MT. VERNON, Ill. — It may be in farmers’ DNA to plant crops, but it is not always the best route.
That was especially true this year, according to University of Illinois ag economist Gary Schnitkey. In years like 2019, when extremely wet conditions kept many farmers out of their fields until June, taking prevent plant payments makes more sense.
“Farmers have a bias against prevent plant,” Schnitkey told farmers at an ag economics conference here. “If you go to North Dakota and South Dakota, that bias is less.”
The numbers say that keeping the seed in the bags was the right decision for many Illinois farmers this year. For most of the state, June 7 is the date when prevent plant payments are triggered. Even without counting Market Facilitation Program payments, taking the insurance was the smart move, Schnitkey believes. And he has the statistics to back it up.
“This year a lot of corn got planted the third week of June. That was just unusual,” he said. “Prevent plant was the most widespread it ever was. Then you have this MFP. All that made decision making very hard.”
Figures compiled in the University of Illinois’ online resource farmdoc show the average net return on prevent plant ground was $366 per acre, compared to only $48 per acre for acreage planted to corn. On the other hand, in order to collect MFP payments, farmers must have planted a crop.
While those figures require accepting certain projections of yields, grain prices and drying costs, they show that taking prevent plant insurance was the smart choice in many areas.
Other considerations of late planting include higher drying costs and harvest difficulties.
Schnitkey also pointed out that farmers can qualify for prevent planting payments regardless of how ready the field may be.
“A farmer can take prevent plant and it just doesn’t matter what the field conditions are,” he said. “June 7 and after, it’s your decision. It doesn’t matter if it’s sunny or anything.”
The crop being planted makes a difference. This year, there was a shift.
“Corn prevent plant is better than soybean prevent plant. You don’t have to be a rocket scientist to figure that out,” Schnitkey said. “That’s what happened. Corn acres were roughly the same. Prevent plant went up about the number we expected it to. But what happened was, corn prevent plant substituted for soybeans.”
Farmers had to make tough decisions as the prevent plant dates neared.
“During this crucial month of May, we entered into discussion of prevent planting. Illinois was sitting at less than half planted going into June,” Schnitkey said. “The big question was how much corn is going to get planted, and how much put into prevent plant position. The market went on an extraordinary rally, from a low in mid-May below $3.75 up to $4.70 as a peak on June 17. The market went straight up.”
He also put in a plug for USDA yield projections. The private ag company Indigo Agriculture on June 11 estimated that average corn yields would be 159.4 bushels per acre and soybeans 47.6 bushels per acre. USDA’s Agricultural Statistics Service had the numbers at 166 and 49.5, respectively.
“The resources USDA devotes to yield estimation are large and include many methods, including satellite imagery,” Schnitkey said.
One takeaway is that government aid — in the form of prevent plant insurance and MFP payments — netted out about the same for both planting and prevent plant.
Schnitkey believes there is a good chance MFP payments will be offered again in 2020, again making planting decisions difficult.