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New Guidelines for Cover Crop Termination Affects Crop Insurance

April 22nd, 2014

Contributed by Steven D. JohnsonFarm Management Specialist, Iowa State University Extension, sdjohns@iastate.edu, 515-957-5790

Johnson_Steve_sm

If you planted a cover crop last fall and need to terminate it this spring in fields that will be planted to corn or soybeans, when should you kill the cover crop? Timing for termination of a cover crop can affect whether the crop insurance coverage attaches for the corn and soybean crop yet to be planted.

The USDA’s Risk Management Agency (RMA) has issued new guidelines for cover crop termination in 2014 that are slightly different from last year.  RMA officials made these changes after meeting with officials from USDA’s Natural Resources Conservation Service (NRCS) and the Farm Service Agency (FSA). Through the interagency working group a consistent and flexible cover crop policy can be applied across all USDA agencies.

With the new guidelines farmers can hopefully obtain the conservation benefits of cover crops while minimizing risk of reducing yield to the following crop due to soil water use.

The NRCS Guidelines for 2014 use four strategic management zones across the nation. Iowa has two of those zones. As the accompanying map shows, about a third of Iowa (western portion) is in Zone 3, while the rest of Iowa is in Zone 4.

If you are in Zone 3, you must terminate the cover crop at or before planting the subsequent crop, which is likely corn or soybeans. In Zone 4, the rest of Iowa, you must terminate the cover crop at or within 5 days after planting the subsequent crop if you want the subsequent crop to be insured.

cover crop termination zones 2014

Termination is not about a date; it’s about when you are going to plant the subsequent corn or soybean crop.  The cover crop, if it is not 100% destroyed, will compete with corn or soybeans for moisture in the soil. That’s the reason for the different zones.

Termination means growth has ended for 100% of the cover crop in the field. These NRCS Guidelines basically state that you have to terminate growth of the cover crop before crop insurance coverage attaches to the corn or soybean crop you plant in that field.

You can still graze or hay a cover crop, but crop insurance will not attach to the crop following a cover crop if termination of the cover crop is not done according to these new guidelines. The key is you want to kill the cover crop if you want the crop insurance coverage to attach. Contact your crop insurance agent if you have questions. The 2014 Cover Crops Crop Insurance and NRCS Cover Crop Termination Guidelines FAQs are at: http://www.rma.usda.gov/help/faq/covercrops2014.html.

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Crop Insurance, Crops

Final Harvest Prices for Crop Insurance Determined

November 1st, 2013

Contributed by Steve Johnson, Extension Farm Management Field Specialist, sdjohns@iastate.edu.

Johnson_Steve_smHarvest prices determined in the month of October appear to be $4.39 per bushel for corn and $12.87 per bushel for soybeans. These are the average futures prices for December CME corn and November CME soybean contracts in the month of October. These final numbers are still to be verified by the USDA Risk Management Agency (RMA).

This and the farm’s actual 2013 yields are the final pieces in determining the potential crop insurance indemnity claim for both corn and soybeans. Those final harvest prices suggest that crop insurance revenue policies on corn will trigger indemnity payments this year. This is especially true if the insured purchased a revenue policy at higher levels of coverage (80 or 85 percent). Farmers experiencing yields below their Actual Production History (APH) should keep good production records and report these to their crop insurance agent immediately upon completion of harvest.

It would take a significant drop in yields to trigger such an indemnity payment. For corn, the harvest price dropped by more than 22 percent from the projected price of $5.65 per bushel determined in February. Since revenue protection coverage guarantees yield times price, those higher levels of coverage will trigger if the actual harvest yields falls below the insured’s APH.

For soybeans, the harvest price is exactly the same at the projected price, $12.87 per bushel. That’s the average settlement price of the November CME soybean futures contract during February. To trigger an indemnity payment in soybeans, the actual yield will need to fall at least 15 percent below the APH for an 85 percent level of coverage. So a substantial yield loss on soybeans will have to occur before crop insurance indemnity payments would be triggered.

Since corn and soybean yields will vary across farms and many insureds use enterprise unit coverage, crop insurance indemnity payments will also vary. A farmer should contact their crop insurance agent with their estimated yields to determine the potential for an indemnity claim. Keep good production records and report the final production immediately upon completion of harvest. This will help expedite an indemnity claim for 2013 and help determine the APH for 2014 crop insurance decisions.

