A Comprehensive Look: Should Farmers Use Prevent Plant or Plant?

May 28, 2019 09:03 AM

It has been a tough spring for farmers across the Corn Belt with a wet spring, lack of planting and trade concerns.

Wet fields are stretching across the Midwest, leading to a historically slow start to spring. It’s to the point where most areas are passing the date to plant corn and be fully covered under federal crop insurance. Now, farmers have to add in yield drag, variety issues and it makes the decision harder.

“When we move to a full season corn to a mid to an early season corn, you’re going to give up yield,” said Ken Ferrie, Farm Journal Field Agronomist.

So do you plant and take a financial hit, switch to soybeans or take prevent plant?

“I’ve had some customers who say [they can’t] make money trying to plant this crop at current levels,” said Jim McCormick with AgMarket.Net.

The switch to plant more soybeans can be complicated, especially since domestic soybean stocks are much higher.

“Last year’s ending stocks [were] at 438 million bushels,” said Ted Seifried with Zaner Ag Hedge. “This year, USDA has ending stocks at 995 million bushels, under that billion bushel mark. That is more than double in the increase from what we had last year to what we had at the end of this year.”

On top of that, the department announced the second round of Trump Tariff Aid payments to farmers with limited details.

“Certainly, we have not disclosed details that would distort planting intentions or intentional purposes,” said Perdue.

USDA says it may be weeks until farmers known just how much money they could receive with the new China trade aid. Agriculture Secretary Sonny Perdue saying USDA is intentionally not releasing the new payment amounts for trade aid right now to prevent a sway in planting decisions.

“I want to let people know they need to make their planting decisions and cropping decisions, all production decisions based on where they see the market and where they see their own weather pattern and when they can get into the fields in their own area,” said Perdue.

Farmers are eligible for three possible payments. The only one guaranteed right now is expected to be released in July. Perdue says there will be a cap on how much farmers will be able to receive under payments. Will it give more of an incentive to plant something or take preventative plant payments? One analyst says generally speaking, corn acres in prevent plant usually receives a larger payment than soybeans. It also depends on a farmer’s coverage and yield.

USDA says farmers should not let the new trade aid payments determine what they plant. However, with payments in the mix, the number of acres is anyone's guess.

“The talks of 10 to 12 million prevent acres for corn and soybeans, that may be overstated at this point just for the promise of getting a payment on planted acreage,” said Seifried. “Honestly, if I’m looking the same payments for corn and soybeans. It’s a lot more attractive to plant corn, especially with the rally we just had.”

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Spell Check

Northern Illinois, IL
5/28/2019 04:37 PM

  This is the year so many will find out crop insurance is not what so many hope.No way are they going to loose money.So much fine print and red tape and its not 100 percent coverage anyway.Many farmers will go belly up this year and those premiums will still come due this fall.

Fred T
Central, NE
5/28/2019 07:08 PM

  Think PP over carefully. If you've got a good APH yield and you know you can't get planted by the late plant date, prevent plant might work. But remember that for corn you only get 55% of whatever level of APH you've chosen on your policy. If you have neighbors that mudded in their corn around you during that late plant period, you may not get prevent plant. It's still a judgement call by your insurance adjuster. Then, can you return your unused inputs? Or cancel your prepay? Things to think about. Every farm is different.

Olton , TX
5/28/2019 07:15 PM

  I have a question for the guy who thinks he must plant. What happens is a bunch of you plant & corn this fall has a handle starting with a $2? Yep, it can happen. Been there, done that. Trump’s not going to win the trade war mainly because what he’s really after is a wholesale change in how China’s government runs China. Does anyone really believe they will adopt a capitalist form of government? See Russia as an example of how that didn’t work out as we planned. You can wash the mud off a pig but it’s still a pig.