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NDSU Prevented-planting Website Provides Analyzer to Help Producers

The program compares prevented-planting with growing either the same crop for which a prevented-planting payment could be received or some other crop.

Nature’s clock is beyond the optimal planting time and wet conditions in areas of the state may continue. This will prevent some North Dakota producers from seeding all their acres before the dates that crop insurance coverage starts to decrease, according to a North Dakota State University agricultural economist.

The final planting date for full crop insurance coverage varies by crop and geographic location. For example, canola varies from May 15 in the southwestern part of the state to June 5 in the northeastern area of the state. For wheat, durum and barley, it is May 31, except for the northern one-third of the state, where it is June 5. It is June 10 for soybeans, dry edible beans and flax.

""After these dates, farmers with insurance can evaluate prevented-planting for that particular crop,"" says Andrew Swenson, farm and family financial specialist with the NDSU Extension Service. ""The question is whether to plant the crop and accept the risk of lower yields and reduced crop insurance coverage or to collect a prevented-planting crop insurance indemnity payment and idle the ground.”

There is an Excel spreadsheet at http://www.ag.ndsu.edu/farmmanagement/prevented-planting to help with the prevented-planting decision. The website also includes other prevented-planting information on eligibility and final planting dates.

The program compares prevented-planting with growing the same crop for which a prevented-planting payment could be received or some other crop.

In the analysis, the prevented-planting indemnity is offset partially by the direct costs, such as cover crop seed, chemicals and fuel, to maintain the land that will not be used for crop production in 2013. This is compared with the income that could be obtained from growing the crop after the additional direct costs of production have been subtracted.

Two critical assumptions to be made are the expected yield and market price if one seeds later. The risk of lower yields and quality is elevated. The analysis also considers crop insurance indemnities that may be received if a producer plants the crop late and yields suffer.

“Fortunately, the crop insurance coverage level only diminishes 1 percent per day for the first several days after the date when producers can choose prevented-planting,” Swenson says. “Therefore, if a producer can plant a few days late, he or she still can have a fairly strong safety net and have the upside revenue potential on better than expected yields and market prices.”

There are other considerations in the prevented-planting decision. Planting will use up soil moisture and lessen the possibility the ground will be too wet for seeding next year. Another reason to plant may be to satisfy a forward sales contract. However, late planting may result in lower yields and lower the actual production history, which is used to calculate future crop insurance guarantees.

“If soil conditions do not allow seeding by the prevented-planting date, each producer should analyze the prevented-planting option and consult an insurance agent if unsure the acreage qualifies, what the payment rates may be and other details,” Swenson says.

NDSU Agriculture Communication – May 30, 2013

Source:Andrew Swenson, (701) 231-7379, andrew.swenson@ndsu.edu
Editor:Rich Mattern, (701) 231-6136, richard.mattern@ndsu.edu
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