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Estimating Crop Insurance Indemnity Payments

October 14th, 2013

Contributed by Steve Johnson, Extension Farm Management Field Specialist, sdjohns@iastate.edu.

Johnson_Steve_smHarvest prices determined in October will have a large impact on the size of the potential crop insurance indemnity payments for corn and soybeans. Current futures prices suggest that crop insurance revenue policies on corn will make indemnity payments on some farms, particularly those that purchased revenue policies at high coverage levels and are experiencing yields below their Actual Production History (APH). In Iowa, there’s a better chance for insurance indemnity payments on corn than there is for soybeans this fall. It would likely take a significant drop in soybean yields to likely trigger such a payment.

Crop Insurance Indemnity Payments

The 2013 projected price for corn is $5.65 per bushel. That’s the average settlement price of the December Chicago Mercantile Exchange (CME) corn futures contract during February. This projected price is used to set crop insurance guarantees and the premium paid by farmers. The harvest price is used to calculate revenue on which crop insurance indemnity payments are based. The harvest price for corn equals the average of settlement prices of the December CME corn futures contract during October. Settlement prices during the first 10 days of October suggest a harvest price of $4.40 per bushel. The final harvest price can vary before the end of the month, but this number provides a good starting point for evaluating corn payments.

An estimate of a $4.40 harvest price is 78% of the $5.65 projected price ($4.40 harvest price divided by $5.65 projected price = 78%). If actual yield equals the guarantee yield on revenue polices of an 80% level or greater coverage levels, it will likely trigger an indemnity payment. So an actual yield that falls 22% or more below the APH should command attention by the farmer. They will need to notify their crop insurance agent and make sure good records can verify this actual yield.

The projected price for soybeans is $12.87 per bushel. That’s the average settlement price of the November CME soybean futures contract during February. The first 10 days of settlement prices during October for November soybean futures suggest a harvest price of $12.75 per bushel. Similar to corn, the soybean harvest price is not yet known, but $12.75 is a useful starting point for evaluating a potential insurance indemnity payment on soybeans.

A $12.75 harvest price is 99% of the $12.87 projected price. Because 99% is above coverage levels offered by crop insurance revenue products, a yield loss has to occur before crop insurance indemnity payments would be made. Since corn and soybean yields will vary across farms and most farmers use enterprise unit coverage, crop insurance indemnity payments will also vary. A farmer should contact their crop insurance agent regarding the actual yield records necessary for an indemnity claim, updating their APH with this year’s harvest numbers or making their 2013 premium payment.

For farm management information and analysis visit Ag Decision Maker at www.extension.iastate.edu/agdm; ISU farm management specialist Steve Johnson’s site is at www.extension.iastate.edu/polk/farm-management.

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Prevented Planting FAQ

June 18th, 2013

Contributed by Steve Johnson, Extension Farm Management Field Specialist, sdjohns@iastate.edu.Johnson_Steve_sm

Question: When is prevented planting available?

Answer: Prevented planting must be due to an insured cause of loss that is general in the surrounding area and that prevents other producers from planting acreage with similar characteristics. Failure to plant when other producers in the area were planting will result in denial of the prevented planting claim.

There’s also the 20/20 Rule–a minimum of 20 acres or 20% of the unit must be affected. Total acres of planted and prevented planted cannot exceed the total cropland acres. Prevented planting claims must be filed with your crop insurance agent by June 28 for corn and July 13 for soybeans. Prevented planting acres must be reported on the FSA Form 578 acreage report. That deadline is extended in Iowa to July 15, 2013.

 

Question: When is prevented planting not available?

Answer: On ground that is insured through a New Breaking Written Agreement; Conservation Program Reserve land—first year out of CRP; on ground where a pasture or forage crop is in place during the time of planting; when other producers in the area are able to plant; on county-based crop insurance policies—such as GRP & GRIP.

 

Question: How much do I get paid for prevented planting?

Answer: 60% of the initial revenue guarantee.

  • For corn, here’s how it’s figured: 180 bushels APH x 80% x $5.65/bu = $814 initial revenue guarantee  x 60% = $488/acre PP payment
  • For soybeans, an example is 50 bushels APH x 80% x $12.87/bu = $515 initial revenue guarantee x 60% = $309/acre PP payment
  • Note that payments for prevented planting use the projected price (new crop futures price average in February).

