, which is less than the 597 eligible under cotton. Therefore the claim can be paid as cotton.
Keep in mind that each crop has separate prevent plant payment provisions and the “roll” crop could pay at a lower rate than the original crop in question. Also, you must have at least 20 acres of prevent plant for the unit to qualify for prevent plant. Make sure you have eligible payment acres and an estimated claim amount before leaving any land fallow. This is the primary mistake producers and agents make that leads to disappointment related to prevent plant claims.
Prevent Plant Options
When the claim has been made, there are two options.
- Leave the acreage in question fallow for the remaining crop year and receive 100% of the prevent plant payment
- Plant a second crop after the late planting period expires and receive 35% of the prevent plant payment. If this option is elected the APH will be penalized by using a plug yield of 60% of the unit’s approved APH for the year.
If the land is left fallow, the full premium will be due on the acreage. If the 35% option is elected, only 35% of the premium will be due, plus the full premium for the crop planted as the second crop. Crops will only receive an enterprise unit discount if the eligibility requirements are met on the planted acres.
The acreage report is the method of certifying to the insurance provider acres planted, date planted, and (for the purpose of this discussion) acres prevented from being planted (PP). If prevent plant acres are not correctly documented on the acreage report then they will not be paid. Make sure the prevent plant acres are properly listed with irrigation practice, county, and farm or section number.
Prevent Plant Buy-Up Endorsement
Under this policy, there is an option to increase the prevent plant coverage an additional 10%. This is a great value on crops most likely to experience claims such as corn, grain sorghum, or cotton.
Late Planting Period
For most crops there is a late planting period that extends beyond the final planting date. The crop can be planted into those dates but the coverage is penalized daily. The producer has the option to plant into this window but is not required to.
There are lots of details to consider when navigating a prevent plant crop insurance claim. Feel free to call us at Alliance Ag Risk Management to get answers to any questions you may have.