Soybean Weather Damage and Crop Insurance Options
As a result of recent weather events, many producers are finding themselves in a position of evaluating replant decisions. It is important that you understand the process of working with your crop insurance company to mitigate this challenge.
When a weather event occurs that has potentially damaged your crop, it is critically important that you contact your local insurance agent immediately. The first step in the process is to have your policy reviewed and the affected crop adjusted. In the adjustment process, the crop adjuster will evaluate the damage and determine the practicality of future options. The determination of adjustment is as follows below.
If it is determined that the crop has experienced a loss of at least 90% of the production guarantee, and the affected area of loss is 20 acres or 20% of the unit. Then, one of the following may occur:
- If it is determined that the crop will stay in place and carried through to harvest, the current policy guarantees and premium payments will remain; this is generally the option used when the crop is expected to produce at least 90% of the production guarantee, and the crop is expected to recover from damage.
- If it is determined that the remaining stand will not produce at least 90% of the production guarantee, the field may be replanted to a soybean crop. If soybean was the original crop planted to the field, the producer will qualify for a replant payment of the lesser of 20% of the production guarantee or 3 bushels of soybeans times the projected price per bushel ($11.36) per acre. The producer will be expected to replant the field unless weather conditions, after good faith efforts, prevent planting activities from occurring.
- If it is determined that the remaining stand will not produce at least 90% of the production guarantee and it is not practical to replant soybeans, a producer may receive 100% of their indemnity payment or they may have the option to plant a second crop. The producer will qualify for a replant payment of the lesser of 20% of the production guarantee or 3 bushels of soybeans times the projected price per bushel ($11.36) per acre. The producer will be expected to replant the field unless weather conditions, after good faith efforts, prevent planting activities from occurring.
- If it is determined that the remaining stand will not produce at least 90% of the production guarantee and due to mitigating circumstances, it is impractical to replant the crop, the producer will receive 100% of their adjusted indemnity payment, per their insurance policy coverage.
Replanting or Second Crop Considerations
To replant a soybean crop or move a field to a second crop, the field must be released by the insuring company for another use. If the producer elects to plant and insure a second crop, the indemnity payment of the first crop will be reduced to 35%. (The indemnity payment will be based on the original crop guarantee and the appraisal conducted by the company.)
At the end of the season, if the second crop does not experience damage, the producer will qualify to receive the remaining 65% of the original adjusted crop loss. If the second crop is damaged and requires adjustment, the producer may elect to receive either the remaining 65% of the original adjusted crop loss payment, or the adjusted indemnity payment of the second crop planted (whichever is greater). Producers will receive an adjustment to the premium payment due, relative to the first crop's indemnity reduction. If the first insured crop's adjusted indemnity is reduced to 35%, the premium is also reduced to 35%; the second crop's premium will not be reduced.
It is important that you visit with your crop insurance agent so you understand how premium payments and adjusted crop indemnity payments will be calculated.
In the event of a replant, it is important to note that the late-plant period for soybean was June 10 to June 30. If you are replanting soybeans, there is no guarantee penalty applied; however, if you plant a second crop (not soybeans), the field will experience a 1% guarantee reduction for each day after the final planting date the crop is sowed.
The decision of replant practicality lies with the individual crop adjuster, who will consider available moisture, marketing window, field conditions, and time to crop maturity. Cost and availability of inputs is not considered. If it is determined that replanting is impractical, a 100% adjusted indemnity payment will be made to the producer. It is important to note that producers will still be responsible for maintaining crop residue, and may be required to provide an acceptable cover crop.
If, after a field is abandoned, the producer decides to plant a crop without being released by the insuring agency, the producer may forfeit their adjusted indemnity payment. For example, it is determined that a soybean field has been destroyed by hail and it's impractical to replant at this time. At this time the producer becomes eligible for 100% of the adjusted indemnity payment. Later in the year, if the producer decides to quick-plant alfalfa and either grazes the field or takes off a hay cutting, he may forfeit the indemnity payment if the field was not released for this use. The final payment decision is at the discretion of the insuring company.
The issue of practicality also takes into account the expected ramifications of crop chemical use. In some cases, the field will have been treated with a chemical that prevents a second season crop from being planted. For example, sorghum couldn't be planted into a soybean field that had been treated with Assure, Fusion, Poast, or Select Max (depending on application date). It is important that producers maintain good records of field operations to assist the crop adjuster with making decisions regarding practicality.
At the end of the day, the decision regarding the future of the field must follow the best intention of the producer's farming practice. It's critical that the grower work with his/her crop insurance agent and crop adjuster to determine the best course of action. It's important to note that if it's determined that a damaged crop be taken to harvest, the producer must care for the field as he or she would any other field, using best agronomic practices. A producer's failure to care for the crop because he didn't feel like it would yield as well as another field may disqualify him for an indemnity payment should a loss occur.