 

Question: How are eligible acres for prevented planting determined?

Answer: The insurance company considers each of the insured’s crops in each county. They look at the maximum number of acres reported for insurance and certified in any of the four most recent crop years. The acres must have been planted in one of the last three crop years.

What happens if you are prevented from planting and there are not enough eligible acres for the crop being claimed? When the insured runs out of acreage eligibility for one crop, the remaining prevented planting acres will be “rolled” to another crop, such as corn to soybeans.

 

Question: What happens to my APH—actual production history– if I take prevented planting?

Answer: The insured farmer who receives prevented planting on a crop does not have to report the actual yield for the year. Generally, prevented planting will not impact the APH yield in future years, unless a second crop is planted on prevented planting acres.

 

Question: What happens if the first crop is prevented planting, but the second crop is planted?

Answer: If the second crop is planted it MUST be insured if there was insurance for that crop elected on or before March 15, 2013. The second crop must have been planted AFTER June 25 for corn and July 10 for soybeans. If the insured farmer plants a second crop they will still receive 35% of the indemnity for the prevented planting crop and pay only 35% of the premium

Planting a second crop on prevented planting ground affects the following year’s APH:

  • 1st Crop – you get 60% of the approved yield (180 bu/A APH X 60% = 120 bu/A)
  • 2nd Crop – actual yields are used for APH

 

Question: What will crop insurance adjusters need to do for prevented planting claims?

Answer: Visually inspect all prevented planting acres to determine:

  • Acres are within 5% of what was on the acreage report
  • Whether the acres are left idle, or whether a cover crop or second crop has been planted
  • What the cause of loss was, and if it is general in the area
  • Determine eligible acres
  • Roll acres to other crops if insured is short of eligible acres for reported prevented planting crop

 

Question: What are the deadlines for filing prevented planting in Iowa?

Answer: These dates vary by state, but tend to be 3 days after the last day of the late planting period.

  • The deadline for filing prevented planting with your crop insurance agent is June 28 for corn and July 13 for soybeans
  • The Iowa Farm Service Agency (FSA) acreage report deadline has been extended to July 15
  • Prevented planting acres listed on your acreage report (FSA Form 578) should match the information provided your crop insurance agent in order to qualify for a full indemnity payment
  • Work with your crop insurance agent well in advance of these dates regarding a prevented planting claim and whether a cover crop or a 2nd crop will be planted.

 

Question: To qualify for enterprise units on my crop insurance policy, I have to have at least the smaller of 20 acres or 20% of my planted acres in two or more different township sections.  If I have to leave some of my acres unplanted (prevented planting), will they still count toward my eligibility for enterprise units?

Answer: Only planted acres are considered when determining eligibility for enterprise units.  For example, a farm with 200 acres each in two sections would normally qualify for enterprise units. However, if fewer than 20 acres are planted in one of the sections, the farm would no longer qualify.  Possible increases in crop insurance premiums due to a change in unit designation should be considered when deciding whether or not to file for a prevented planting claim on some acres.

 

ISU Extension Resources

More details can be found in the publication “Delayed and Prevented Planting Provisions” on the Iowa State University Extension and Outreach Ag Decision Maker web site . An electronic decision spreadsheet is also available to help analyze alternative actions. Producers should communicate with their crop insurance agent before making decisions about replanting or abandoning acres.

Additional information on recovering from flooding can be found at http://www.extension.iastate.edu/content/dealing-flooding-2013.

 

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Crop Insurance, Crops

Flooding Impact and Crop Insurance FAQs

June 6th, 2013

Johnson_Steve_smContributed by Steve Johnson, Extension Farm Management Field Specialist, sdjohns@iastate.edu.

The frequent rains that have soaked Iowa this year have left many corn and soybean fields unplanted or with flooded areas.  Many producers have questions regarding what options they have under their multiple peril crop insurance (MPCI) policies.

Fortunately, over 90 percent of the insured corn and soybean acres in Iowa are covered by MPCI, which includes replant, delay and prevented planting coverage. The following are questions that are commonly asked by producers with MPCI that are facing replant, delay, and prevented planting decisions.

