Industry News

Crop Insurance Prevented Planting Q&A

Crop Insurance Prevented Planting Q&A

In the face of another dry year, many growers are asking questions about prevented planting coverage for the upcoming year. The following is a Q&A we have developed to address the questions growers have raised.

California Rice Commission
Crop Insurance Questions – Drought and Prevented Planting

Disclaimer:  After discussing the matter of prevented planting with the Risk Management Agency, the California Rice Commission offers the following answers to some of the prevented planting questions that are circulating through the industry.  Please be advised that the Risk Management Agency only provided some general input and should not be considered the author of this document.  Please be further advised that the answers to the questions can only be in general terms; each grower’s situation will vary and must be analyzed.  In addition, in each situation there may be other crop insurance provisions that come into play that will affect the final determination of eligible prevented planted acres.

Drought

  1. If a District’s supply is reduced due to drought how do you calculate prevented planting acres?
    1. In general, the acreage eligible for prevented planted is based on how many acres could have been planted to the intended crop, the amount of available water and the reduced amount. However it is also limited by available cropland acres, the highest amount of planted acreage of the crop in the past four years, and other factors.
    2. If the grower has AND normally uses supplemental supplies, such as a well, those supplemental supplies must be counted.
    3. If the grower has a well that hasn’t been operated in recent years, it does not have to be activated.
    4. The reduction of water will be based on how much water was reduced at the time of planting, but no later than the final planting date of 6/1.

    Example:  For the past four years a grower has planted 300 acres of rice on their 400-acre ranch.  The District providing water has reduced its deliveries such that the grower can only plant 200 acres.  The grower has 100 acres eligible for prevented planted.

  2. If a grower transfers a portion or all of their reduced supplies, is the grower eligible for prevented planting?
    1. If transferred to a third party, the grower is not eligible for prevented planting on the acreage equivalent of the transferred supply, but is eligible on the acreage equivalent of the reduced supplies.
    2. Water transferred to a grower’s own crops (other crops), even if in another district, may not impact the growers eligibility for a prevented planted payment.  Producers should immediately notify their Crop Insurance Agent and Approved Insurance Provider if the intend to divert irrigation water.  The Risk Management Agency Loss Adjustment Manual Standards Handbook (LAM) Paragraph 84 provides instructions regarding the diversion of irrigation water.
  3. If a grower transfers all or a portion of their district allocated water supplies, does this disqualify other growers in the district that don’t transfer from prevented planting?Other growers will not be affected by the transfer of one grower, as long as that transfer does not affect the allocations of the other growers.  However, if the district sold or transferred all available water supplies, all growers may be denied prevented planting for their normally allocated shares of the water as the transfer by the district would not be an insurable cause of loss.
  4. If a grower received payment for prevented planting last year, are they still eligible for prevented planting this year? YES
    1. Acres are eligible if the loss occurs during the prevented planted coverage period.
    2. The maximum amount of eligible acreage cannot exceed the amount covered in the previous 4 years.
  5. If a grower did not buy any insurance last year can the grower purchase crop insurance this year? YES
    1. A new insured will not be eligible for prevented planting coverage for any cause of loss that resulted on or before the sales closing date for the current year. Typically this means that insurance purchased in 2015 will not cover prevented plantings due to drought for this year.
  6. Would a grower be covered for prevented planting if he plants a crop only for upland nesting habitat such as oats/vetch?  YES.
    1. Crop insurance rules allow a cover crop to be planted on acreage that was eligible for prevented planting coverage.  While not clear, the better practice would be to not irrigate the cover crop.
  7. Is a grower eligible for prevented planting if they choose the Price Loss Coverage (PLC) or Ag Risk Coverage (ARC)? YES
    1. Prevented planted coverage is covered under the individual plans.
    2. Supplemental Coverage Option (SCO), however, is only available with the PLC option.
  8. What happens if a farmer buys crop insurance and selects SCO thinking they will choose the PLC option and later changes their mind and selects ARC as their farm bill program?
    1. The grower will loose a majority of the premium they paid for the SCO portion of their coverage. The balance of the individual revenue or yield policy will not be affected.
  9. I heard that Individual Revenue Plans are not available this year? TRUE
    1. Due to a lack of trading on the Chicago Board of Trade, individual revenue policies are not available this year.
    2. Yield plans are available and existing revenue plans will be renewed as yield plans for this year.
    3. We are working with the Risk Management Agency to develop price projections not dependent on contracts traded on the commodity boards. We are very optimistic that individual revenue polices will be available in future years.

More Industry News Stories