With favourable weather, it is highly likely for the planting progress to reach average levels. However, the planting progress in Corn Belt seems to lag, almost like in 2019, when the land of several acres was left barren. This situation has led most farmers to ensure crop insurance before planting corn. Doing so gives them a choice to get prevented planted payment.
The prevented plants were reviewed by the specialists at the University of Illinois. They came up with the suggestion that farmers would get higher returns if they harvest corn in June and prevent planting payments in early July.
The planting progress of several states was generated by USDA. In Illinois, the cultivated corn acres were 7% as per the findings in the year 2022. That percentage is pretty low compared to the five-year average, i.e., 43%. The planting progress was 10% in 2019. In Indiana it was 6% in 2022.
The planting progress for Iowa was recorded to be 9%, and that of Minnesota and North Dakota was 0%. In Ohio, it was recorded to be 3%. It is important to note that the planting progress of all the mentioned states has decreased considerably in the last five years.
Planting can move swiftly if fieldwork days are available because this season is quite favorable. If we take the example of Illinois, the full corn crop may be planted in around fourteen favorable field days.
Banned Corn Planting Pay-Outs
COMBO policy is the crop insurance policy that offers prevented planting payouts on three basic plans:
- Revenue Protection (RP).
- (RP-hpe) Revenue Protection with the harvest price exclusion.
- Yield Protection (YP).
No pre-planned planting payments are included in the insurance coverage of Area Risk Protection. Furthermore, usage of Supplemental Coverage (SCO) combined with or separate from Enhanced Coverage Options (ECO) does not improve the savings on avoided plant payments. That is because of the high dependency of preventive plantings payments with ECO and SCO upon COMBO products.
The condition of claiming “Prevented planting incentives” is achieved when “final planting dates” meet. Farmers must make every attempt to sow corn on specified acres before the last date for planting. Grain corn planting dates differ per state in the Midwest. Iowa, southern Minnesota, and Wisconsin, north-eastern Missouri, Illinois’ extreme southern counties, and Kentucky have a “last planting date” of May 31. Most Michigan, Indiana, Illinois, and Ohio can have their corns planted on June 5.
Due to some inevitable reasons, farmers avoided planting corn right after date season, and a prevented planting reimbursement for corn could be claimed (e.g., wet weather). The cost of the preventing plant would be 50 to 60% of the insurance if the 5% buy-up is obtained by the mid of March. Therefore, the usual 55 % factor is used in the following example.
The yield of 200 bushels per acre would cost $5.90 per bushel this year. The coverage level would be 85%. In this example, the avoided planting payment would be $552 per acre.
Comparing The Costs Between Prevented Planting/Planting Corn
According to calculations, cultivating corn this year is expected to be more lucrative than accepting the prevented plant payout at the beginning of June. Figure 3 illustrates the results of the Prevent Planting Module by farmdoc, a FAST series Microsoft Excel spreadsheet is there for download from farmdoc (see Planting Decision Model here). The total output from planting corn and prevented planting on June 7 are shown in the first column.
The total profits from prevented planting fees are calculated using an RP policy of 85 percent, 200 bushels per acre yield, and a forecast price of $5.90. Early June planting of corn is predicted to yield 171 gals per acre, with a cash price of $7.10 per bushel. In early May, the harvest-time offer was $7.10 cash. The costs are taken from the Illinois Crop Budget for 2022.
Planting corn soon after the ultimate plant date yields bigger benefits than collecting the prevented plant payout because autumn bids are higher when compared to the price that is predicted, $5.90 in 2022, Until the prices are likely above the estimated rate, plantation of corn would have better-required payments than receiving prevented planting payments.
Factors Effect After Schedule Planting
Yields and prices may be modest, but accepting the payments of prevented plants seems a better investment than growing corn. Prices may drop in the coming month. As the date of plantation approaches, yield losses become more obvious.
Each day beyond the final planting date, the crop insurance guarantee is diminished, diminishing the security net provided by crop insurance.
Corn yields planted beyond the ultimate plant date would be included in the APH yields, as explained in the next section.
Appropriate Acres For Prevented Planting
Different acres would be suitable for prevented planting in each insurable unit. Knowing how many acres are suitable is crucial to avoid being caught off guard when making preventative planting choices. Crop insurance brokers can assist in evaluating which acres are eligible for compensation to avoid planting.
As a general rule, the maximal area which can be cultivated is available for prevented planting payouts are equal to the maximum area where corn can be cultivated in that unit of insurance, in the previous four years, modified for acreage increases, the minimum area is cultivated in 2022. There are also other planting criteria to consider.
It is important to note that, for the previous four years a 100-acre insurance unit has not changed in size. If the largest number of acres planted in corn in one of the four years is 75 acres, the largest number of acres on which preventing planting corn planting can be taken is 75 acres. Only 25 acres of this farm’s corn would be available for a corn planting incentive if 50 acres are cultivated with corn. Here’s where you can learn more.
Despite the present lag in Corn Belt planting efforts, given good field days throughout May, planting may move quickly.
Although it is too early to say whether bad weather would prevent any land from being planted before the final dates of the plantation, the planting progress numbers for 2019 are a reminder of the alarming situation. The market indications differentiate the position in 2022 from that of 2019. Planting corn late is estimated to have greater expected returns than collecting prohibited plant payments if harvest-time bids do not fall.