Q: What should a producer do if their planted crops are affected by the flooding?

A. Notify their crop insurance agent within 72 hours of the loss. If they qualify, the replant option provides a payment reflecting 8 bushels of corn or 3 bushels of soybeans per acre times the projected price of $5.65 per bushel corn and $12.87 per bushel soybeans, respectively. So replant will provide about $45 per acre for corn and over $38 per acre for soybeans in 2013.

Q: What if a producer didn’t have their crops planted yet, what are the late planting dates in Iowa?

A: May 31 – Final planting date for Corn
    June 15  – Final planting date for Soybeans

In Iowa, the crop insurance “late planting period” for corn begins on June 1.  Corn can still be planted after this date, but the insurance guarantee on those acres is reduced by 1% per day until they are planted.  Corn acres planted after June 25 will receive insurance coverage equal to 60% of their original guarantee.  Producers should keep accurate records of planting dates on all remaining acres.  The late planting period for soybeans in Iowa is from June 16 through July 10.

Beginning June 1, corn producers with unplanted acres have three choices: plant corn as soon as possible with a reduced guarantee, shift to soybeans with full insurance coverage, or apply for prevented planting.  Prevented planting acres are insured at 60% of their original guarantee. Those acres may have a cover crop established on them or may be left idle (black dirt).

Q: If I am prevented from planting by the final planting date, what are my choices under the terms of my policy provided I meet all other policy provisions and I do not qualify for double cropping?

A: You may:

  • Plant the insured crop during the late planting period, if applicable, and insurance coverage will be provided. The late planting period is generally 25 days after the final planting date but varies by crop and area. For most crops, the production guarantee is reduced 1 percent per day for each day planting is delayed after the final planting date.
  • Plant the insured crop after the late planting period (or after the final planting date if a late planting period is not applicable), and insurance coverage will be provided. The insurance guarantee will be the same as the insurance guarantee provided for prevented planting coverage.
  • Leave the acreage idle (black dirt) and receive a full prevented planting payment.
  • Plant a cover crop and receive a full prevented planting payment provided the cover crop is not hayed or grazed before November 1, or otherwise harvested at any time. If the cover crop is hayed or grazed before November 1, the prevented planting payment on the first crop is reduced to 35 percent of the first crop prevented planting guarantee.
  • Plant another crop (second crop) after the late planting period, or after the final planting date if no late planting period is applicable, and receive a prevented planting payment equal to 35 percent of the prevented planting guarantee.

These plus additional commonly asked questions pertaining to delayed, prevented, and replanting crop insurance decisions can be found on the Iowa State University Extension and Outreach Dealing with Flooding – 2013 page at http://www.extension.iastate.edu/Documents/Flood/FloodCropInsuranceFAQs.pdf.

ISU Extension Resources

More information can be found in the ISU Extension publication “Delayed and Prevented Planting Provisions,” file A1-57 on the Iowa State University Extension and Outreach Ag Decision Maker web site, at: http://www.extension.iastate.edu/agdm/crops/html/a1-57.html

 An electronic decision spreadsheet is also available to help analyze alternative actions.  Producers should communicate with their crop insurance agent before making decisions about replanting or abandoning acres.

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Crop Insurance, Crops

Delayed Planting, Prevented Planting and Replant Crop Insurance Coverage

May 28th, 2013

Johnson_Steve_smContributed by Steve Johnson and William Edwards, Iowa State University Extension and Outreach Farm Management Specialists.

The frequent rains that have soaked Iowa this year ave left many corn and soybean fields unplanted or with flooded areas.  Many producers are wondering what options they have under their multiple peril crop insurance (MPCI) policies.

In Iowa, the crop insurance “late planting period” for corn begins on June 1.  Corn can still be planted after this date, but the insurance guarantee on those acres is reduced by 1% per day until they are planted.  Corn acres planted after June 25 will receive insurance coverage equal to 60% of their original guarantee.  Producers should keep accurate records of planting dates on all remaining acres.  The late planting period for soybeans is from June 16 through July 10 in Iowa.

Choices

Beginning June 1st, corn producers with unplanted acres have three choices: plant corn as soon as possible with a reduced guarantee, shift to soybeans with full insurance coverage, or apply for prevented planting.  Prevented planting acres are insured at 60% of their original guarantee, and the insured may either leave the acreage idle “black dirt” or be required to plant a cover crop that cannot be hayed or grazed before November 1.

