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The 2019 Crop Insurance Roller Coaster

Friday, September 6, 2019   (0 Comments)
Posted by: Joanna Guza, marketing & digital comm. manager
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By Lucas Conmey, Compeer Financial

It’s likely that the 2019 crop year will be one that’s remembered for a long time and for a lot of reasons. The spring weather was one of the more challenging years due to relentless rain over most of the corn belt. This was preceded by a later than normal fall, a difficult winter for some, and feed issues for upper Midwest dairy and cattle farmers.

As planting in the corn belt tried to get going at the end of May, farmers were faced with many challenging decisions. Do I plant in less than ideal conditions? Do I take prevent plant insurance? Is there going to be a Market Facilitation Program (MFP) payment? How much will it be? Will prevent plant acres be included? The list of challenges goes on and we certainly don’t need to relive them all.

As always, farmers battled through and pushed ahead. They planted the crops that they could and did the absolute best job all things considered. Then came more changes. USDA decided in June to change the current cover crop rules. Historically, cover crops could be hayed or grazed before November 1 without affecting prevent plant acres. There were also rules in place that after November 1, a farmer could only hay or graze and could not “chop.” Over the years there has been plenty of discussion about the word “chop” and cover crops. It became clear that the only option was to hay or graze those acres without affecting a prevent plant payment.

According to the new rules, a farmer could plant a cover crop following prevent plant acres, and then hay, graze, or chop that cover crop after September 1 without affecting prevent plant acres. This was considered a win for farmers who were facing feed shortage issues. Unfortunately, there were still some grey areas up for consideration.

“Well, what is considered a cover crop?” This is the question that most crop insurance agents faced throughout June and July. The Risk Management Agency (RMA), who oversees the federal crop insurance program, doesn’t provide a magical list of what can be considered a cover crop. That is left up to the local agricultural experts, which makes good agronomic sense. Most states in the upper Midwest had a local ag expert approve the use of corn and soybeans as a cover crop as long as it met certain criteria. That was dependent on the state and the expert’s opinion.

Can I sell my cover crop? Can I rent my land to a dairy so they can plant and chop a cover crop? Can I aerial seed soybeans as a cover crop? The changes in rules continued to create more questions than answers.

Let’s not forget the added political decisions and questions. What about those MFP payments? What about the disaster bill and that three billion dollars? Parts of those discussions have found some clarity.

The MFP payment rates were released on July 25; those dollar amounts will be broken into three payments. The first is guaranteed to be paid at 50% in late summer or early this fall. The other two payment amounts and times are yet to be determined. These decisions are dependent on the China trade negotiations and market conditions. There will be a MFP payment on acres where prevent plant was elected and then followed with a cover crop, as long as there was a cover crop planted by August 1, 2019. USDA released a list of cover crops that would qualify for the $15 per acre payment for those acres. Farmers should be in contact with their local Farm Service Agency (FSA) office if they want to receive the MFP payment on their cover crop acres.

Now that you have relived the challenging spring and summer of 2019, where are we now, and what should farmers be considering for crop insurance?

The words “early frost” should be considered profanity, but with how Mother Nature is throwing blows, don’t discount it. If you encounter disease or quality issues, call your crop insurance agent right away. If you’re going to chop or destroy an insured crop, call your crop insurance agent beforehand. If you chop your cover crop corn, make sure to track it separately from your insured corn acres for your records. If you have questions about how something might affect your insurance, never hesitate to reach out to your trusted crop insurance partner.

With the challenges farmers have faced, or might yet face with their 2019 crop, looking ahead to 2020 insurance decisions may be far from your mind. However, now could be the time to start thinking about those decisions. Make sure the coverage that was elected before March 15, 2019 was the right coverage for your farm. If you felt comfortable with your coverage considering all the challenges we faced, then you should be in good shape. In contrast, if you felt that the coverage elected kept you up at night, start talking with your insurance agent now to prevent that from happening again. There are decisions and crop insurance elections that can and will happen this fall, that will determine coverage for the 2020 crop year. It’s never too early to have discussions with your crop insurance agent about what you should do for next year.

Lucas Conmey is a state insurance product officer with Compeer Financial. For additional insights from Lucas, and the rest of the Compeer Insurance team, visit
Compeer.com

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