By Kent Thiesse
Farm operators in many portions of the Midwest will likely not be able to plant a portion of their 2019 corn and soybeans crops by the crop insurance final planting dates. Their prevented planting decisions became more difficult following the USDA announcement regarding potential 2019 market facilitation program payments.
On May 23, USDA announced preliminary details for $14.5 billion in 2019 MFP payments that could potentially be made to producers. The MFP payments will again be administered through Farm Service Agency offices. Following is a brief summary of the 2019 MFP payment details:
The concern for farmers with planting delays is the requirement that crops must be planted in order to be eligible for 2019 MFP payments on those acres; however, it does not specify what crop must be planted. Once a producer plants any crop on the unplanted crop acres, those acres will lose the opportunity for prevented planting crop insurance payments in 2019. For most Midwest farmers, this means a choice of planting very late planted corn or late-planted soybeans on those acres, in order to maintain eligibility for potential MFP payments.
Once the crop insurance final planting date for corn or soybeans has been reached, farm operators can opt to take the prevented planting insurance coverage rather than planting the crop. A large majority of producers in the Upper Midwest carry revenue protection crop insurance with prevented planting coverage on their corn and soybeans. If they choose the prevented planting coverage, they will receive 55 percent of their original crop insurance guarantee for corn and 60 percent for soybeans on a specific farm unit.
One alternative is to plant the original crop during the 25-day late planting period. Following the final planting date for a crop, there is a reduction of one percent per day in the crop insurance guarantee (from the maximum guarantee) for that crop. For example, corn in southern Minnesota planted on June 10 would have a crop insurance guarantee that is 90 percent of the original maximum guarantee.
The other alternative would be to plant another crop on those acres after the final planting date. For example, soybeans could be planted on intended corn acres after May 31. In that case, there would be no prevented planting coverage payment eligibility for the corn acres, and the soybeans would be treated as insurable soybean acres.
Following are the final planting dates for corn and soybeans at various locations:
Many farm operators are already dealing with the stress of likely yield reductions from delayed or prevented planting, as well as very tight profit margins for the current year. The 2019 MFP factor adds even more stress to making a decision on whether or not to opt for prevented planting this year.
They must now also consider the economics of possibly receiving 2019 MFP payments (estimates and formula for which is still unknown), versus the known payment amount of their prevented planting crop insurance coverage. If they choose to plant a crop very late to protect the MFP payments, knowing they will get reduced yields, they will lose the prevented planting protection.
Farm operators that are facing prevented planting decisions should contact their crop insurance agent for details and information. I have prepared an information sheet titled: “Late and Prevented Planting Options for 2019”, which contains details on prevented planting requirements and considerations. Email me to receive a copy.
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