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Published June 16, 2014, 09:40 AM

Alternatives to prevented planting insurance

Acreage that is too wet to plant on time for most insured crops is again prevalent in the region. An alternative some producers might want to consider is to not request a prevented-planting payment and instead seed a warm-season grass for hay later in June when the land dries enough to plant.

By: NDSU Agriculture Communication,

Acreage that is too wet to plant on time for most insured crops is again prevalent in the region. An alternative some producers might want to consider is to not request a prevented-planting payment and instead seed a warm-season grass for hay later in June when the land dries enough to plant.

“The net income from the hay may be as much or more than the prevented-planting payment, less the cost of putting a cover crop on prevent-planted acres,” says Dwight Aakre, North Dakota State University Extension Service farm management specialist. “With an actual production yield of 38 bushels per acre for spring wheat and a 75 percent insurance coverage level, the prevented-planting payment would be about $111 per acre. Land preparation and seed for a cover crop would cost about $28 per acre, leaving a net of $83 per acre.”

Planting a warm-season grass, such as German millet, could yield about 3 tons per acre, with seed, land preparation and harvest costs of $85 per acre. At $56 per ton, this hay would generate the same net return as a prevented-planting payment.

Cattle producers are realizing record high prices and herd expansion is beginning. Demand for hay has been exceptional in recent years because of drought-reduced supplies in many areas of the country. Also, high grain prices the past several years have contributed to hay acreage being converted to grain production. The result is continued strength in the hay market.

“The competiveness of an annual hay crop with prevented-planting varies by crop, actual production history (APH), insurance coverage level, and the cost to produce and harvest the hay crop,” Aakre says. “If the prevented-planting payment is based on soybeans with a 30-bushel APH, the break-even hay price is about $70 per ton. With a prevented-planting payment for corn based on a 115-bushel APH, the break-even price becomes about $98 per ton.”

A field must have been planted and harvested in one of the most recent four years to qualify for prevented-planting payments. For fields that have been too wet to plant for consecutive years, planting and harvesting a hay crop will break this string of prevented-planting years and start the four-year limit over again.

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