Editor’s note: The following was written by Dave Bau, Phyllis Bongard and Liz Stahl, with the University of Minnesota, the Extension Minnesota Crop News website May 29.
“To plant or not to plant” is a challenging question for farmers this year who have faced an extremely wet spring.
For crop insurance purposes, May 31 was the final planting date for corn and June 10 for soybean in southern Minnesota and many other parts of the upper Midwest. The final planting date has already passed for other corn producers (May 25).
The following examples show how different decisions could play out.
Scenario 1: Choose not to plant and take prevented plant.
If you choose to take prevented plant for corn, there is a simple payment rate of $4 per bushel multiplied by your APH and your insurance coverage percentage. This equals your revenue guarantee per acre.
To calculate your prevented planting payment for corn, the guarantee is multiplied by 55% (unless you paid a higher premium for a more coverage).
For soybean, the payment rate is $9.54 per bushel, and the standard prevent plant rate is 60% of the guarantee.
For example, corn at 85% coverage when your APH is 180 bushels per acre: $4 x 180 bushels (APH) x .85 x .55 = $336.60 per acre payment less premium.
Scenario 2: Plant a crop late.
You decide to plant, but what crop will you plant? The yield potential for corn planted after mid-May declines fairly rapidly. For corn planted June 9, yields were reduced by 21-31% in long-term University of Minnesota research. In addition to yield potential losses, insurance coverage declines by 1% per day after the final planting date.
If you plant corn on June 9, your coverage level would decrease by 9%. Using the corn example above, the revenue guarantee at 85% coverage would go from $612 an acre to $556.92.
Keep in mind the yield potential would be expected to decrease at least 20%, resulting in an estimated loss of 36 bushels per acre, or an estimated final yield of 144 bu./acre. If these bushels are sold for $3.80 per bushel cash this fall, gross income would be $547.20 per acre, so the small crop insurance payment would be just under $10 per acre.
With later-planted corn, higher drying costs and lower test weights would also be expected.
If a farmer chooses the prevented plant option, the yield used in their APH will not be affected unless a second crop is planted. In this case, the yield used for 2019 on the first crop must be reported as 60% of APH on that unit.
One more factor to consider is the recent announcement of another year of Market Facilitation Program (MFP) payments. These payments will be made on planted acres, and acres cannot be higher than your last four-year planted average. The exact details have yet to be stated, but this would encourage a farmer to plant.
Using an estimate of $2 per bushel for soybeans at 50 bu./acre, this would add $100 per acre and make late-planted soybeans profitable.
Bottom market economics look better for planted corn than soybeans, but the potential MFP payment could narrow the margin between corn and soybeans.