Spring 2019 Crop Insurance and Trade Aid Options for Farmers

In the coming days farmers will have to choose between planting and accepting USDA trade aid payment or making a prevent plant insurance claim, managing their field differently than planned, and possibly receiving disaster assistance.

2019 MARKET FACILITATION PROGRAM

USDA has announced up to $14.5 billion has been set aside for direct payments to farmers as part of a second Market Facilitation Program (MFP). Producers of the following crops are eligible:

• Alfalfa hay
• Barley
• Canola
• Corn
• Crambe
• Dry peas
• Extra-long staple cotton
• Flaxseed
• Lentils
• Long grain and medium grain rice
• Mustard seed
• Dried beans
• Oats
• Peanuts
• Rapeseed
• Safflower
• Sesame seed
• Small and large chickpeas
• Sorghum
• Soybeans
• Sunflower seed
• Temperate japonica rice
• Upland cotton
• Wheat

Farmers of these crops will be paid based on a county rate, no matter what crop they plant in 2019, as long as it gets planted. Prevent planted acres are not eligible for MFP. Neither the county rates nor planting deadline has been announced by USDA.

Payment or eligibility limits for this new round of trade aid have not been announced. Most USDA farm subsidies limit farmers to a maximum of $125,000 apiece, and people with an adjusted gross income above $900,000 are not eligible.

Pig and dairy farmers may also benefit from MFP payments, but details are sparse. USDA says, “Dairy farmers will receive a per-hundredweight payment on production history.” So far it is unknown what span of production history USDA will be considering or what the payment rate is. Hog producers will be paid based on their inventory, but the time frame and rate has not been announced for that either.

Note, these payments will be broken up into three parts. It is not clear if the county rates will be the same for all three or if the three parts will be divided evenly. The first round “will begin in late July/early August as soon as practical after Farm Service Agency crop reporting is completed by July 15.” The second and third rounds will be evaluated as market conditions change and trade relationships evolve. They are not guaranteed. USDA says, “If conditions warrant, the second and third tranches will be made in November and early January.”

Many analysts are optimistic this combination of events will cause commodity prices to rise. Coupled with MFP payments, this may have you leaning toward planting. Be sure to factor in the longer-term consequences of planting in less than ideal conditions if you decide to plant.

AGRONOMIC CONSEQUENCES OF PLANTING

Each pass of equipment through a field causes compaction, but on heavily saturated soils like many states in the Midwest are seeing now, long-term effects on the soil and plant emergence increases.

While farmers put pen to paper during these rainy days and weigh their late-planting options, “mudding it in” may be one of the last resorts and should be carefully considered.

SHORT- AND LONG-TERM EFFECTS

Farmers out in the fields planting through the wet soils will see the effects right away.

Dave Nicolai, Extension educator at the University of Minnesota, says, “If the field conditions are too wet, you’ll get compaction, a poor seed bed, the soil may have more clods, you’ll experience poor seed to soil contact, and the stand will suffer because of that.”

Compaction can cause an increase in soil’s bulk density (organic matter, pore space, and soil minerals), which restricts root growth of plants. As roots struggle to penetrate compacted soil, they may not develop properly and will be less able to take up water and nutrients, which can then result in nutrient deficiencies in the crop.

Yield loss at the end of the season is estimated around 10% to 20% due to compaction during planting.

The effects of compaction are also felt long after one growing season. Compaction causes damage to the soil structure, which means less organic matter is available to plants. Compacted soils also retain water longer and are slower to warm up.

HOW TO MANAGE COMPACTION IN THE FIELDS

To mitigate compaction during planting, some farmers are switching out tires for tracks on planters and going out into the fields with less of a load. While that may mean more trips and time, it could make a huge difference in the health of the soil.

In addition, limiting traffic on the fields by using the same wheel tracks for passes will also help limit the total area of compaction.

After this season, it will be important to consider conservation practices like cover crops to increase organic matter and reduced tillage to help lessen the long-term effects on the soil, especially as tillage can increase compaction just below the tilled zone.

For more information on how to combat the challenges of this wet growing season, read these articles:

• What this Spring’s Wet Conditions Mean for Nitrogen Loss
• Chilling Injury the Latest Challenge for Corn and Soybean Farmers
• Planting Soybeans in Soggy Soils Leads to Long-Term Problems
• What Impact will Late Planting Have on Crop Diseases?

Finally, make note, if you elect to plant and apply for the MFP payments, the lower yields you may achieve this year due to delayed planting or adverse weather conditions will be factored in to your Actual Production History (APH) for crop insurance purposes and could lower your crop insurance pay out should you need to make a claim for many years into the future.

LATE AND PREVENTED PLANTING INSURANCE

In Iowa, the late planting period for corn is June 1 through June 25. Soybean late planting is June 16 to July 10. In this window of time, coverage is reduced 1% per day and drops to 55% for corn and 60% for soybeans.

Note that as of 2018, your farm may be deemed “practical to replant” if you plant within 10 days after the late planting date.

If you have Revenue Protection insurance, your revenue guarantee will vary based on the following factors. Know what each of these variables are specific to your operation if you are penciling out your options.

• Type of insurance
• APH
• Level of coverage
• Unit coverage: Enterprise, Optional, or Basic

The flow chart from Iowa State University Extension below depicts the series of decisions a corn or soybean farmer must make for prevented planting or replanting. Regardless of the choice, it is important to regularly communicate with your crop insurance agent. Each time you talk to him or her, make note of the date and what you understood.

Alejandro Plastina, Ag Decision Maker, Iowa State University Extension

If you choose to not to plant corn or soybeans, be prepared with a plan and know the costs. These articles may be helpful:

• How to Control Weeds on Prevented Planted Acres
• What Cover Crops Should You Plant?
• Select the Right Cover Crop
• Grain Sorghum Could be a Fit for Waterlogged Farms

DISASTER AID

A $19.1 billion disaster bill, which includes $3 billion for agriculture, was blocked from passing the House for the second time in a week. That $3 billion includes compensation for farmers prevented from planting crops due to floods and rain this spring. Details about how this money would be distributed are still unclear.

The House is scheduled to meet again Thursday and will have a third opportunity to act on the bill. If that fails, a fourth opportunity will come when the House returns next week after a 10-day recess.

LEARN MORE

If you are still struggling to decide what the best option may be for your operation check out this article:

• Should You Plant or Take Prevented Plant Coverage?

Megan Vollstedt also contributed to this article.