Acres that have been planted, but need to be replanted, may qualify for a special replanting insurance payment. Payments are based on the value of 8 bushels of corn or 3 bushels of soybeans per acre, times their respective projected insurance prices. In 2013, that is about $45 per acre for corn and $38 per acre for soybeans.  To qualify for an indemnity payment under the replanted or prevented planting provisions, a minimum area of 20 acres or 20% of the insured unit, whichever is smaller, must be affected

ISU Extension Resources

More details can be found in the publication “Delayed and Prevented Planting Provisions”  on the Iowa State University Extension and Outreach  Ag Decision Maker web site .  An electronic decision spreadsheet is also available to help analyze alternative actions.  Producers should communicate with their crop insurance agent before making decisions about replanting or abandoning acres.

 

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Crop Insurance, Crops

Crop insurance and prevented planting in 2013

May 16th, 2013

The following is a news release from USDA RMA regarding late and prevented planting in 2013. Contact: Duane Voy (651) 290-3304, duane.voy@rma.usda.gov

Heavy rainfall, floods and cool temperatures across the Midwest have slowed planting this spring. The final planting date for corn in Iowa is May 31.  The final planting date for soybeans in Iowa is June 15. Final planting dates and other crop insurance information can be found at www.rma.usda.gov/aboutrma/fields/mn_rso/.

Prevented planting is a failure to plant an insured crop with the proper equipment by the final planting date designated in the insurance policyʼs actuarial documents or during the late planting period, if applicable, due to an insured cause of loss that is general to the surrounding area and that prevents other producers from planting acreage with similar characteristics. More information can be found on the Prevented Planting fact sheet at www.rma.usda.gov/fields/mn_rso/2013/2013preventedplanting.pdf.

Here are some basic guidelines if you are unable to plant because of an insurable cause of loss by the final planting date. You may:

  • Plant during the 25-day late planting period. For most crops, the timely planted production guarantee is reduced one percent per day for each day planting is delayed after the final planting date.
  • Plant after the late planting period. The insurance guarantee will be the same as the insurance guarantee provided for prevented planting coverage.
  • Not plant a crop and receive a prevented planting payment.
  • Plant a cover crop and receive a prevented planting payment.
  • After the late planting period ends, plant the acreage to another crop (second crop) and receive a reduced prevented planting payment.

The most important thing you can do if you are unable to plant the crop by the final planting date is contact your crop insurance agent to review your policy and options before you make a decision. You are required to provide notice that you were prevented from planting an insured crop within 72 hours after the final planting date.

An Ag Decision Maker Information File is available, along with a Decision Tool to aid late planting and replanting decisions.

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Crop Insurance

Farmers encouraged to contact insurance provider about haying or grazing a cover crop this spring

May 9th, 2013

News release from USDA Risk Management Agency, contact Dustin Vande Hoef, 515/281-3375.

Iowa Secretary of Agriculture Bill Northey today encouraged farmers with cover crops to contact their insurance provider if they are interested in haying or grazing after May 10, 2013.  The USDA Risk Management Agency (RMA) has provided new guidance that insurance providers may allow farmers to continue to hay or gaze the cover crop until May 22, 2013.

“It is critically important for farmers to work with their insurance provider and receive approval if they are interested in haying or grazing a cover crop past May 10,” Northey said.  “It has been a very challenging spring for farmers and hopefully this announcement will provide farmers with some additional flexibility.”

USDA had previously provided guidance to farmers interested in insuring a spring crop following a cover crop that they must not hay, graze or otherwise harvest the cover crop after May 10, and terminate the cover crop prior to planting the spring crop.  The cover crop must be terminated with tillage or herbicide, grazing is not considered terminating the crop.

“This new guidance from RMA only affects farmers interested in haying or grazing a cover crop past May 10,” Northey added.  “Otherwise, a farmer only has to terminate the cover crop prior to planting.  So, if they aren’t able to get into a field due to wet weather they still have time to kill the cover crop prior planting and not have it impact their crop insurance.”

