Crop Insurance and Replant Decisions
Recent adverse weather conditions may force some growers who have already planted to replant.
If you believe replanting may in your best interest, check the replant provision in your crop insurance policy and immediately contact your insurance agent to get the paperwork started. [Catastrophic (CAT) and Area (Revenue) protection policy do not have replant provisions.]
The following guidelines, which come from the USDA Risk Management Agency's Loss Adjustment Standards Handbook, will give you an idea of what to expect from crop insurance for replanting. To qualify for a replanting payment:
The insured crop must be hit with an insured peril (excess moisture, frost, hail, etc…).
Your approved insurance provider must determine that it is practical to replant. (This is why it's best to contact your insurance agent immediately.)
Acres being replanted must have been initially planted on or after the earliest planting date.
Appraised expected yield must be below 90% of the guarantee yield on acreage intended for replant.
Acreage replanted must be at least the lesser of 20 acres or 20% of the insured planted acreage for the unit.
- Approved insurance provider must give consent to replant.
The replanting payment will be equal to the projected price multiplied by a maximum bushel factor. For 2014 corn and soybean projected prices are $4.62 and $11.36, respectively. Maximum bushel factors are eight bushels per acre for corn and three bushels per acre for soybeans.
For example, your insured corn crop was hit with excessive moisture. You planted corn on May 1, which is past the earliest planting date of April 10. Appraised expected yield is now 70 bushels per acre (bpa). Actual production history (APH) is 140 bpa. You insured using a Revenue Protection policy at a 75% coverage level using the projected price of $4.62 per acre. Your yield guarantee would be 105 bpa (140 APH yield x 75% guarantee). Applying Rule 4 from above, 90% of your yield guarantee is 94.5 bpa (105 x 0.9). Your expected yield of 70 bpa is less than 94.5 bpa (90% of guaranteed yield). Consequently, you would receive a replant payment of $36.96/acre (8 bpa x $4.62, the projected price).
From the example we can see that qualifying for a replanting payment hinges on the producer's yield guarantee. Selection of a lower coverage level implies a lower yield guarantee and a smaller chance of qualifying for a replant payment. However, when extreme events occur it is likely everyone will qualify for a replant payment. If you are unsure whether you may qualify for a replant payment, your first step is to contact your crop insurance agent.
UNL Extension Crop Economist