Farmers in many portions of the Midwest, including parts of southern Minnesota, northern Iowa and eastern South Dakota, will likely not be able to plant a portion of their corn and soybeans by the crop insurance “final planting dates” for their area.
Those farmers have been evaluating their crop insurance coverage for prevented planting payments, as compared to the yield and profit potential for late-planted corn and soybeans. The prevented planting decision became more difficult with the USDA’s announcement regarding potential market facilitation program (MFP) payments.
On May 23, the USDA announced preliminary details for $14.5 billion in MFP payments. The payments will again be administered through Farm Service Agency offices. Here is a quick look at the MFP:
• Producers of corn, soybeans, wheat, alfalfa hay, barley, canola, crambe, dry peas, extra-long staple cotton, flaxseed, lentils, long and medium grade rice, mustard seed, dried beans, oats, peanuts, rapeseed, safflower, small and large chickpeas, sorghum, sunflower seed, temperate japonica rice, and upland cotton are eligible for payments.
• Payments will be based on the total planted acres to those crops on a farm and will not be dependent on which specific crops were planted. The total acres eligible for MFP payments can not exceed the amount of eligible crop acres that a farmer planted in 2018, except for any acres that were added in land purchases, land rental contracts, family arrangements, etc. This does not include converted CRP acres.
• As it stands now, 2019 prevented planted crop acres will not be eligible for 2019 MFP payments.
• Payments will be paid on a single county payment rate. (Details of the payment formula have not yet been announced.) Last year’s payments were based on actual crop production. This year’s payment formula will be vastly different.
• Hog producers will qualify for payments, based on their hog and pig inventory on a yet-unknown date.
• Dairy producers will earn a payment based on their production history.
• This year’s payments will be made in three times. The first would be in late July or early August following the required crop acreage reporting deadline of July 15 at FSA offices. The second and third rounds will be made in November and January.
The biggest provision to impact farmers in areas that are affected by planting delays is the requirement than crops must be planted in order to be eligible for MFP payments on those acres. However, it does not specify what crop must be planted. Once a producer plants any crop on the unplanted acres, those acres lose the opportunity for prevented planting crop insurance payments.
For most Midwest farmers this means planting very late corn or late soybeans in order to maintain eligibility for potential MFP payments.
Once the crop insurance “final planting date” for corn or soybeans has been reached, farm operators can opt to take the prevented planting insurance coverage, if they have that coverage option, rather than planting the crop.
The final planting dates for corn and soybeans are:
May 25 in the northern Minnesota, extreme northern Wisconsin, most of Nebraska, and most counties in North and South Dakota.
May 31 in the southern two-thirds of Minnesota, all of Iowa, most counties in Wisconsin, and a few counties in southeast North and South Dakota.
June 5 in Illinois, Indiana, Ohio and most of Michigan.
June 10 in most counties in Minnesota, Nebraska, North and South Dakota, the northern two-thirds of Wisconsin that are eligible for crop insurance.
June 15 in all of Iowa, the southern one-third of Wisconsin, the northern one-third of Illinois, and most counties in Michigan.
June 20 in Indiana, Ohio and the balance of Illinois.
Many farmers are dealing with the stress of likely yield reductions from delayed or prevented planting, as well as very tight profit margins for the year.
The MFP factor adds even more stress to making a decision on whether or not to opt for prevented planting this year. They must now weigh the economics of possibly of receiving MFP payments, of which no one yet knows the payment formula.
Farmers who are facing prevented planting decisions should contact their crop insurance agent for details and information.