In addition to contacting their insurance provider, farmers can also contact the USDA Risk Management Agency’s Saint Paul Regional Office for more information via phone at 651-290-3304, email at rsomn@rma.usda.gov, or online at http://www.rma.usda.gov/aboutrma/fields/mn_rso/.

Bulletin - Haying and Grazing of a Cover Crop for the 2013 Crop Year

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Agricultural regulations, Crop Insurance

Keep Good Planting Records This Spring

May 3rd, 2013

Contributed by Steve Johnson, Extension Farm Management Field Specialist, sdjohns@iastate.edu.

Johnson_Steve_smSpring will arrive eventually, and as you plant corn, soybeans and other crops, keep accurate records. Farmers need to keep track of the date each field is planted, name of the field, how many acres are planted and the crop planted.

Farmers need to keep accurate planting records to report that information to your local USDA Farm Service Agency (FSA) office, to certify your planted acreage. As they do each year, FSA staff will include the information in your acreage report–FSA form 578—which is kept on file at FSA. The information will be used not only by FSA but also by your crop insurance agent to enter into the Risk Management Agency (RMA) database.

Need to certify planted acreage with FSA for farm program and crop insurance

Reporting of planted acreage information to FSA is commonly referred to as “acreage certification.” Farmers certify their planted acreage each year. For 30 years or so farmers have been certifying their planted acreage each year with FSA, so this requirement is not new. But this spring with the late start on planting and what will end up being a rush to get the crop in the ground, it’s important to remember to keep track of their planted acreage information.

With technology in the tractor cab today, how much does that help farmers keep track of information needed for acreage certification? Some farmers are using digital cards and provide their planting information electronically to their FSA office or to their crop insurance agent. But agriculture generally is in the very early stages of certifying acres electronically. Most farmers are still writing down the number of acres and crop planted and related information by hand, and the data is transferred to FSA form 578 by hand.

July 15 is deadline to report 2013 planted acreage to FSA

You have until July 15 to report your planted acreage information to your FSA office,  and it probably wouldn’t hurt to do this in person, just in case someone on the other end of the conversation has a question, or needs a clarification. A lot of farmers, as soon as they are done planting, want to get their information to FSA as soon as possible. And local FSA offices are going to get pretty busy in the next few weeks—with acreage certification and other farm program activities such as ACRE enrollment and CRP and CSP sign-ups.

Most farmers find it works best to keep records while they are actually planting—so they don’t forget or don’t get fields confused as to which information goes with each field. For each field, some also keep track of fertilizer and herbicide applications, tillage practices used, etc. But you definitely need to keep track of the planting information that both FSA and RMA requires.

Traditionally, the deadline for farmers to certify their planted acreage with FSA was June 30. But last year USDA FSA moved it to July 15 to avoid confusion with the crop insurance reporting deadline. Now both deadlines are July 15.

Since the crop insurance billing date has been moved up to August 15, providing a copy of that acreage report well in advance of the July 15 deadline will assure more timely crop insurance data entry and receipt of your premium notice. The 2013 crop insurance premium is due in September. To avoid a penalty, payment must be received by October 1, which is one month earlier than in the past.

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Crop Insurance, Farm Bill

Iowa’s early planting dates: April 11 for corn, April 21 for soybeans

April 1st, 2013

Contributed by Steve Johnson, Extension Farm Management Field Specialist, sdjohns@iastate.edu.

Early planting dates in Iowa are April 11 for corn and April 21 for soybeans. Acres planted before these dates are no longer eligible for replant coverage payments should it be necessary to replant. The maximum replant payments each year are equal to 8 bushels of corn and 3 bushels of soybeans. Multiply these bushels times the RMA projected price for that year, which is the February average futures price for December corn and November soybeans used to establish the value of the insurance guarantees that the producer purchases. For 2013 the projected prices are $5.65 per bushel for corn and $12.87 for soybeans, so the maximum replant payments are $45.20 or $38.61 per acre, respectively.

Any acres planted before the early planting dates lose replant coverage, even if the entire farm or insurance unit hasn’t been planted. However, early planting doesn’t affect a farm’s actual production history (APH) yield or revenue insurance guarantee, as long as all other good management practices are followed throughout the growing season. Once the crop is planted, that revenue guarantee is still in effect, and any indemnity payments will depend on the final harvested yield and the harvest price.

More information on important crop insurance dates can be found on the Ag Decision Maker website.

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