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# Crop Insurance: What You Need to Know Right Now

03:00AM May 25, 2013
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#### Calculate your prevent plant or other crop insurance options for your unplanted acres.

Last week was a record-breaking period for corn planting progress. As of May 19, 71% of the U.S. corn crop is in the ground, a 43-percentage-point jump from the previous week.

For soybeans, only 24% of the crop has been planted. Normally around 40% of the crop is in the ground by mid-May.

As May fades away, many farmers are running out of time to get their crops in by the crop insurance final planting date. They are now weighing the options of switching up crops or maybe just not planting a field at all.

Jamie Wasemiller, Gulke Group analyst and owner of Wasemiller Insurance Agency, says farmers should definitely calculate out the option of taking a prevent plant claim.

And, do that fast. Depending on the area, final planting dates are either May 25, May 31 or June 5 for corn. For soybeans, the dates are June 15, June 10, June 20 or June 25 all depending on your location.

Wasemiller says that with spring insurance prices of \$5.65 for corn and \$12.87 for beans, along with the bearish nature of futures prices moving forward, the premiums provided by prevent plant could be close to or even higher than profits from producing a crop on those acres."I do think prevent plant is a viable option this year."

For farmers with unplanted acres, covered by insurance, Wasemiller provides four options. For these examples, assume the farmer is planting corn, has an 80% crop insurance coverage level and an APH (actual production history) yield of 170 bu./acre.

#### Option 1: Submit a prevented planting claim.

With a spring insurance price of \$5.65, that gives you an insurance guarantee of \$768 per acre. (\$5.65 x 170 x 80% = \$768). If you take \$786 time 60% to calculate your prevent plant indemnity it would come out to be \$472. This may not be ideal but a farmer should be able to make that work on a portion of their acres.

Wasemiller says no other crops can be planted on these acres other than approved cover crops. And, in this instance, prevented planting acres will not affect your APH.

#### Option 2: Do Not submit a prevented planting claim and plant a second insurable crop.

If you do this, you must plant that second crop during the "late planting period," which is 25 days after the final planting date.

He says if the second crop is planted before the late planting period, coverage for the second crop can replace the coverage for first. "Essentially those corn acres are now going to soybeans and it is kind of like corn never existed," he says, and therefore, no prevented planting payment will be issued for the first crop.

#### Option 3: Submit a prevented planting claim and plant a second insurance crop after the late-planting period.

Wasemiller says that if the second crop is insured and is planted after the late planting period, a payment of 35% of the prevented planting payment will apply to the corn acres. Also, only 35% of the original premium for the policy on those acres will be charged.

"Keep in mind that depending on when you switch from corn to insured soybeans you may also run into late planting period rules for the soybeans if they are planted after their final planting date," he says.

In this case the prevented planted acres will receive a yield equal to 60% of the approved yield, which will now be part of the 10-year history.

#### Option 4: Plant the original crop during the late planting period.

Of course, Wasemiller says, farmers also have the option of planting their crops after the final planting date. "The late plating period lasts for 25 days after the final planting date," he says. "Acres planted within this window will receive 1% less insurance coverage per day. Acres planted after the late planting period can still be insured at the prevented planting level which is 60% of the original guarantee."

He reminds that the late planted acres will be combined with any acres planted before the late planting window to determine your average guarantee if you utilize the enterprise unit discount

Since crop insurance is so farm-specific, Wasemiller says any of these options could be correct for a farmer, but he definitely would suggest some over others. "My first choice is to take the full prevent plant claim," he says. "My second choice is to continue to plant corn for up to a week after the final date."

He also advises to visit with other farmers and your insurance agent to find out what others in your area are doing. "Don’t be that lone wolf in your area taking prevent plant. Adjusters and underwriters are getting a little more picky about quickly approving prevent plant acres."

If the majority of people in your area are getting their acres in, Wasemiller says, it may be best to have an adjustor come out to help determine if you land is eligible for a prevent plant claim.

Hear Wasemiller's full audio analysis:

#### Crop Insurance in the News

In a 59-33 vote, Senators have adopted a measure that would limit government subsidies for crop insurance to roughly 20,000 of the wealthiest U.S. farmers, media reports say. The vote comes amid ongoing discussions in Washington over a new five-year farm bill.

The subsidy for the top 1% of farmers—those with gross adjusted incomes higher than \$750,000—would fall to 47%, Reuters says. The government now pays 62 cents on every \$1 in premiums.

Wasemiller says this vote is just the latest in a long trend of scrutiny of the crop insurance program. "Between the House and the Senate, they really want to take money out of the crop insurance program."

Looking forward, Wasemiller says it is difficult to say what federal programs will be available for farmers. "There’s a good chance that subsidies will not only go down for those high-end guys, but we could certainly see this trickle down to all farmers."

His advice is to stay in touch with your senators and voice your opinion on the program. "Don’t be afraid to hound those guys," he says.

Also, he suggests ramping up your knowledge and the overall structure of your crop insurance and marketing plan, so you can weather more risk. "Do the best you can today, so that no matter what the government or the weather does, we’re in a place where we can say we can manage all those scenarios."

Have a question for Jamie? Contact him at 707-365-0601 or Jamie@GulkeGroup.com. Also, check out his blog: Risk Management with Insurance Tools

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