Third year no charm for prevent plantFARGO, N.D. — A third year of difficulties in planting crops in some of the wettest areas of the region could spell trouble for farmers wanting to use prevent-plant insurance, a crop insurance official says.
By: Mikkel Pates, Agweek
FARGO, N.D. — A third year of difficulties in planting crops in some of the wettest areas of the region could spell trouble for farmers wanting to use prevent-plant insurance, a crop insurance official says.
Bob Perius, of Moorhead, Minn., national training director for the NAU Country Insurance Co., says a third year of stepped-up enforcement for prevent-plant policies could be a problem for some. Perius was a speaker at an Extension Service Advanced Crop Advisors Workshop Feb. 10 in Fargo, N.D.
To get prevent-plant insurance, a farmer must have “planted and harvested” or insured the crop in at least one of the past three years: “Prevented planting; prevented planting; the third year you’re out,” Perius says. You can’t get it three years in a row.”
While that always has been true, the enforcement has changed.
The U.S. Department of Agriculture’s Risk Management Agency had been “very lax, and companies have been very lax” on enforcement before 2009. “They just wanted to get producers paid ’cause there were so many prevent-plant acres in the Dakotas,”
Perius says RMA simply told the crop insurance companies that they need to start enforcing the rules, Perius says.
Before this, the companies didn’t all do the enforcement the same way, Perius says.
The enforcement may cause hard feelings with some insured, but that will be “minimized” when they find out that all companies are doing it the same way, Perius says. He says some smaller companies, trying to get business, may not be as good about following the rules, but the bigger companies are because they understand they’ll be out of business if they don’t.
The 2011 crop season may be the worst yet for the issue in the Red River Valley and surrounding areas, Perius says.
“There’s so much moisture out there that there are a lot of areas where this will be the third year they didn’t get planted,” he says. “There are going to be a lot of folks who think they’ll get a PP payment and they won’t.
There may be hard choices for some producers.
“They can try to ‘mud it in,’ ’cause once it’s in the ground, it’s insurable. But at what expense? Ruin their machinery to get it in there? Probably not,” Perius says. “But I think this year is going to be worse than last year because a lot of them didn’t hit the three years (limit) last year, but they will this year.”
Otherwise, the biggest change for prevent plant insurance is that customers used to be able to take the higher of the spring or fall price. “Now they get spring price, only,” Perius says.
“The other change is that whatever crop they declared for prevented planting, whatever the payment per acre for that is, if they run out of eligible base acres and we have to move it to another crop, we can never increase the payment. It’s always going to be the same or lower.”